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NSE Intra-day chart (21 November 2016)
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Market Commentary 22 November 2016
Markets to see a strong start on firm global cues


Indian equity benchmarks started the new week on a disturbing note as they went on to extend the declining streak for the third successive session as market participants resorted to hefty across the board profit taking. The frontline indices shaved off about one and half percent and breached 25,800 (Sensex) and 7,950 (Nifty) levels on the downside. The big selloff in the local market can be attributed to a couple of factors, such as the political situation which seems to be deteriorating and puts a question mark on GST if this Parliament session gets into a logjam. The second part is the impact of demonetisation on the economy. A private report has stated that India's economic growth is expected to fall by up to 1 percentage points over the next 12 months in the wake of demonetisation, while longer-term gains will depend on follow-up reforms. The recent selling by the foreign portfolio investors (FPIs) of Indian stocks also weighed on sentiment. Foreign investors have pulled out close to $ 3 billion from the Indian capital market this month so far on lingering concerns over the government's demonetisation decision and fears of a rate hike by the US Federal Reserve. According to data, net withdrawal by FPIs from equities stood at Rs. 9,841 crore during November 1-18, while the same from the debt market was Rs 9,720 crore during the period under review, translating into a total outflow of Rs 19,561 crore ($ 2.89 billion). Adding anxiety among market participants, rupee was hovered around its Brexit lows to 68.23/$. It hit its lowest level since June 1 against dollar as sentiment turned bearish on combination of growing US rate hike expectations and stunning dollar run. On the global front, Asian equity markets ended mostly in green on Monday, while European stocks moved mostly lower in cautious trade. Back home, finally, the BSE Sensex declined 385.10 points or 1.47% to 25765.14, while the CNX Nifty dropped 145 points or 1.80% to 7,929.10.


The US markets closed higher at fresh records on Monday, aided by a jump in oil prices and a pullback in the dollar, giving the Dow industrials, S&P 500 and Nasdaq their third simultaneous all-time closing highs this year. Stronger oil prices and a moderation of dollar strength are providing relief for the market, along with a return to earnings growth. Additionally, with the market pricing in a December interest-rate increase from the Federal Reserve, positive economic data is becoming a tailwind for stocks. On the economy front, a measure of national economic activity improved in October but its less-volatile, three-month average weakened - one sign that below-potential economic growth could limit Fed aggressiveness with interest-rate hikes. The Chicago Fed national activity index rose to negative 0.08 in October from negative 0.23 in September as factory production, housing and consumer spending, as well as the business orders that make up the index mostly improved; employment had a neutral effect. The Dow Jones Industrial Average added 88.76 points or 0.47 percent to 18,956.69, Nasdaq was up 47.35 points or 0.89 percent to 5,368.86, while S&P 500 gained 16.28 points or 0.75 percent to 2,198.18.


Crude oil futures surged on Monday on Russian leader Vladimir Putin's confidence that a deal with OPEC to curb supplies is imminent and as dollar gave back some ground versus major rivals after soaring to a 14-year high. Meanwhile, the major oil producing countries appeared to be moving closer to agreeing to limit output. Russian President Vladimir Putin said he saw no obstacle to freezing oil output, which at more than 11 million barrels per day is at a post-Soviet high. Benchmark crude oil futures for December delivery gained $1.80 or 3.9 percent to close at $ 47.49 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for January delivery rose by $1.56 or 3.72 percent to $47.25 a barrel on the ICE.


Indian rupee extended its weakness on Monday for the second consecutive day after the American currency strengthened overseas amid persistent foreign capital outflows. Rupee hit its lowest level since June 1 against dollar as sentiments turned bearish on combination of growing US rate hike expectations and stunning dollar run. Sentiments remained down-beat after a private report has stated that India's economic growth is expected to fall by up to 1 percentage points over the next 12 months in the wake of demonetisation, while longer-term gains will depend on follow-up reforms. On the global front, yen gained against dollar as a ‘Trumpflation'-fuelled rally paused and political risks came to the fore in Europe. Finally, the rupee ended at 68.16, 4 paise weaker from its previous close of 68.12 on Friday.


The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4183.10 crore against gross sell of Rs 5056.21 crore, while in the debt segment, the gross purchase was of Rs 1079.87 crore with gross sales of Rs 2867.43 crore.


The US markets surged in last session with major averages ending the session at new record closing highs, reacting to a sharp increase by the price of crude oil. News on the merger-and-acquisition front also generated some buying interest. The Asian markets have made an all green start tailing the gains in the US markets, Japanese markets too has rebounded as markets digested a tsunami warning in the Fukushima region. The Indian markets suffered yet another setback in last session with major benchmarks deposing over a percent, the broader markets performed even worse on worries that demonetization will drag the economic growth lower. Today, the start is likely to be in green and some recovery can be seen on positive global cues. Though, traders will still be cautious over concern of India's demonetisation move estimated to pull down gross domestic product growth this financial year from last year's 7.6 per cent. The domestic rating agency Icra has forecast a 40 bps dip in growth rates to 7.2 per cent in the second quarter of the current fiscal, citing debilitating impact of the demonetisation drive on the economy. Meanwhile, exporters in a meeting with Minister for Commerce and Industry have expressed concern over a possible fall in output over the past week due to the government's demonetisation drive as some have been forced to stop production or reduce capacity due to shortage of cash. There will be some buzz in the aviation sector, with report that domestic airlines carried 86.72 lakh passengers during October this year, registering a growth of 23.18 per cent over the 70.39 lakh passengers flown during the same period in the previous year. There will be lots of important result announcements too, to keep the markets in action.


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  • Mahindra & Mahindra has inaugurated its state of the art spare parts warehouse in Mahindra World City, Jaipur.
  • Coal India is examining opportunities to export coal with high ash content or high grade fossil fuel to the neighbouring nations.
  • Axis Bank is planning to raise up to Rs 1,800 crore from debentures to fund business expansion.
  • Bharti Airtel has launched 4G services in Muzaffarpur, Samastipur, Purnia, Bikramganj, Jhajha, Daudnagar & Ramnagar.
  • Tata Motors along with its Sri Lankan partner, Diesel & Motor Engineering PLC, have launched a new world-class Sales, Service & Spares facility, catering to the company's range of commercial vehicles in Kurunegala district, all under one roof.
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