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NSE Intra-day chart (22 February 2016)
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Market Commentary 23 February 2016
Markets to make a positive but cautious start

Monday's trading session was clearly of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained in tight band throughout the day. Nevertheless, the benchmarks managed to extend the winning momentum for the fourth consecutive day of trade as local sentiments continued to show signs of improvement. Traders took some encouragement with the Economic Affairs Secretary Shaktikanta Das' statement that the Union Budget 2016-17 will try to address the key challenges of the economy and give an impetus to growth. He also added that the government is committed to not only maintain the 7.6 per cent growth but also improve it. Higher growth will lead to job creation, more economic activities and development.  Furthermore, some encouragement also spread by Finance Ministry with the proclamation that the quality of government expenditure has improved significantly in the current fiscal and is resulting in high growth. According to CGA data, it was 74.4 per cent of Budget Estimate at the end of December, as compared to 61.3 per cent a year ago. However, market participants remained cautious with the report that overseas investors have pulled out a massive Rs 4,600 crore from the Indian capital markets this month so far, primarily on account of continuous fall in crude oil prices and fears of a global slowdown. Meanwhile, all eyes would be on the Budget session of Parliament that will be commencing on February 23 and will focus largely on the financial business of the government. The Rail Budget will be unveiled on Thursday, economic survey on Friday and the Union Budget next Monday. On the global front, Asian share markets ended mostly higher, while European shares too rose on Monday. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade. But the frontline indices slowly started gathering steam and surged by around quarter a percent by late morning trades. But the indices failed to capitalize on the initial momentum and continued to trade in a tight range for most part of the day. Finally, the BSE Sensex gained 79.64 points or 0.34% to 23788.79, while the CNX Nifty added 23.80 points or 0.33% to 7,234.55.


The US markets closed higher on Monday, with the Dow Jones Industrial Average jumping more than 200 points, carried by a 6% jump by oil futures. The Chicago Fed released the national activity index (a composite index of other indicators) showed economic growth picked up in January and the index reading rose to 0.28. Also, the December 2015 reading was revised to -0.34 from -0.22. January's move was led by improvements in production-related indicators. Two of the four broad categories of indicators that make up the index increased from December, and two of the four categories made positive contributions to the index in January. The index's three-month moving average remained in contraction. Still, it increased to -0.15 in January from -0.30 in December. On the other hand, a reading of manufacturing sentiment unexpectedly lost momentum in February. The flash manufacturing Purchasing Managers Index from Markit fell to 51.0 from 52.4 in January. The Dow Jones Industrial Average gained 228.67 points or 1.40 percent to 16,620.66, the Nasdaq was up 66.18 points or 1.47 percent to 4,570.61 while, the S&P 500 added 27.72 points or 1.45 percent to 1,945.50.   


Crude oil futures surged on Monday after the international energy watchdog Paris-based International Energy Agency (IEA) predicted that US crude production will continue to slide as prices hover near record-lows. In its 2016 Medium-Term Oil Market Report, the IEA said that U.S. light, thick oil (LTO) will fall 600,000 barrels per day this year, before declining by another 200,000 bpd in 2017, when at which point the markets will start rebalancing. The IEA said that within the next five years, the US and Iran are seen leading production gains among non-OPEC and OPEC countries respectively. Benchmark crude oil futures for March delivery surged  by $1.64 or 5.17 percent to $33.39 a barrel after trading in a range of $31.70 and $33.83 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery closed at $34.74, up $1.73 or 5.24 percent on the ICE.


Indian rupee ended weaker against dollar on Monday on increased dollar demand from banks and importers. The domestic currency failed to get solace from the gains in the equity market. Investors turned cautious ahead of the Budget session of Parliament commencing on February 23 which will focus largely on the financial business of the government. Furthermore, investors overlooked that the global rating agency Moody's pegged India's growth at 7.5% for next two years, saying that it's insulated from global turmoil. On the global front, yen was weaker against its rivals during Asian trade, as investors opted to sell the safety of the Japanese currency amid Tokyo stocks' steady gains. Finally, the rupee ended at 68.61, 15 paise weaker from its previous close of 68.46 on Thursday.


The FIIs as per Monday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 6853.64 crore against gross selling of Rs 6233.74 crore, while in the debt segment, the gross purchase was of Rs 387.85 crore with gross sales of Rs 1120.72 crore.        


The US markets ended higher in last session, adding to the strong gains posted in the previous week, mainly on a sharp increase by the price of crude oil. Though, some of the traders remained on sidelines amid a lack of major U.S. economic data on the day. The Asian markets have made a mixed start with some of the indices trading in red. Chinese market was down as the yuan declined after the People's Bank of China lowered its daily reference rate by the most in six weeks. The Indian markets despite a choppy trade managed to extend the gaining streak in the last session and the major averages gained over a quarter percent. Today, the start is likely to be in green tailing the overnight gains in the US markets. However, traders will be eyeing the stormy start of the budget session of Parliament, with opposition targeting the government on a range of issues. The government has prioritised 32 items for the session, which includes 11 bills pending in Rajya Sabha and one in the Lok Sabha. Meanwhile, Economic Affairs Secretary Shaktikanta Das, terming the projected 7.6 percent growth for the current fiscal as "very, very significant" has expressed the government's commitment to work towards boosting economic growth. Traders are likely to turn cautious in latter trade, on report that exports of over half of the sectors, out of the 30 closely monitored by the Commerce Ministry, were in the negative zone in January due to a fall in global prices and demand.  There will be some buzz in the PSU stocks, as the government is divesting five per cent of its stake in NTPC through the offer-for-sale route, the sale is expected to garner Rs.5,029 crore at a floor price of Rs.122 per share.   


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  • ONGC has received its board's approval for Rs 5,050 crore investment in Tripura for drilling of wells and creation of surface facilities to produce 5.1 mmscmd gas from the state's fields.
  • Idea Cellular in collaboration with Aditya Birla Nuvo has incorporated a company named Aditya Birla Idea Payments Bank.
  • State-owned miner Coal India has embarked on a project to generate 1,000 megawatts of solar energy to save 30 percent of its power and fuel expenses.
  • Bharti Airtel has commercially deployed LTE Advanced in Kerala, a technology that enables the operator to provide data speeds of up to 135 MBPS.
  • Reliance Industries' arm Reliance Jio would be ready to commercially launch its much talked about the 4G telecom services in second half of 2016, offering 80%of Indians high-speed mobile internet & voice services.
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