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NSE Intra-day chart (22 May 2017)
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Market Commentary 23 May 2017
Markets to make a flat-to-positive start

Monday's trading session was clearly of consolidation as the Indian benchmark indices appeared a bit fatigued and remained in tight range for most part of the day. Sentiments got some support after the government last week finalized rates for the upcoming goods and services tax (GST). The government on Friday unveiled four bands of rates under the GST for services in line with those applying to goods, a big departure from the current single rate of 15% applied on most services. Adding the optimism of investors, Revenue Secretary Hasmukh Adhia said Inflation will fall by 2% on implementation of the GST and create buoyancy in the economy. With the stage set for the biggest overhaul of India's tax system since Independence, the government will launch a massive awareness campaign to educate consumers about GST so that they are not fleeced by traders in the name of new tax. Some support also came after Maharashtra Assembly passed the GST Bill in today's session of its lower house. GST, which will come in force from July 1, will unify the country's economy into a common market and eliminate a string of central and state levies. The act is significant as the BMC gets a considerable share of its revenue through octroi, which will now be scrapped with the introduction of the GST regime.  Meanwhile, Foreign Direct Investment (FDI) inflows into the country touched a new high of $60.08 billion in 2016-17. FDI Inflows grew by 8% over the previous high of $55.6 billion posted in 2015-16. Increased FDI inflows in the country are largely attributed to intense and bold policy reforms the government undertook to bring pragmatism in the FDI regime. On the global front, Asian markets ended mostly higher on Monday as the Japanese yen weakened and US crude futures climbed back above $50 per barrel on expectations that major oil producing nations might extend their production cuts beyond an agreed-on June deadline when they meet on May 25. Finally, the BSE Sensex gained 106.05 points or 0.35% to 30570.97, while the CNX Nifty was up by 10.35 points or 0.11% to 9,438.25.


The US markets closed higher on Monday, for a third straight session, recovering most of last week's sharp loss as tech and industrial stocks rallied in a day marked by lighter than usual volume. With the bulk of earnings season over, investors will scrutinize US political news, like headlines last week that triggered a sharp midweek plunge for stocks. On the economy front, US hiring improved and factories were busier last month, enough to overcome weaker consumer spending and drive up a broad measure of April national economic activity released Monday by the Chicago Federal Reserve. The Chicago Fed national activity index jumped to a positive 0.49 in April from a positive 0.07 in March. That's the highest reading for the index since March 2014. The index's three-month moving average, which tends to offer a clearer picture of the trend in economic activity than the volatile monthly reading alone, rose to a positive 0.23 in April from a neutral reading a month earlier. The three-month average has been neutral or positive for a fifth consecutive month. The contribution of the personal consumption and housing category was the only drag on the activity index as it ticked down to negative 0.08 in April from negative 0.06 in March. The Dow Jones Industrial Average gained 89.99 points or 0.43 percent to 20,894.83, Nasdaq added 49.92 points or 0.82 percent to 6,133.62, while S&P 500 edged higher by 12.29 points or 0.52 percent to 2,394.02.


Crude oil futures extended their gains on Monday, amid growing expectations that OPEC members will agree to extend production cuts, after Iraq supported Saudi Arabia's view that cuts needed to be extended for a prolonged period until March 2018. Saudi Energy Minister Khalid al-Falih is meeting with Iraqi officials to hammer out the details of the agreement. Meanwhile, German Chancellor Angela Merkel said the euro is "too weak." The dollar softened on her remarks, boosting oil prices. Benchmark crude oil futures for June delivery ended higher by $0.40 or 0.8 percent to $50.73 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended up by $ 0.28 to $53.89 on the ICE.


Indian rupee strengthened for second consecutive session on Monday, on increased selling of the American currency by exporters and banks. Sentiments remained optimistic with Revenue Secretary Hasmukh Adhia's statement that inflation will fall by 2 percent on an implementation of the goods and services tax (GST) and will create buoyancy in the economy. Some support also came with report that Foreign Direct Investment (FDI) inflows into the country touched a new high of $60.08 billion in 2016-17. Besides, positive momentum in the domestic equities and continuous foreign capital inflows too supported the rupee. On the global front, dollar steadied close to six-month lows against a basket of currencies on Monday, as investors took stock of a week of political turmoil in the United States and a resurgent euro zone economy. Finally, the rupee ended at 64.55, 9 paise stronger from its previous close of 64.64 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8772.35 crore against gross selling of Rs 5599.70 crore, while in the debt segment, the gross purchase was of Rs 1148.66 crore with gross sales of Rs 469.77 crore.


The US markets moved further high albeit modestly, trading activity remained somewhat subdued with a lack of major US economic data. The Asian markets have made a mixed start and some of the indices in the region are trading in red, as investors took a cautious approach amid the latest reports on the Trump administration and a suspected terrorist attack in the UK. The Indian markets despite cautiousness and losing some strength in the latter half managed a positive close in last session, while the benchmarks snapped the two session losing streak, broader indices succumbed to pressure. Today, the start is likely to be mildly positive to flat. Though, there will be some concern with a suspected terrorist attack in UK where 19 people have been killed. Traders however will be getting some support with a new survey by the Confederation of Indian Industries (CII) and Indian Bank's Association (IBA) showing that the outlook towards the financial condition of the country has taken a positive turn during the first quarter of the ongoing fiscal. The CII-IBA Financial Conditions Index stood at 56.9 for first quarter of 2017-18, as compared to 48 during the previous quarter. The banking stocks may see some recovery, as the Reserve Bank of India (RBI) has said that the oversight committee set up to decide loan restructuring cases under the so-called S4A scheme will be expanded by adding new members. RBI has also said that credit rating agencies will be given greater role in dealing with large amount of stressed assets in banks. There will be some buzz in the textile stocks, as the Textiles Minister Smriti Irani has said that the Textile Ministry will announce an incentive package for the knitwear sector in less than two months to help the industry cope with the challenging times. There will be lots of important earnings announcements too, to keep the markets in action.


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  • Tata Motors has unveiled the new BS IV-ready medium and heavy duty trucks with ‘exhaust gas recirculation' and ‘selective catalytic reduction' technologies in Tamil Nadu.
  • Reliance Industries' telecom arm - Reliance Jio Infocomm has added a whopping 5,839,734 subscribers and controlled 9.29% of the telecom market as of March 31, 2017.
  • Lupin has received an approval for Bepotastine Tablets from the Central Drugs Standard Control Organisatio
  • Tata Power Company has surpassed power generation of 52,000 Million Units for the first time, collectively from all its power plants in FY-17.


News Analysis