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NSE Intra-day chart (23 May 2016)
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Market Commentary 24 May 2016
Markets to make a week start amid soft global cues


Indian equity benchmarks commenced the week on a sluggish note as the indices showcased an unenthusiastic performance on Monday and settled with moderate cuts of around a quarter percent. Sentiments remained down-beat  with RBI Governor Raghuram Rajan's  statement that India should restrain itself from being ‘too ambitious' at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth. Rajan has also said that Indian economy has certainly picked up pace in growth, but certain sectors are still under stress, making the economic recovery uneven. Besides, prospects of early interest rate hike by the US Federal Reserve in June and slip in crude oil prices also hurt sentiments. However, the downside risks for the frontline indices was limited by reports that India's net FDI flows are expected to rise further this fiscal to $38 billion on emergence of some ‘positive signs' such as regulatory easing in select sectors and reform measures initiated by the government. Net FDI flows in 2015-2016 stood at around $36 billion as against $31 billion for 2014-2015.  Going ahead, volatility is to be seen on the bourses as traders will roll over positions in the futures & options segment from the near-month May series to June series. Last batch of quarter results, progress of monsoon, trend in global markets, foreign institutional investor stance and movement of rupee and crude oil will also dictate trend this week.  On the global front, Asian equity markets ended mostly higher on Monday, while European markets traded in red in early deals. Back home, the benchmarks though got off to a boisterous start as investors were largely influenced by the supportive leads from Asian markets. Some support also came with Finance Minister Arun Jaitley's statement that India offers a good opportunity for global investors because of its strong growth when the world economy is struggling. He also said good monsoon forecast, political reform process and low current oil prices were the key drivers of economic growth, while also pointing out that India had also benefited from the decline in prices. Finally, the BSE Sensex ended lower by 71.54 points or 0.28% to 25230.36, while the CNX Nifty dropped 18.65 points or 0.24% to 7,731.05. 


The US markets closed lower on Monday, weighed down by the prospect that interest rates might rise as soon as next month. The main indexes drifted between slight gains and losses for most of the day as US markets logged their second-lowest trading volume this year. St. Louis Federal Reserve President James Bullard stated that US interest rates being kept too low for too long could cause financial instability in future and stronger market expectations for a rate rise are probably good. On the economy front, US growth appears to have picked up in the second quarter, but the latest Markit survey of American manufacturers fell to a weak 50.5 in May and signaled little improvement in a key segment of the economy. The Markit Flash PMI dipped from 50.8 in April, with production declining for the first time since September 2009. The Dow Jones Industrial Average lost 8.01 points or 0.05 percent to 17,492.93, Nasdaq was down by 3.78 points or 0.08 percent to 4,765.78, while S&P 500 dropped 4.28 points or 0.21 percent to 2,048.04.


Crude oil futures made a weak closing on Monday, retreating from 7-month highs from late last week, as the dollar strengthened on talk of a rate hike from the Federal Reserve. Signs of a lingering supply glut also weighed on prices with Iran officials showing little signs of abandoning a long-term plan to boost exports. Iran's deputy oil minister sent clearer indications that the Persian Gulf nation will not budge on a current strategy of ramping up exports to pre-sanction levels from 2007. Also, key oil sands producers in Alberta are set to resume production as wildfires were coming under control. Benchmark crude oil futures for July delivery declined by $0.28 or 0.58 percent to $48.13 a barrel after trading in a range of $47.41 and $48.50 a barrel on the New York Mercantile Exchange. In London, Brent crude for July delivery closed at $48.36, down $0.36 or 0.78 percent on the ICE.


Indian rupee surrendered its early gains and ended weaker against dollar on Monday along with local equity markets. Besides, demand for dollar from banks and importers also hit the rupee sentiment. The domestic currency was strong from the very beginning but lost its momentum in the end. Rupee ended weaker for eighth straight session. Sentiment remained down-beat with RBI Governor Raghuram Rajan's statement that India should restrain itself from being ‘too ambitious' at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth. On the global front, euro was pressured in the wake of disappointing EZ flash PMI data that showed economic activity in the continent slowing in May. Finally, the rupee ended at 67.49, 4 paise weaker from its previous close at 67.45 on Friday.


The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity, the gross buying was of Rs 3051.64 crore against gross selling of Rs 3744.01 crore, while in the debt segment, the gross purchase was of Rs 645.31 crore with gross sales of Rs 1413.95 crore.            


The US markets made a flat close with a negative bias in last session. The trade remained mostly subdued amid trepidation about a possible June interest rate hike from the Federal Reserve. Traders were paying close attention to comments from Fed officials, lacking any major economic announcements. The Asian markets have made a weak start with most of the indices in the region snapping their two days gaining streak mulling the prospect of tighter US monetary policy as soon as next month. Japanese market has led the fall on rebound in the yen. The Indian markets once again witnessed a choppy trade in the last session and despite showing some signs of recovery ended with cut of about a quarter percent. Traders overlooked some good earnings amid global concerns. Today, the start is likely to remain soft on sluggish global setup. Traders will be concerned with SBI report stating that Credit growth in the country is unlikely to revive "materially" in near term as demand conditions are still acting as a laggard. The yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. The monthly index, however, jumped to 50.3 in May from 46.5 in April due to increase in commercial vehicle and consumer durables sales.  Meanwhile, industry leaders just ahead of the second anniversary of the government have said that building political consensus for the goods and services tax (GST) Bill and sustaining the momentum on the ease of doing business should be the government's focus in its third year in office. Markets can see some recovery in the latter trade owing to the F&O series expiry later in the week. Traders will be getting some support with India, Iran, and Afghanistan signing the strategic Chabahar port pact. There will be lots of important result announcements too, to keep the markets in action.


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  • ITC has posted a rise of 5.68% in its net profit at Rs 2495.2 crore for the quarter ended March 31, 2016 as compared to Rs 2361.18 crore for the same quarter in the previous year.
  • Tata Consultancy Services has released a new module for its Digital Software & Solutions Group's Customer Insights & Intelligence Solution for Retail Banks.
  • In a bid to expand its footprint, HDFC Bank is planning to open about 500 new branches in FY17.
  • Tata Motors is in talks with a local manufacturer in Iran to set up a joint venture for assembling its petrol cars in Tehran.
  • IndusInd Bank has recently signed a Corporate Agency agreement with Reliance General Insurance, with the objective to distribute multiple options of general insurance products to its customers.
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