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NSE Intra-day chart (23 August 2016)
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Market Commentary 24 August 2016
Markets to start on a cautious note on mixed global cues

After trading on a feeble note for most part of the session, Indian benchmark indices managed to negotiate a close in the green terrain, breaking the two session downtrend, as market participants showed renewed buying interests in information technology and Banking counters. Investors remained highly apprehensive in early part of trade amid weak Asian cues and fading hopes of rate cut after nomination of Urjit Patel as news RBI Governor, who is known for his hawkish view on inflation.   Sentiment also remained edgy ahead of the expiry of the derivative contracts on Thursday and ahead of a widely anticipated speech by the Fed chief at the central bank's annual meeting in Jackson Hole scheduled on August 26. However, there appeared some tentative recovery in investors' sentiments in afternoon trades as the key indices tracked European equity markets which swiftly recuperated and surged after data that pointed to a gradual improvement in the region's economy. The Euro area composite output index combining both manufacturing and service sectors rose unexpectedly to a seven-month high of 53.3 in August from 53.2 in July. On the domestic front, sentiments got some support with President Pranab Mukherjee's statement that Indian economy has revived and is poised to achieve a growth rate of 7.5 per cent in the next two years. Also, the NCAER's business confidence index (BCI) registered a sequential increase of 2.2 per cent in June quarter of 2016-17, mainly driven by improvement in perception about economic conditions and financial position of firms in the next six months. On the global front, Asian markets ended the session on mixed note, while European equities edged higher in early trade. Back home, the local benchmarks commenced the session on a cautious note tracking global cues with the Asian markets exhibiting mixed trend ahead of a widely anticipated speech by the Fed chief at the central bank's annual meeting in Jackson Hole scheduled on Friday. During the final hour of the trade, the key gauges managed to gain some more traction and bounced into the positive terrain by the end of trade. Finally, the BSE Sensex gained 4.67 points or 0.02% to 27990.21, while the CNX Nifty rose by 3.45 points or 0.04% to 8,632.60.

The US markets despite paring some gains managed to end higher on Tuesday; traders were though concerned about the possibility of a near-term interest rate hike, but rejoiced the Commerce Department report showing an unexpected jump in new home sales in the month of July. New home sales jumped 12.4 percent to an annual rate of 654,000 in July from the revised June rate of 582,000. With the unexpected increase, new home sales reached their highest annual rate since October of 2007. Reflecting the strength in the sector, the Philadelphia Housing Sector Index shot up by 1.8 percent. The Dow Jones Industrial Average inched up by 17.88 points or 0.10 percent to 18,547.30, the Nasdaq gained 15.47 points or 0.30 percent to 5,260.08 and the S&P 500 was up by 4.26 points or 0.20 percent to 2,186.90.

Crude oil futures resumed their rally on Tuesday despite ratings agency warnings that the recent rally will run out of steam and Goldman Sachs keeping its $45-50/barrel outlook through mid-2017. Though, the hopes were dim for an agreement of an output freeze at an informal OPEC meeting next month but Iran was sending positive signals that it may support joint OPEC action to prop up the market.  If OPEC and some other producers agree to cap output at informal talks next month, the resulting price boost may help other suppliers revive output.Crude pared some gains on trade data showing a surprise build in US crude stocks. Benchmark crude oil futures for October delivery ended up by $0.69 or 1.5 percent to close at $48.10 a barrel after trading in a range of $47.69 and $48.20 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery gained $0.80 or 1.6 percent to $49.96 a barrel on the ICE.

Snapping three days losing streak, Indian rupee appreciated against dollar on Tuesday due to increased selling of American currency by exporters and banks. Besides, dollar weakness against other major currencies too supported the domestic currency. Sentiments also got some support with President Pranab Mukherjee's statement that Indian economy has revived and is poised to achieve a growth rate of 7.5 per cent in the next two years. However, investors remained cautious ahead of a widely anticipated speech by the Fed chief at the central bank's annual meeting in Jackson Hole scheduled on August 26. On the global front, yen turned stronger against dollar, as investors shifted their focus away from hawkish remarks on US interest rates by Federal Reserve officials. Finally the rupee ended at 67.06, stronger by 12 paise from its previous close of 67.18 on Monday.

The FIIs as per Tuesday's data were net sellers in equity segment and debt segment both. In equity segment, the gross buying was of Rs 3511.71 crore against gross sell of Rs 3624.83 crore, while in the debt segment, the gross purchase was of Rs 659.58 crore with gross sales of Rs 1873.41 crore.

The US markets closed in green in last session after the Commerce Department reported an unexpected jump in new home sales in the month of July. The Asian markets have made a cautious start, with some indices trading marginally in green, though energy shares were under pressure in the region after the oil retreated. The Indian markets despite a volatile trade managed a positive close in last session. Today on the penultimate session of F&O series expiry, the start is likely to be cautious but in green taking cues from the global markets. Traders will be getting some encouragement with rating agency Ind-Ra revising India's economic growth forecast to 7.8 percent for the ongoing fiscal on better monsoon. It has said the positive impact of monsoon on agriculture will support the overall GDP growth with its backward and forward linkages. Meanwhile, Prime Minister Narendra Modi has said that India's progress is incomplete without rapid expansion and upgradation of basic infrastructure. The Prime Minister underlined that the India story is also about resilience. "When the world economy is weakening and slowing down, India is a ray of hope." Also there are reports that India is renegotiating over a two-decade old tax treaty with Singapore and the revised protocol will take into account the concerns of both. There will be some buzz in coal and power stocks, as the Indian Railways has notified 8-14 per cent increase in freight rates for coal moved between 100 km and 700 km. However, for more than 700 km, freight rates have been cut by up to 13 per cent. It would also levy coal terminal surcharge at Rs 55 a tonne for loading and unloading for distances beyond 100 km. The IT sector stocks too will be in action with reports that despite a hefty hike in fees of US H-1B and L-1 visas, there has been no drop in number of applications from India and the country continues to be the highest recipient of H-1B visas. Indian citizens receive almost 70 percent of all the H-1B visas issued worldwide.

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  • NTPC has raised Rs 800 crore through private placement of secured non-convertible debentures at a coupon of 7.58% p.a. with a door to door maturity of 10 years.
  • Tata Power has registered 55.98% fall in its net profit at Rs 146.91 crore for the quarter as compared to Rs 333.77 crore for the same quarter in the previous year.
  • Bharti Airtel has rolled out Aadhaar-based digital verification process in Delhi for instant activation of new Airtel mobile connections.
  • PT Tata Motors Distribusi Indonesia, a Tata Motors' unit, has launched two new-generation commercial vehicles in Indonesia - Tata ULTRA 1012 light truck and Tata Xenon XT D-Cab 4x4 pick-up - at the GIIAS 2016.
  • In order to develop natural gas-based fuel cell power generation, State-run GAIL India has signed a memorandum of understanding with California-based Bloom Energy.

News Analysis