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NSE Intra-day chart (21 October 2016)
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Market Commentary 24 October 2016
Markets to make a cautious but positive start


After ginning some strength in last session, Indian stock markets once again turned lower and finished the Friday's session on a dull note, marginally below the neutral line as investors at large remained reluctant to build on long positions amid weak trade in regional markets. The session largely remained characterized by choppiness as the aimless indices moved only slowly towards the previous closing levels after the early decline. Sentiments were undermined by the SBI's report indicating that manufacturing growth is likely to remain flat and factory output may even continue to remain in the negative territory in the coming months. The yearly SBI Composite Index for October remained stationary at 50.2, compared to September. The monthly index declined marginally to 52.1 in October from 52.6 in September. The report also noted that credit off-take on a year-on-year basis continues to be a laggard and stood at 10.4 per cent in September 30, 2016. Investors also remained cautious with the Moody's report that there has been a large-scale decline in private investment in PPP projects in recent years because of delays in project approvals and land purchases by the government, complicated dispute resolution mechanisms in the concession agreements and lower than expected revenues due to aggressive assumptions. There were mostly stock specific activities based on earnings. Biocon hit a fresh record high of Rs 1020, after the company posted robust 52% year on year (YoY) jump in consolidated net profit at Rs 147 crore for the quarter ended September 30, 2016, led by the company's biologics, small molecules businesses and Syngene.  Also, HCL Technologies rallied after the company maintained constant currency guidance at 12-14% for FY17. On the flip side, ACC came under pressure after posting 29% fall in consolidated net profit at Rs 82 crore for the quarter ended September 30, 2016. The company's Sales turnover during the quarter under review declined 9.7% to Rs 2473 crore against Rs 2,740 crore in the corresponding quarter of previous year. Finally, the BSE Sensex declined by 52.66 points or 0.19% to 28077.18, while the CNX Nifty dropped 6.35 points or 0.07% to 8,693.05.


US markets ended the lackluster trade mixed on Friday, as traders focused on the latest batch of earnings news and a rally in crude oil futures. The tech-heavy Nasdaq got some benefit from a strong gain by Microsoft (MSFT), with the software giant jumping by 4.3 percent. With the gain, Microsoft reached a record closing high. The advance by shares of Microsoft came after the company's first quarter adjusted earnings per share and revenues exceeded forecasts, helped by a strong performance by its Cloud business. Shares of McDonald's (MCD) moved to the upside after the fast food giant reported third quarter earnings and sales that beat analyst estimates. Global same-store sales rose 3.5 percent during the quarter. Meanwhile, General Electric (GE) closed modestly lower after the conglomerate reported third quarter earnings that beat estimates but on lower than expected revenues. GE also lowered its full-year revenue growth forecast. The Dow Jones Industrial Average lost 16.64 points or 0.09 percent to 18,145.71 and S&P 500 was down by 0.18 points or 0.01 percent to 2,141.16, however Nasdaq was up by 15.57 points or 0.30 percent to 2,141.34. 


Crude oil futures ended higher on Friday, despite the data showing the U.S. rig counts continue to rise. Baker Hughes showed the number of active U.S. oil rigs rose by 11 this week to 443, the 17th week without a decline in the rig count. Natural gas rigs rose by 3 to 109, while miscellaneous rigs were flat at 2. Prices moved higher as bullish comments from Russia contended with a resurgent dollar and a rising oil rig count. Russian Energy Minister Alexander Novak said that an oil production freeze deal was necessary to support prices and that he would make proposals to his Saudi Arabian counterpart this weekend. The Organization of the Petroleum Exporting Countries is set to hold a meeting on November 30 to further discuss the details of a global output freeze. Benchmark crude oil futures for December delivery was up $0.22 or 0.2 percent to $50.85 on the New York Mercantile Exchange. In London, Brent crude for December delivery ended at $51.80, higher by $0.42 or 0.2 percent on the ICE.


Indian rupee weakened for the second consecutive session to hit a one-week low against the US dollar on Friday due to fresh demand for the American currency from banks and importers. Some cautiousness prevailed as US Trade Representative Michael Froman underlining the need to improve the business environment in India in order to ensure greater investment inflow, has said that certain areas in the Indian economy like retail and financial services needed further opening up. Also, weak domestic equity market as well as fall in Asian currencies too weighed on the rupee sentiments. On the global front, euro hit its lowest against the dollar since March after the European Central Bank (ECB) left its ultra-loose policy unchanged on Thursday but kept the door open to more stimulus in December. Finally, the rupee ended at 66.88, 7 paise weaker from its previous close of 66.81 on Thursday.


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 3121.81 crore against gross sell of Rs 2780.64 crore, while, in the debt segment, the gross purchase was of Rs 2235.64 crore with gross sales of Rs 1270.18 crore.  


The US markets despite recovery ended flat with a negative bias, though the tech heavy Nasdaq ended higher and all the three indices snapped the weekly declining streak, amid mixed corporate earnings. The Asian markets have made mostly a positive start, though the gains are muted as investors weighed prospects for a US interest-rate increase, and as a report showed China's capital outflows are picking up. The Indian markets were in consolidation mood and ended marginally lower in the last session, today, the Diwali and the F&O expiry week is likely to get a mildly positive start though the trade is likely to remain choppy. Traders will get some support with Prime Minister Narendra Modi's statement that the Goods and Services Tax law will boost domestic demand, create more opportunities for domestic business and drive job creation. He said that India is the fastest growing major economy, and one of the most attractive destinations for FDI. There will be some buzz in the banking sector stocks, as the Finance Ministry has called a meeting with senior managers of banks to discuss the bad loans problem existing in specific sectors. The agenda of meeting will be focussed on non-performing assets (NPAs) in sectors like steel, power and infrastructure, so these sectors too will be in action. Meanwhile, industry body Assocham has said that it had earlier cautioned for card frauds, after the unprecedented security breach reported earlier this week. There will be some buzz in the aviation sector too, as the Directorate General of Civil Aviation (DGCA) and the Bureau of Civil Aviation Security (BCAS) all set to get powers to impose fines on violators. While in other development, carriers from the gulf region have shown interest in launching regional airlines to implement the regional connectivity scheme. There will be lots of earnings announcements too keep the markets in action.



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  • ACC has reported 28.14% fall in its net profit at Rs 84.10 crore for the quarter ended September 30, 2016.
  • Wipro has reported 10.26% fall in its net profit at Rs 1932.10 crore for the quarter ended September 30, 2016.  
  • Sun Pharmaceutical Industries has completed the divestment of its seven prescription brands in India to RPG Life Sciences.
  • HCL Technologies is aggressively looking at acquisition opportunities in areas like engineering and R&D services



News Analysis