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NSE Intra-day chart (24 May 2016)
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Market Commentary 25 May 2016
Markets to make a gap-up start on jubilant global cues


After registering losses for four consecutive sessions, Indian benchmark indices managed a modestly positive close on Tuesday, as investors accumulated quality stocks at attractive levels. Though, the session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band amid lack of triggers. Sentiments got some support after March-quarter earnings mostly meeting street's estimates despite a slowdown in global growth and tepid demand. Strength in European markets too aided sentiments. Some support came in with the report from private forecasting agency Skymet raising India's monsoon forecast to 109% of the long period average from 105% on the back of a waning El Nino. The agency also said that conditions are favourable for timely monsoon in Kerala. However, fears of an interest rate hike by the US Federal Reserve in June along with decline in crude oil prices and weakness in rupee capped the upside gains. Indian rupee slid for the ninth day as it depreciated 14 paise more to trade at over two and half month low of 67.63 against the dollar at the time of equity markets closing, hit by sustained foreign fund outflows.  Investors also remained 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. On the global front, Asian markets ended in red on Tuesday, while European shares rose, shrugging off losses at the start of trading. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained on sidelines ahead of the May F&O expiry due on Thursday. Finally, the BSE Sensex gained 75.11 points or 0.30% to 25305.47, while the CNX Nifty rose 17.80 points or 0.23% to 7,748.85.


The US markets closed higher on Tuesday, as rally in financial and technology shares pushed indices up. Tuesday's rally comes on the heels of hawkish minutes from the Federal Reserve's latest policy meeting and comments from several officials that rate increases may come as soon as next month. According to the CME Group's FedWatch tool, Wall Street is pricing in a 38% chance of a June hike and a 58% chance of a July move. On the economy front, sales of new homes surged in April, a sign that builders are stepping up as demand for housing remains robust. Sales soared 16.6% to a seasonally adjusted annual rate of 619,000, the Commerce Department said Tuesday. That was the biggest monthly jump in 24 years and trounced estimates of a 525,000 pace. The median price also jumped, rising 9.7% from 12 months ago to $321,100. The big increase in sales took supply sharply lower. The Dow Jones Industrial Average added 213.12 points or 1.22 percent to 17,706.05, Nasdaq was up by 95.28 points or 2.00 percent to 4,861.06, while S&P 500 gained 28.02 points or 1.37 percent to 2,076.06.


Crude oil futures moved higher on Tuesday, nearing their six months high amid expectations of a build in US weekly oil inventories. Traders also got some support with as Iraq's OPEC governor expressing concerns regarding the nation's slowing output, helping ease supply levels from near-record highs. Iraq OPEC governor Falah Alamri indicated that production nationwide is hovering around 4.5 million barrels per day, amid slowing output due primarily to poor weather, maintenance issues and numerous power outages. Benchmark crude oil futures for July delivery gained $0.57 or 1.19 percent to $48.65 a barrel after trading in a range of $47.64 and $48.93 a barrel on the New York Mercantile Exchange. In London, Brent crude for July delivery closed at $48.62, up $0.27 or 0.56 percent on the ICE.


Extending the fall for the ninth day in a row, rupee fell sharply on Tuesday on account of sustained foreign fund outflows. Foreign institutional investors (FIIs) continued to liquidate their investment in debt markets and weighed on the rupee heavily. FIIs have been net sellers collectively in last nine days of trade, leading the domestic currency to weaken to over two and half month low. Rupee remained in somber mood from the beginning, pressured by the dollar requirement from oil companies to meet their month end demand and the choppiness in the local equity markets, though the equity markets recovered in the late trade but rupee continued its weak run for yet another day. On the global front, the dollar rose to two-month highs against the other major currencies, as expectations for a June rate hike continued to boost demand. Finally, the rupee ended at 67.76, 27 paise weaker from its previous close at 67.49 on Monday.


The FIIs as per Tuesday's data were net sellers in equity and debt segments both. In equity, the gross buying was of Rs 3095.24 crore against gross selling of Rs 3131.20 crore, while in the debt segment, the gross purchase was of Rs 258.42 crore with gross sales of Rs 949.01 crore.            


The US markets witnessed a sharp surge in last session offsetting the modest losses seen in the previous one. The gains were partly supported by bargain hunting and partly by the release of a Commerce Department report showing a sharp jump in new home sales in the month of April. The Asian markets have made a strong start with many of the indices in the region gaining over a percent in early deals, rebounding from a seven-week low on supportive US cues. Rise in crude and industrial metals have supported the markets in the region. The Indian markets regaining momentum in the second half managed a modestly positive close in last session. Though, the trade remained choppy but traders were seen lapping up fundamentally strong stocks at attractive valuations. Today, the start of the penultimate day of the F&O series expiry is likely to be good on strong global cues. Traders will also be getting some encouragement with Australian Met Department's report that the weather system that wreaked havoc in India, Asia and Africa has just ended and will now give way to bountiful rain in the form of La Nina. There will be some buzz in the market and especially the banks as the government has approved the revision in guidelines of the Performance in Credit Rating Scheme, aiming to increase its credibility and effectiveness for both borrowers and banks. The infra sector stocks too will keep buzzing with the government announcing the names of 13 more cities that will be developed under the Centre's "Smart City Mission." Each city will receive Central assistance of Rs. 200 crore in the first year and Rs. 100. crore over the three subsequent financial years. State governments and respective urban local bodies will also match the Centre's contribution. There will be lots of earnings announcements too, to keep the markets in action.


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  • Larsen and Toubro's IT services unit L&T Infotech has received capital markets regulator SEBI's approval for its proposed initial public offering.
  • Coal India's exploration and consultancy arm Central Mines Planning & Design Institute has bagged order worth Rs 52 crore.
  • Cipla has got regulatory approval in India from Drug Controller General of India to sell its Truvada drug as a preventive that can be given to healthy people to reduce their risk of getting HIV.
  • Mahindra & Mahindra has incorporated a company 'Trringo.com' in India, on May 23, 2016 as its subsidiary company.
  • Tata Power has posted over 2 fold jump on the consolidated basis, in its net profit at Rs 360.25 crore for the quarter ended March 31, 2016 as compared to Rs 159.14 crore for the corresponding quarter in the FY15.
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