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NSE Intra-day chart (24 October 2016)
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Market Commentary 25 October 2016
Markets to make a cautious start on mixed global cues


Indian equity bourses commenced the fresh week on a positive note as gains in select financials helped offset losses in IT majors, amid firm European cues. Sentiments remained up-beat for the markets 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 also said that India is the fastest growing major economy and one of the most attractive destinations for FDI. Investors also got some confidence with the Union Minister Arjun Ram Meghwal's statement that country's economy will grow 8 percent this fiscal, while agricultural growth is expected to be over 4 percent. However, gains remained capped with the report that Private equity investments declined 53 percent to touch $2.5 billion during July-September this year, lowest in the last nine quarters, largely owing to absence of big ticket deals. According to the report, there were 241 PE transactions worth $2,538 million in the September quarter this year, while there were 303 deals worth $5,446 million in the corresponding period last year. Meanwhile, Aviation stocks came under pressure after the report that DGCA and BCAS are all set to get powers to impose fines on violators, with the government preparing to amend the legislation in this regard. Currently, there is no provision for levying penalties. Further, telecom majors like Bharti Airtel slipped after the report that India's telecoms regulator recommended the top three network operators be fined a combined Rs 30.5 billion ($455 million), saying they were denying new entrant Reliance Jio sufficient interconnection points. Airtel and Vodafone India were fined for 21 zones each, while Idea was fined for 19 zones. On the global front, Asian markets ended higher on Monday, while the European markets started the week in a buoyant mood. Back home, the major indices failed to capitalize on the initial momentum and see-sawed around the neutral line in a very tight band throughout morning trade as investors remained sideways in the absence of any significant trigger at domestic front, however hefty buying at several counters got triggered after strong opening of European markets. Finally, the BSE Sensex gained 101.90 points or 0.36% to 28179.08, while the CNX Nifty rose 15.90 points or 0.18% to 8,708.95. 


The US markets closed higher on Monday, as gains in the Technology, Consumer Services and Consumer Goods sectors led shares higher. St. Louis Fed President James Bullard stated that the Federal Reserve only needs to nudge up interest rates even though it is very close to its targets of full employment and stable inflation at an annual rate of 2%. The St. Louis Fed believes that a single 25-basis-point increase in the policy rate - from 38 to 63 basis points - is necessary. On the economy front, a measure of national economic activity improved in September but its less-volatile, three-month average weakened, according to the Chicago Federal Reserve - one sign that US inflation could be contained over the coming year. The Chicago Fed National Activity Index rose to negative 0.14 in September from negative 0.72 in August as factory production, employment, housing and consumer spending, as well as the business orders that make up the index improved from a particularly weak August. The September reading still shows US economic growth running below its potential. The Dow Jones Industrial Average added 77.32 points or 0.43 percent to 18,223.035, Nasdaq gained 52.43 points or 1.00 percent to 5,309.83, while S&P 500 was up 10.17 points or 0.47 percent to 2,151.33. 


Crude oil futures turned lower on Monday after the dollar strengthened to its highest in eight months on speculation the Federal Reserve will soon raise interest rates. Also Iraq said that it will not join OPEC quotas as it looks to make up for years of supply interruptions brought on by war. Benchmark crude oil futures for December delivery dropped $0.33 to close at $50.52 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $0.18 to $51.60 a barrel on the ICE.


Indian rupee ended marginally stronger against the US dollar on Monday on fresh selling of American currency by banks and exporters. Local currency got 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 adding that indeed, they stand out as a bright spot in the global economy. Further, gains in the domestic equity market too supported the rupee. However, dollar strengthened against basket of currencies, buoyed by expectations that the US Federal Reserve will raise interest rates this year and by a receding chance of Donald Trump becoming US president capped the rupee's gains. On the global front, Euro rebounds from 7-month low against dollar after fresh data showed economic growth in the currency union is the strongest it's been all year, spurring chatter the European Central Bank could taper its easing program. Finally, the rupee ended at 66.84, 4 paise stronger from its previous close of 66.88 on Friday.


The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3513.20 crore against gross selling of Rs 3735.14 crore, while in the debt segment, the gross purchase was of Rs 594.25 crore with gross sales of Rs 381.74 crore. 


The US markets ended higher in last session, adding to gains of previous week. Traders digested latest batch of quarterly results and took encouragement with flurry of activity on the merger-and-acquisition front. The Asian markets have made a mixed start, with some indices moving higher on advancement in industrial metals and reports showing manufacturing is picking up in the US and the euro area. The Indian markets despite coming off their day's high managed a positive close in last session; the major averages were up by around a quarter percent. Today, the start is likely to be cautious and the markets will be eyeing the development in the Tata group stocks after promoters Tata Sons in a surprise decision made Chairman Cyrus Mistry to step down from his post. Tata's announced that Mistry was stepping down as Chairman and Ratan Tata had returned to take over the role in the interim. A three-member panel comprising Venu Srinivasan, Amit Chandra and Ronen Sen has been entrusted with the task of finding a new Chairman within four months. Meanwhile, after the former Finance Minister P. Chidambaram said that too many GST rates would be disastrous, NITI Aayog Vice-Chairman Arvind Panagariya has defended the Centre's proposal for four-tier rate structure and a cess under the Goods and Services Tax and said that said these would ensure less inflationary implications and lower tax rates for consumers as well as revenue predictability for the exchequer. There will be some buzz in the PSU and banking stocks as the finance ministry has asked PSUs such as NTPC, Steel Authority of India (SAIL) and Cochin Shipyard to explore taking over some stressed projects in their respective sectors as current promoters are lax or unable to repay debt. There will be lots of earnings reaction with many important companies slated to announce their numbers.


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  • Power Grid has received its board's approval for investment proposals worth Rs 1,184.45 crore for power transmission related projects.
  • Reliance Industries has marked its entry into cooking gas retailing, launching a 4-kg LPG cylinder in 4 districts on pilot basis.
  • Sun Pharmaceutical Industries has significant investment plans for its facility in Madhya Pradesh including setting up of a new research facility in Madhya Pradesh.
  • Tata Motors is lining up a slew of new products, including a compact SUV, premium hatchback and an executive sedan.
  • NTPC shall set up Solar Power projects of 50 MW capacity with Battery Energy Storage System at different locations in Port Blair in Andaman & Nicobar Islands as part of its Green Commitment to Government of India.
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