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NSE Intra-day chart (25 October 2016)
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Market Commentary 26 October 2016
Weak start on cards tailing subdued global cues


Indian stock markets finished the session on a dull note, modestly below the neutral line as investors at large remained reluctant to build on long positions amid weak global cues, as oil prices dipped and after Chicago Fed President Charles Evans said that the Fed could raise short-term interest rates by three quarter-point by the end of 2017.  The session largely remained characterized by choppiness as the aimless indices moved only slowly creeping towards the previous closing levels after the early decline. Sentiments remained subdued with the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 325.13 crore on October 24, 2016. Depreciation in Indian rupee too weighed down sentiments. However, investors got some encouragement with the report that Performance of States in improving the overall infrastructure for facilitating business has gone up, with a majority of them scoring over 80% in the World Bank-Department of Industrial Policy & Promotion ranking of States. The 'Make in India' programme of the government has spurred strong competition among Indian states in improving the ease of doing business in order to attract investments and drive the economies of their regions.  As many as 16 States have scored over 80% in the World Bank- DIPP ranking of States based on 340 parameters on ‘Ease of Doing Business'. Meanwhile, shares of Tata Group companies came under pressure after the board of Tata Sons announced the sudden removal of chairman Cyrus Mistry. In a dramatic development, Mistry was removed as Chairman of India's largest conglomerate Tata Group and replaced by his predecessor Ratan Tata in the interim. On the other hand, banking stocks rose on the report that there is room for a 50 basis point (bps) rate cut by the Reserve Bank of India (RBI) over the next few months with 25 bps each likely in February and April 2017. Finally, the BSE Sensex declined by 87.66 points or 0.31% to 28091.42, while the CNX Nifty dropped 17.65 points or 0.20% to 8,691.30.


The US markets closed lower on Tuesday, giving back some of the previous day's advance as worries about a lackluster spate of earnings and a slip in a reading of consumer confidence weighed on market sentiment. A drop in the price of oil below $50 a barrel, lingering uncertainty about the US presidential election and growing expectations of a rate increase by the Federal Reserve, also contributed to the downbeat mood. William Dudley, president of the Federal Reserve Bank of New York stated that regulators need a clearer view of the trading that takes place in the US Treasury market, the world's deepest, in order to better understand looming risks and the sources of abrupt changes in prices. On the economy front, the confidence of Americans in the US economy fell in October to a three-month low just ahead of the presidential election, with more consumers saying that jobs are a bit harder to find. Consumer confidence drooped to 98.6 this month from 103.5 in September, a number that was revised lower. The Dow Jones Industrial Average lost 53.76 points or 0.30 percent to 18,169.27, Nasdaq dropped 26.43 points or 0.50 percent to 5,283.40, while S&P 500 was down 8.17 points or 0.38 percent to 2,143.16. 


Crude oil futures declined further on Tuesday, with Nymex crude once again slipping below the $50 a barrel mark, ahead of closely-watched US oil inventories data. Traders were also concerned with report that Iraq now says it wants to keep pumping oil at a furious pace to make up for market share lost during recent wars there. Iraq is the second biggest producer in OPEC after Saudi Arabia. The country pumped 4.78 million barrels last month, according to its own reporting. Benchmark crude oil futures for December delivery dropped $0.56 or 1.1 percent to close at $49.96 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $0.39 or 0.76 percent to $51.07 a barrel on the ICE.


Indian rupee ended marginally stronger against the US dollar on Tuesday on fresh selling of American currency by banks and exporters. Domestic currency got some support with NITI Aayog Vice-Chairman Arvind Panagariya's statement where he defended the Centre's proposal for four-tier rate structure and a cess under the Goods and Services Tax stating that said would ensure less inflationary implications and lower tax rates for consumers as well as revenue predictability for the exchequer. However, losses in the local equity market capped the rupee gains. On the global front, dollar hovered near a nine-month high against a basket of major currencies and touched a one-week high against yen on Monday on growing expectations of a Federal Reserve interest rate increase in December. Finally, the rupee ended at 66.82, 2 paise stronger from its previous close of 66.84 on Monday.


The FIIs as per Tuesday'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 2951.05 crore against gross selling of Rs 3342.96 crore, while in the debt segment, the gross purchase was of Rs 1709.37 crore with gross sales of Rs 945.55 crore. 


The US markets ended lower in last session as traders reacted to the latest batch of earnings news, with a number of big-name companies releasing their quarterly results. The Asian markets have made a weak start and some of the indices in the region are down by over half a percent in early deals tailing weakness in US markets, as oil prices slumped and Apple Inc.'s results disappointed. Also, the BoE Governor Mark Carney dashed stimulus hopes. The Indian markets ended modestly in red in last session, the weakness in some Tata group stocks after the latest development weighed on the sentiments. Today, the start of the penultimate day of the F&O October series expiry is likely to be a bit soft and traders will be reacting to some disappointing earnings amid subdued global cues. Axis Bank's quarterly net profit plunged 83 percent in the September quarter; IDBI Bank reported a 53 percent decline in quarterly net profit, while Telecom major Bharti Airtel's Q2 profit slipped 5 percent from a year earlier. Traders will also be concerned with report that despite many efforts India moved up only one position in the International Finance Corporation's (IFC) ease of doing business rankings. Though, the government which is keen to increase attractiveness as an investment destination has said that the string of reform initiatives undertaken by it in the last one year had not been factored in by the World Bank arm. However, there will be some solace for the India Inc as the finance ministry is said to be examining the possibility of cutting corporate tax rate by one to two percentage points in the February budget. Also, the Economic Affairs Secretary Shaktikanta Das has said that the GDP growth will be around 8 percent this fiscal while the agriculture sector is expected to grow over 4 percent. There will be lots of important earnings announcements too to keep the markets in action.


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  • Idea Cellular has reported net loss of Rs 42.79 crore for the quarter as ended September 30, 2016 compared to a net profit of Rs 739.59 crore for the same quarter in the previous year.
  • Power Grid has received its board's approval for investment proposals worth Rs 409.19 crore for power transmission related projects.
  • Dr Reddys Laboratories has reported 54.12% fall in its net profit at Rs 313.20 crore for the quarter under review as compared to Rs 682.60 crore for the same quarter in the previous year.
  • HDFC Bank has reported 20.42% rise in its net profit at Rs 3455.33 crore for the quarter under review as compared to Rs 2869.45 crore for the same quarter in the previous year.
  • Kotak Mahindra Bank has reported 42.81% rise in its net profit at Rs 813.29 crore for the quarter under review as compared to Rs 569.50 crore for the same quarter in the previous year.
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