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NSE Intra-day chart (25 January 2016)
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Market Commentary 27 January 2016
Markets to get a cautious start after a day of break

Extending their winning streak for second day in a row, Indian equity benchmarks ended the session with a gain of around two tens a percent on Monday. Sentiments got some support with United Nations world economy report, which indicates that India will be the world's fastest growing large economy at 7.3 percent in 2016, improving further to 7.5 percent in the following year. Some support also came with the report that India's index of industrial production (IIP) is likely to grow 4-5 per cent in December 2015. The government's efforts to de-bottleneck investment coupled with early signs of pick-up in urban demand would support production. However, gains remained capped by profit bookings and caution over the upcoming rate setting meeting of the FOMC (Federal Open Market Committee) scheduled for January 27-28. FOMC assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India. Investors also remained cautious with global rating agency Moody's statement that that India's economic exposure to external risks has gone up during the past seven months. Market participants are increasingly concerned about the potential spillover on India's growth story of external risks such as interest rate tightening in the US and China's ongoing slowdown. Meanwhile, volatility ahead of expiry of January derivative contracts has also kept investors on the sidelines. On the global front, Asian stocks rallied again Monday as investors bet on central bank stimulus measures to support markets after the bloodbath at the start of the year, however, European markets traded with mild losses in early deals. Back home, the benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors and drifting European markets weighed down the local bourses by the end of session. However, hefty short covering in the late hours helped the indices to end the session on positive note. Finally, the BSE Sensex gained 50.29 points or 0.21% to 24485.95, while the CNX Nifty ended up by 13.70 points or 0.18% to 7,436.15.


The US markets closed higher on Tuesday, as energy stocks soared amid a rebound in oil prices. Oil futures erased early losses and jumped 3.7% to settle above $31 a barrel. On the economy front, turmoil on Wall Street isn't bothering consumers, as confidence in January rose. The consumer confidence rose to 98.1 from a reading of 96.3 in December. A similar gauge, the University of Michigan's consumer sentiment index, also rose in January. US home-price gains picked up again in November, with several metro areas notching double-digit annual percentage increases. The S&P/Case-Shiller 20-City Composite Index rose 0.1% in the three months ending in November, for a 5.8% yearly increase. That was up from a 5.5% yearly gain in the period ending in October, and marked the strongest reading since July 2014. The Dow Jones Industrial Average added 282.01 points or 1.78 percent to 16,167.23, the Nasdaq was up 49.18 points or 1.09 percent to 4,567.67 while the S&P 500 gained 26.55 points or 1.41 percent to 1,903.63. 


Crude oil futures surged on Tuesday amid signs that OPEC will cooperate on curbing production. OPEC renewed calls for rival producers to cut supply alongside its members. OPEC's Gulf members have insisted OPEC will not cut production alone, which would cede market share to rivals. However, worries about world's second largest oil consumer, China's economy limited crude's gains.  Benchmark crude oil futures for March delivery gained $1.11 or 3.7 percent to $ $31.45 a barrel after trading in a range of $30.02 and $ 32.41a barrel on the New York Mercantile Exchange. In London, Brent crude for March delivery closed at $31.80, up $1.30 or 4.26 percent on the ICE.


Indian rupee ended weaker against dollar on Monday due to heavy demand from banks and importers for American currency amid a flat close at the domestic equity market. The rupee further plummeted against the dollar as investors turned cautious ahead of the 2-days US Fed Reserve meeting which will start from January 26. The sentiments were under pressure after Moody's poll stated that the greatest challenge facing the Indian economy is exposure to external shocks such as interest rate hike in the US and slowdown in China and the risk has risen since last year. On the global front, dollar edged down against a basket of currencies on as renewed selling on oil markets drove investors into their current safe havens of choice, the euro and yen, while weakening the currencies of major crude exporters. Finally, the rupee ended at 67.83, 20 paise weaker from its previous close of 67.63 on Friday.


The FIIs as per Monday's data were net sellers in equity and in debt segments both. In equity segment, the gross buying was of Rs 3930.43 crore against gross selling of Rs 4663.85 crore, while in the debt segment, the gross purchase was of Rs 1176.09 crore with gross sales of Rs 1783.12 crore.     


The US markets ended up in last session, the pullback after previous session's big losses took the markets considerably higher in reaction to a significant rebound by the price of crude oil and on some good earnings report. The Asian markets are mostly in green, erasing Tuesday's drop. The Japanese market has taken the lead, surging by over two percent, on the other hand the Chinese market slid after a report showed industrial profits dropped last month.   The Indian markets in a volatile last session of trade managed flat but positive close. Today, the start of the penultimate day of F&O series expiry is likely to be cautious and the decline that it escaped due to Republic Day holiday, what other regional markets went through, is likely to be seen in early deals; however volatility can be seen through the day based on result reactions. Traders will also be concerned with the SBI Composite Index falling below the 50 mark to 47.3 in January. Manufacturing activity in the country dipped to a one-year low, suggesting moderation in growth. Also, the World Bank has warned that slowing emerging-market economies were hampering an oil recovery, and prices could sink further in a blow to a “fragile” global economy. However, there will be some support with Standard & Poor's Rating Services stating that Indian economy is less vulnerable to external shocks as it is mainly driven by household consumption and government spending, and not dependent on hot money which can move out quickly. There will be some buzz in power sector stocks on report that Coal India's supply to the power sector increased by 6.8 percent to 299.10 million tonnes in the first 9 months of the current fiscal.


Support and Resistance: NSE Nifty and BSE Sensex



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  • HDFC Bank has reported a rise of 20.12% in its net profit at Rs 3356.84 crore for third quarter ended December 31, 2015, as compared to Rs 2794.51 crore for the same quarter in the previous year. 
  • Bank of Baroda, one of the leading public sector lenders, has opened its new branch in Kanyakumari District of Tamil Nadu.
  • Cairn India has reported a net loss of Rs 9.85 crore for the third quarter ended December 31, 2015 as compared to a net profit of Rs 555.34 crore for the same quarter in the previous year.
  • Cipla has completed the transfer formalities in relation to the divestment of its entire 25% stake held in Biomab Holding, Hong Kong.
  • ITC has reported 0.68% rise in its net profit at Rs 2652.82 crore for the quarter ended December 31, 2015.
News Analysis