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NSE Intra-day chart (26 May 2016)
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Market Commentary 27 May 2016
Markets to start the new series on a positive note


The local equity markets rallied for the third day in a row on Thursday, as participants indulged in buying valuable stocks at attractive valuations. Sentiment got a boost after Prime Minister Narendra Modi said that he expects the long-pending GST bill to get the parliamentary nod this year while efforts to amend another contentious legislation on land acquisition are 'over now'. Improving earnings have raised optimism at a time when investors are betting monsoon rains will be stronger than average, boosting the outlook for rural demand. Private weather forecaster Skymet said that monsoon rains are expected to be 109 per cent above the long-term average, compared with its earlier estimate of 105 per cent. Appreciation in the rupee against dollar too supported market sentiment. Indian rupee was trading stronger by 14 paise at 67.19 at the time of equity markets closing, on increased dollar selling by banks and exporters and due to capital inflows into the domestic equity market. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 652.35 crore on May 25, 2016. On the global front, Asian equity markets ended mostly in green on Thursday as gains in oil prices and positive cues from overseas markets outweighed concerns about a slowdown in Chinese growth and prospects of higher interest rates in the US. European counterparts too are traded in green in the early trade. Back home, traders rejoiced with the report that the new bankruptcy law is credit positive for Indian banks as it increases their bargaining power in distressed asset resolutions. The current weak legal framework for asset resolution has been a key structural credit weakness for Indian banks. The new law entails greater efforts by corporate borrowers to avoid default and thereby a possible insolvency resolution process, as such a procedure would cause management to lose control over the company immediately. Finally, the BSE Sensex surged 485.51 points or 1.88% to 26366.68, while the CNX Nifty rose 134.75 points or 1.7% to 8,069.65.


The US markets closed mostly lower on Thursday, as crude-oil futures failed to hang on to a move above $50 a barrel and investors brushed off better-than-expected economic reports. The number of people who applied for unemployment benefits last week fell to a one-month low, another sign the US economy has weathered a rough patch earlier in the year. Initial jobless claims dropped by 10,000 to 268,000 in the period stretching from May 15 to May 21. Initial jobless claims spiked in early May to a 14-month high, but the increased was tied mostly to an unusual law in New York that lets some school personnel collect benefits when school is out during spring break. New claims in New York have since been cut in half. The average of new claims over the past four weeks, a less volatile measure, rose by 2,750 to 278,500. Meanwhile, the National Association of Realtors' pending home sales index hit 116.3 in April, its third straight monthly climb, the index is 4.6% higher than it was a year ago. The Dow Jones Industrial Average closed down 23.22 points or 0.13 percent to 17,828.29, S&P 500 dropped 0.44 points or 0.02 percent to 2,090.10 while, Nasdaq was up by 6.88 points or 0.14 percent to 4,901.77.


Crude oil futures pared some gains on Thursday after clearing the $50 a barrel level for the first time since October, as investors responded to reports of further supply disruptions in Nigeria and growing Asian demand for Saudi Arabian oil. Traders booked some profits after crude oil's rapid weekly advance. Earlier in the day, oil topped $50 a barrel level supported by the previous session's report of larger-than-expected decline in US crude supplies. Meanwhile, OPEC officials will meet next week to discuss a production freeze that will put a floor under oil prices. Benchmark crude oil futures for July delivery declined by $0.10 or 0.20 percent to $49.45 a barrel after trading in a range of $49.23 and $50.21 a barrel on the New York Mercantile Exchange. In London, Brent crude for July delivery closed at $49.55, down by $0.19 or 0.38 percent on the ICE.


Indian rupee extended their gaining streak on Thursday, supported by the second consecutive day of rally in the local equity markets. The domestic currency that made a flat start picked up pace in the latter trade after the local equity market started moving higher . The rupee also got support with increased selling of the US currency by exporters and banks. The gains in Asian peers also boosted the sentiment for the rupee, most of the other Asian currencies gained for the day. On the global front, the dollar slipped against the other major currencies, with traders locking in profits from the greenback's recent rally to two-month highs, awaiting the release of US jobless claims and durable goods orders data later in the day. Finally, the rupee ended at 67.17, 16 paise stronger from its previous close at 67.33 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity, the gross buying was of Rs 3752.57 crore against gross selling of Rs 3243.02 crore, while in the debt segment, the gross purchase was of Rs 583.24 crore with gross sales of Rs 828.32 crore.            


The US markets consolidated in last session and after a volatile trade ended flat, with tech-heavy Nasdaq surging to its best closing level in over a month. Traders largely overlooked the upbeat pending home sales and initial jobless claims data. The Asian markets have mostly made a positive start shrugging off the lackluster session in the U.S. overnight. Though, the Chinese market was marginally in red, the Japanese market was trading higher amid speculation that weakness in economy will lead to delay in planned sales-tax increase. The Indian markets remained in jubilant mood and snapped the May series on strong note, with the major benchmarks soaring to their highs of the year in the last session. Some upbeat earnings and policy decisions coupled with short covering helped the markets post another big rally. Today, the start of the new series is likely to be in green and the markets will be extending the gains, though all eyes will be on the Fed chief's speech at Massachusetts on Friday night to look for clues to a rate hike. On the domestic front, traders will be getting some encouragement with the global rating agency Fitch in its Global Economic outlook stating that India's economic growth will accelerate to 8 percent by 2018-19 fiscal as gradual implementation of structural reforms will contribute to higher growth. Meanwhile, Prime Minister Narendra Modi on completion of his government's two year in office has said that his government has undertaken maximum reforms since coming to power in May 2014 and is expecting the long-pending GST bill to get passed this year. The infra sector stocks will be in action, as the Centre has approved an investment of over Rs 5,530 crore for providing basic infrastructure in over 110 cities across six states under AMRUT scheme for the current fiscal. There will be lots of important earnings too to keep the markets in action.


Support and Resistance: NSE Nifty and BSE Sensex



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Bank of Baroda





Larsen & Toubro





Tata Steel






  • Larsen & Toubro has posted a rise of 23.22% in its net profit at Rs 2539.14 crore for the quarter ended March 31, 2016 as compared to Rs 2060.65 crore for the same quarter in the previous year.
  • Tata Motors has received approval from an authorised committee to raise upto Rs 300 crore via issue of non-convertible debentures to bankroll its expansion plans.
  • Bosch is planning to invest around Rs 770 crore on its manufacturing facilities in Bidadi in Karnataka, Nashik and R&D technology centre at Bengaluru in FY17.
  • Gail has posted a rise of 50.76% in its net profit at Rs 769.99 crore for the quarter ended March 31, 2016 as compared to Rs 510.75 crore for the same quarter in the previous year.
  • Bajaj Auto has registered a growth of 29.19% in its net profit after tax at Rs 803.06 crore for the quarter ended March 31, 2016 as compared to Rs 621.62 crore for the same quarter in the previous year.
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