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NSE Intra-day chart (26 October 2016)
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Market Commentary 27 October 2016
Markets to make a weak start on F&O series expiry day


Indian benchmarks extended the declining streak for the second successive session as funds and retail investors turned jittery tracking a sluggish global trend due to tumbling oil prices. Oil prices came under pressure after a rise in US crude inventories and as hopes that OPEC will find a deal to cut production faded. Market participants around the world also remained nervous given the US election next month, the Federal Reserve's policy meeting in December, and over the health of China's economy. On the domestic front, sentiments were undermined by the report that India has moved up only one rank on the World Bank's ease of doing business ranking this year, a disappointing result for the Narendra Modi government that made several initiatives and has set itself a target to break into the top 50.  The Doing Business 2017 report showed that India was placed 130th among 190 countries that had been surveyed for the annual rankings, with Russia, Bhutan, South Africa, China, Nepal, Sri Lanka and Brazil ranking higher. In the ranking, India has made a substantial improvement in some areas such as electricity connection, but slippage in other areas, including payment of taxes and enforcing contracts, prevented improvement on the rankings that is followed widely by global investors. Furthermore, amidst concerns for wide trade deficit with China, India's engineering exports are fast losing a huge Chinese market, falling by annualised 57% in September 2016 reflecting subdued demand in some of the core sectors like non-ferrous metals. For the cumulative period of April-September, 2016, India's engineering exports to China dropped by a sharp 45% to $584.10 million over $1.06 billion in the first half of the previous fiscal. Besides, disappointing earnings by some heavyweights and sustained selling by FIIs too dampened the trading sentiments. Axis Bank's quarterly net profit plunged 83% in the September quarter, while IDBI Bank reported a 53% decline in quarterly net profit. However, losses remained capped with the Economic Affairs Secretary Shaktikanta Das's statement that the GDP growth will be around 8 percent this fiscal, while the agriculture sector is expected to grow over 4 percent. Finally, the BSE Sensex declined by 254.91 points or 0.91% to 27836.51, while the CNX Nifty dropped 76.05 points or 0.88% to 8,615.25.


The US markets closed mostly lower on Wednesday, as Apple Inc., the largest US company by market cap, tumbled, but the Dow Jones Industrial Average bucked the trend and ended in green. Investors punished the stock after the iPhone maker posted quarterly earnings that slightly beat expectations and revenue that was just shy of forecasts. The market weakness followed a downbeat day on Tuesday when worries about a string of lackluster earnings and a drop in consumer sentiment sent major indexes lower. The oil-price bounce came after the Energy Information Administration reported domestic crude supplies unexpectedly fell in the latest week, a positive sign for a market that continues to struggle with oversupply. On the economy front, an early look at trade patterns in September points to a sharper than expected drop in the US trade deficit, adding to the picture of an economy that by most measures showed marked improvement in the third quarter. The advanced trade report for goods - services are excluded - showed a deficit of $56.1 billion in September compared to $59.1 billion in August. The Nasdaq dropped 33.13 points or 0.63 percent to 5,250.27, S&P 500 was down 3.73 points or 0.17 percent to 2,139.43, while the Dow Jones Industrial Average gained 30.06 points or 0.17 percent to 18,199.33.


Crude oil futures continued their sluggish trend on Wednesday, slipping to their lowest in three weeks, as Russia and OPEC are dragging their feet over a planned reduction in output that would have helped to stabilize oil prices. It was reported that Russia is now against OPEC production cuts, while Iraq and others say they should be exempt. Traders even overlooked data showing that crude supplies in the US fell unexpectedly last week. The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 553,000 barrels in the week ended October 21. The report also showed that gasoline inventories decreased by 1.956 million barrels, while for distillate inventories including diesel, the EIA reported a drop of 3.354 million barrels. Benchmark crude oil futures for December delivery dropped $0.78 or 1.6 percent to close at $49.18 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $0.81 or 1.6 percent to $49.98 a barrel on the ICE.


Indian rupee ended marginally weaker against the US dollar on Wednesday due to fresh demand for the American currency from banks and importers. Sentiments remained down-beat with the report that India moved up only one rank on the World Bank's ease of doing business ranking this year, a disappointing result for the Narendra Modi government that made several initiatives and has set itself a target to break into the top 50. Also, dollar strengthened against other currencies overseas as well as losses in the domestic equity market, weighed on the rupee sentiments. Finally, the rupee ended at 66.83, 1 paise weaker from its previous close of 66.82 on Tuesday.


The FIIs as per Wednesday'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 3555.39 crore against gross selling of Rs 4060.40 crore, while in the debt segment, the gross purchase was of Rs 2258.28 crore with gross sales of Rs 1710.55 crore. 


The US markets made a mixed closing in last session as traders weighed a flurry of earnings news, including downbeat results from Apple and Southwest. The Asian markets have made mostly a lower start weighed down by weakness in the US markets overnight and slump in the oil prices. The Indian markets suffered setback in last session on some weak earnings report and the benchmark indices lost around a percent. Today, the start of the F&O expiry day is likely to be in red with markets following the footsteps of their Asian counterparts. The trade though may turn volatile in the latter hours as the traders will cover their shorts and rollover to next series. Traders may get some support with report that Prime Minister Narendra Modi has asked secretaries at the Centre and chief secretaries in the state to analyse the World Bank's Ease of Doing Business Report. Meanwhile, Union minister Nirmala Sitharaman expressing disappointment at India's rank remaining low in terms of ease of doing business has said that the efforts and reforms undertaken by the Centre and states have not been adequately captured in the ranking released by the World Bank. Market will also be reacting to Finance Minister Arun Jaitley's statement, who talking in favour of levy of cess on tobacco and luxury products to compensate states for loss of revenue on Goods and Services Tax (GST) said that the cost of funding otherwise through a higher tax rate would be "exorbitantly high and almost unbearable". The Tata group shares will continue to remain in focus as the leading bourses, the National Stock Exchange and Bombay Stock Exchange, have issued notices to a number of the Tata Group's companies, seeking a clarification on ousted Tata Sons' chairman Cyrus Mistry's claims that the conglomerate faced a $18-billion writedowns, or reduction in value of assets. There will be lots of important result announcements too, to keep the markets in action.


Support and Resistance: NSE (Nifty) and BSE (Sensex)



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  • RIL has raised a term loan of $573 million to part finance construction of six very large ships for transportation of ethane from the US.
  • Axis Bank has reported 83.34% fall in its net profit at Rs 319.08 crore for the quarter under review as compared to Rs 1915.64 crore for the same quarter in the previous year.
  • Bharti Airtel has unveiled an affordable 10 day validity pack for International Roaming.
  • HDFC has reported 13.83% rise in its net profit after tax at Rs 1826.50 crore for the quarter under review as compared to Rs 1604.56 crore for the same quarter in the previous year.
  • Hindustan Unilever has reported 11.55% rise in its net profit at Rs 1095.60 crore for the quarter under review as compared to Rs 982.17 crore for the same quarter in the previous year.
News Analysis