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NSE Intra-day chart (26 February 2016)
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Market Commentary 29 February 2016
Budget day to see a cautious start for the markets

Indian equity benchmarks snapped three-day losing streak as investors opted to buy beaten down but fundamentally strong stocks amid positive global cues. Sentiments got a boost after the Economic Survey said the government will likely meet its FY16 fiscal deficit target of 3.9 percent, while at the same time it also indicated that India's long run potential GDP growth is substantial, about 8 to 10 per cent. Presenting an optimistic picture of Indian economy, Chief Economic Adviser Arvind Subramanian's Economic Survey 2015-16 said that amidst the gloomy landscape of unusual volatility in the international economic environment, India stands as a haven of stability and an outpost of opportunity. The Economic Survey also talked about India's exports, which are in the negative zone since December 2014, and are expected to start picking up from the next fiscal. On the flipside, the survey enumerated three downside risks - turmoil in global economy could worsen the outlook of exports, contrary to expectations oil price rise would increase the drag from consumption and the most serious risk is the combination of these two factors. The survey also expressed concern over approval of GST Bill being elusive so far and the disinvestment programme falling short of targets. Meanwhile, market participants remained cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1466 crore on February 25, 2016. On the global front, Asian stocks rose on Friday, while European stocks too climbed in early trade. Back home, the benchmark started the day on an optimistic note tracking the Asian peers which traded mostly in the green following the upbeat overnight cues from the Wall Street, while recovery in global crude oil prices also aided sentiment. The key indices remained choppy through the morning trades but saw a sudden spurt in buying in early afternoon trades post the Economic Survey 2016 tabled in the Parliament, reinstated confidence in the growth of Indian economy for the next two years. Finally, the BSE Sensex gained 178.30 points or 0.78% to 23154.30, while the CNX Nifty added 59.15 points or 0.85% to 7,029.75. 


The US markets ended the choppy day of trade mostly in red on Friday as traders reacted negatively to the release of a batch of largely upbeat U.S. economic data, which led to renewed worries about the outlook for interest rates. Shortly after the start of trading, the Commerce Department released a report showing that personal income and spending both increased by 0.5 percent in January, exceeding estimates. Paul Ashworth, Chief U.S. Economist at Capital Economics, said the increase in spending indicates there is no danger of the economy falling into an imminent recession. However, the report also said a key reading on core consumer prices rose by 0.3 percent in January, pushing the annual rate of growth up to 1.7 percent from 1.5 percent. A separate report from the Commerce Department showed that economic growth slowed by less previously estimated in the fourth quarter of 2015. The report said real gross domestic product increased by 1.0 percent in the fourth quarter, reflecting an upward revision from the initially reported 0.7 percent growth. The University of Michigan also released a report showing a smaller than initially estimated drop in consumer sentiment in February. The Dow Jones Industrial Average declined 57.32 points or 0.34 percent to 16,639.97 and the S&P 500 gained 3.63 points or 0.19 percent to 1,948.05.  However, Nasdaq was up 8.27 points or 0.18 percent to 4,590.47. 


Crude oil futures suffered some profit taking and declined on Friday, though for the week the US crude rose 11 percent on the week, its steepest weekly rise since August, while the Brent crude was up by more than 6 percent. Meanwhile prices moved higher in early trade on news that pipeline outages in Iraq and Nigeria had removed more than 800,000 barrels of crude per day from the global market for at least the next two weeks. There were positive economic reports from US like an upward revision to the country's fourth-quarter economic growth that too supported the prices. However, in latter trade there was profit taking that dragged the prices down. Benchmark crude oil futures for April delivery ended at $32.78, down $0.29 or 0.88 percent, after trading in a range of $32.67 and $34.66 a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery ended at $35.10, down $0.19 or 0.54 percent on the ICE.


Indian rupee ended stronger against dollar on Friday on the back of selling of the American currency by banks and exporters. Besides, dollar's weakness overseas and gains in equity market also added to the positive milieu of the domestic currency. The rupee sentiment was upbeat as the Economic Survey has revised upward India's GDP growth range to 7 to 7.75 per cent for 2015-16 against earlier government projected growth rate of 7 to 7.5 per cent. The sentiment further got support after the Economic Survey stated that the government will likely meet its FY16 fiscal deficit target of 3.9%, while at the same time it also indicated that India's long run potential GDP growth is substantial, about 8 to 10 percent. On the global front, dollar edged down against the basket of major currency overseas, as investors remained cautious on a two-day Group of 20 (G20) summit of finance ministers and central bankers in Shanghai. Finally, the rupee ended at 68.62, 10 paise stronger from its previous close of 68.72 on Thursday.


The FIIs as per Friday's data were net sellers in equity and in debt segments both. In equity segment, the gross buying was of Rs 4965.03 crore against gross selling of Rs 6027.88 crore, while in the debt segment, the gross purchase was of Rs 509.99 crore with gross sales of Rs 1555.09 crore.        


The US markets made a mixed closing in last session, after failing to sustain an initial upward move. Traders reacted to largely upbeat US economic data. While the reports eased concerns about the possibility of a recession, the data also led to renewed worries about the outlook for interest rates. The Asian markets have made a mixed start, with some indices trading in red led by Chinese market, which is down by over three percent after Group of 20 finance chiefs made only vague commitments to spur growth after talks in Shanghai. The Japanese market though was in green despite the yen rebounding from a three-day drop. The Indian markets made a good bounce back in the last session after the Economic Survey of the government gave encouraging signals for the economy despite gloomy global outlook. Today, the big day of the markets is likely to get a cautious start, with all eyes on the Union Budget for 2016-17. Finance Minister Arun Jaitley while presenting his third and challenging Budget will have to give equal importance to the farm sector as well as the industry, amid back-to-back droughts and high industry expectations. Jaitley will be announcing details of the gradual reduction of corporate tax from 30 per cent to 25 per cent over four years. The budget may also look into retrospective taxation and may have some provisions for the legacy issues. Meanwhile, Chief Economic Adviser Arvind Subramanian has said that government is open to the idea of going in for higher fiscal deficit to propel growth in the upcoming Budget and will take a balanced view after considering various factors. Markets may get some support with the report that foreign direct investment (FDI) into the country increased by 40 percent to $ 29.44 billion during April-December in the current fiscal. Power sector stocks will be in action, as the Prime Minister Narendra Modi has asked the Power Ministry to target electrification of around 200 villages every week by holding regular follow ups with the state implementing agencies.


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  • Zee Entertainment Enterprises' digital arm Zee Digital Convergence, has launched a new video on demand platform OZEE.
  • M&M's subsidiary Mahindra First Choice Services has added more feathers to its cap with the inauguration of its first Franchisee Owned Franchisee Operated workshops in Gwalior & Jhansi.
  • Coal India is planning to increase its coal production to 1,000 million tonne in the next four years through the use of latest environment-friendly technology.
  • Tech Mahindra and Comptel Corporation have entered into collaboration to re-write telecommunications operators' billing playbooks.
  • State-owned Life Insurance Corporation has increased its stake in India's largest power producer NTPC by 3.90% after buying 32.15 crore shares in the open market.
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