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NSE Intra-day chart (28 March 2016)
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Market Commentary 29 March 2016
Markets to make a flat-to-negative start


The Indian equity markets lost over a percent on Monday, posting their biggest single-day fall in five weeks, as investors booked profit after an upward revision in US fourth quarter GDP numbers signaled strength in the world's biggest economy, bolstering the case for the Federal Reserve to tighten interest rates further in the coming months. Sentiments weakened further with the Centre imposing President's rule in Congress-ruled Uttarakhand, which could impact the functioning of the second half of the budget session and hinder passage of any crucial Bill. Besides, depreciation in Indian rupee against dollar and rise in crude oil prices also dampened investor sentiment. Investors also remained cautious with the private report indicating Indian economy to grow at 7.2 per cent in 2016-17, a tad lower than Central Statistics Office's advance estimates of 7.6 per cent in the current fiscal due to weak investments and external headwinds. According to the report, Indian economy continues to face multiple challenges, and this is being reflected in high frequency data such as industrial production and trade. Meanwhile, market participants were patiently waiting for the Reserve Bank of India (RBI) monetary policy review due on April 5 amid hopes of a 25 basis points cut in interest rates. Also, volatility is likely to be witnessed this week on account of March series futures and options contracts expiry. On the global front, Asian markets ended mostly in red on Monday, while European markets were closed for the Easter holiday. Back home, the benchmark got off to a flat opening with a positive bias following supportive leads from Asian markets. Sentiments remained optimistic in thin trades triggered by a slew of encouraging economic reports from the US. However, the indices dropped into the red terrain, lacking any significant upside cues. Finally, the BSE Sensex plunged by 371.16  points or 1.46% to 24966.40, while the CNX Nifty dropped 101.40 points or 1.31% to 7,615.10.


The US market closed mostly higher on Monday, with S&P 500 and Dow closing in green, on the back of consumer-discretionary and consumer-staples companies, but energy shares capped the market's upside. A fresh drop in oil prices to below $40 a barrel weighed on the market. A lack of clarity from the Federal Reserve also dampened market sentiment as investors wrestle with conflicting comments. On the economy front, an early look at US trade patterns in February suggest a small increase in the nation's trade deficit. The trade gaps in goods - services are excluded - rose 1% to a seasonally adjusted $62.9 billion. The government will release overall trade numbers for February next week, but the size of the trade deficit is generally tied to changes in the movement of goods such as cars, computers, refined oil, heavy machinery and aircraft. Trade patterns involving services rarely change much from month to month. For January, the government previously reported that the total U.S. trade deficit rose 2.2% to $45.7 billion. The Dow Jones Industrial Average rose 19.66 points or 0.11 percent to 17,535.39, S&P 500 gained 1.11 points or 0.05 percent to 2,037.05 while, Nasdaq dropped 6.72 points or 0.14 percent to 4,766.79.


Crude oil futures after mostly a flat trading ended with modest cuts on Monday in thin post-Holiday trading. Traders remained a bit cautious ahead of the next month's highly-anticipated meeting between OPEC and Non OPEC members, which if successful could result in production cut. At the meeting, Saudi Arabia, Russia and two other OPEC producers could freeze output at their respective levels from January. Meanwhile, US supplies are brimming, as evidenced by recent data showing record stockpiles at Cushing, Oklahoma. Benchmark crude oil futures for May delivery declined by $0.10 or 0.25 percent to $39.39 a barrel after trading in a range of $38.87 and $40.14 a barrel on the New York Mercantile Exchange. In London, Brent crude for May delivery closed at $40.85, down $0.18 or 0.44 percent on the ICE.


Indian rupee extended its gains for the second straight session against dollar on Monday due to fresh selling of American currency by exporters. Domestic currency erased all early losses to end higher. However, losses of local equities, month-end demand for the greenback from importers and the dollar's strength limited further appreciation of Indian currency. Meanwhile, investors are waiting for the Reserve Bank of India (RBI) monetary policy review due on April 5 amid hopes of a 25 basis points cut in interest rates. On the global front, dollar headed gain against the yen, its longest streak since October, as speculation grew that the Federal Reserve has a stronger case for raising interest rates. Finally, the rupee ended at 66.57, 7 paise stronger from its previous close of 66.64 on Wednesday.


The FIIs as per Monday's data were net buyers in equity and in debt segments both. In equity segment, the gross buying was of Rs 3972.64 crore against gross selling of Rs 2906.21crore, while in the debt segment, the gross purchase was of Rs 731.44 crore with gross sales of Rs 172.09 crore.         


The US markets made mostly a flat closing following the long Easter weekend. The trade remained choppy as the traders expressed some uncertainty about the near-term outlook for the markets, ahead of the release of some closely watched data later in the week. The Asian markets have once again made a mixed start, as crude oil extended decline and on concern slowing growth in China and political upheaval in some emerging markets will derail global expansion. The Indian markets suffered sharp sell-off in last session, coming after a long weekend with benchmarks losing over a percent in broad based selling by funds and retail investors. Today, the start is likely to remain somber and the markets may extend their weakness in early deals on sluggish global cues. However, there will still be hopes of rate cuts from the RBI that could support the markets in latter trade after Finance Minister Arun Jaitley said interest rates in India are “extraordinarily” high and the country risks becoming the most sluggish economy if lending rates continue to rule high. Meanwhile, RBI Governor Raghuram Rajan has said that there should be guidelines for responsible monetary policy behaviour globally as aggressive actions by one nation can lead to significant adverse cross- border spillovers on others. Rajan said monetary policy could be broadly characterised and rated based on analytical inputs and discussion. Gold and Jewellery stocks will continue to remain under pressure on a report that demand is expected to record a sharp fall of 71 per cent to 40-50 tonnes in the March quarter against the 173 tonnes logged in the December quarter due to the strike. There will be some action in steel stocks too, as the government has asked Washington to comply with the dispute settlement body's ruling against countervailing duties (CVD) imposed on imports, in order to help the debt-ridden steel industry regain its foothold in the US market for hot-rolled carbon steel products.


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  • Tata Motors has signed a follow-on contract for the supply of an additional 619 units, of its high-mobility 6X6 multi-axle truck, from the Indian Army.
  • HEL has commissioned a 40MW unit of a hydro power plant in West Bengal.
  • Dr Reddy's Laboratories has entered into a US licensing pact with XenoPort for the development and commercialisation of the latter's clinical-stage oral new chemical entity XP23829.
  • ITC has acquired the entire equity share capital of Technico Agri Sciences, India, from Technico, Australia, for Rs 121 crore.
  • Larsen and Toubro's subsidiary L&T Infotech is planning to expand its presence in the United States and Europe and is in the process of augmenting its teams in high potential markets.
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