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NSE Intra-day chart (30 August 2016)
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Market Commentary 31 August 2016
Markets to make a soft-to-cautious start


Indian benchmark equity indices staged a stunning performance on Tuesday by vehemently rallying over one and half percent in the session and re-conquering their key psychological levels. Monday's optimism got spilled over into day's trade, helping the frontline indices in extending the winning momentum for second successive session, as encouraging global developments buttressed domestic sentiments. Investors continued to build hefty positions across the board as sentiments got a boost after consumer spending rose for a fourth straight month in US, pointing to a pick-up in the world's largest economy. On the domestic front, sentiments got some support with Reserve Bank of India's Annual Report indicating that the near-term growth outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 percent in 2016-17. It said that a better than anticipated agricultural performance and the possibility of allowances under the 7th Pay Commission's award being paid out in the fourth quarter of 2016-17 provide upsides to this projection. Also, Niti Aayog Vice-Chairman Arvind Panagariya stated that India's economy will accelerate to 8% growth in the current financial year thanks to a good monsoon, policy reforms and PM Narendra Modi's focus on implementation at the grassroots level. Some support also came with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 286.52 crore on August 29, 2016. On the global front, Asian markets ended mostly lower on Tuesday, while European markets edged higher in early deals. Back home, the local benchmarks got off to a positive start as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and traded with over half a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session's highest levels in dying moments. Finally, the BSE Sensex surged 440.35 points or 1.58% to 28343.01, while the CNX Nifty gained 136.90 points or 1.59% to 8,744.35. 


The US markets closed lower on Tuesday, as investors weighed additional comments from Federal Reserve members that emphasized the central bank's intention to raise interest rates sooner rather than later. Federal Reserve Vice Chairman Stanley Fischer stated that it is impossible to say whether the next interest-rate hike would be one and done. Fischer did not provide new insight into the possible timing of a move. He said the US economy is nearing full employment and had withstood the rise in the dollar's value in foreign exchange markets. On the economy front, a city-by-city look at US house prices as the S&P CoreLogic Case-Shiller 20-city composite recorded a 0.8% monthly gain and a 5.1% year-on-year advance. After seasonal adjustment, the 20-city composite fell 0.1%. The yearly growth slowed to 5.1% from 5.3% in May - which represents the fifth straight month of flat or decreasing year-over-year growth. The Dow Jones Industrial Average lost 48.69 points or 0.26 percent to 18,454.30, Nasdaq was down 9.34 points or 0.18 percent to 5,222.99, while S&P 500 dropped 4.26 points or 0.20 percent to 2,176.12. 


Crude oil futures continued the decline on Tuesday on growing glut worries amid forecasts for higher U.S. crude stockpiles and Iran's remark that it was on target to reach peak production. Also, the dollar rallied against major currencies on hopes of a rate hike. Meanwhile, an Iranian government official said at an oil industry conference in Norway that Tehran's production was expected to hit 4 million barrels per day by year end. Benchmark crude oil futures for October delivery dropped $0.63 or 1.30 percent to close at $46.35 a barrel after trading on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $0.89 or 1.87 percent to $48.37 a barrel on the ICE.


Indian rupee bounced back and ended higher against greenback on Tuesday due to dollar selling by banks and exporters amid positive closing of domestic equity markets. Investors got some encouragement with the Reserve Bank of India stating that the near-term growth outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 percent in 2016-17. While fresh foreign fund inflows supported the rupee, strength in the dollar against some currencies overseas capped the gains. On the global front, dollar hovering near a two-week high against a some basket of currencies, with investors focused on the next set of U.S. data to see whether it supports expectations that the Federal Reserve will raise interest rates soon. Finally the rupee ended at 67.03, stronger by 12 paise from its previous close of 67.15 on Monday.


The FIIs as per Tuesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 3476.17 crore against gross selling of Rs 2918.66 crore, while in the debt segment, the gross purchase was of Rs 1252.45 crore with gross sales of Rs 1298.66 crore.


The US markets ended modestly in red in the last session on uncertainty about the outlook for interest rates. However the selling pressure was relatively subdued ahead of the release of the closely watched monthly jobs report on Friday. The Asian markets have made a mixed start, with some indices losing quarter to half a percent in early deals, while the Japanese market has advanced again as the yen held near its weakest level since July. The Indian markets rallied in the last session on expectations the US Federal Reserve may delay hiking interest rates until after the presidential election in November. Some positive comments from the top government officials about the economy too supported the markets, with benchmark indices reclaiming their key psychological levels. Today, the start is likely to be cautious and some profit taking can be seen in very early trade after last sessions' huge gains on weak global cues with Fed Vice-Chairman Stanley Fischer stating that the US job market was close to full strength, while adding that the pace of interest rate hikes will depend on how the economy is doing. On the domestic front, trade unions have said that they will go ahead with nation-wide strike on September 2, rejecting as "completely inadequate" the government's 42 percent hike in minimum wage to Rs 350 per day. Earlier, Finance Minister Arun Jaitley announced a slew of labour-friendly measures including hiking of minimum wage to Rs 350 a day for unskilled non-agricultural workers for 'C' category areas in central sphere. However, markets may get some support with a Ficci survey that India's economy is likely to expand 7.8 percent during the current financial year on the back of good monsoons. The estimated median GVA (gross value added) growth for Q1 FY17 has been put at 7.6 percent. There will be some buzz in the auto sector stocks, as the Minister for Road Transport and Highways Nitin Gadkari has said  that the draft vehicle scrapping policy would offer a combined benefit of Rs 14,000 crore to the Centre and states and drive the auto industry growth by 22 percent.


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  • Maruti Suzuki India has launched sporty Swift Deca, a limited edition model of its most popular hatchback.
  • GAIL has granted an amount of Rs 2 lakh and a monthly scholarship of Rs 20,000 for the next two years to gymnast Ashmita, a 15-year-old Tripura girl from humble background being billed as the next Deepa Karmakar.
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  • Tata Motors has launched its sporty new hatchback, TIAGO in Nepal, with cutting edge design, technology and driving dynamics to create new segment benchmarks in the industry.
  • Bharti Airtel has unveiled Mega Saver Pack for prepaid customer.
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