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NSE Intra-day chart (10 November 2016)
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Market Commentary 11 November 2016
Markets to see some consolidation on mixed global cues

A session after displaying a distressing performance, Indian equity indices have managed to pull through a dazzling performance by vivaciously rallying around percentage points on Thursday, thanks to the hefty short covering in the beaten down Metal, Banking and Realty counters. The relentless across the board value picking ensured that the frontline indices settle over the psychological 8,500 and 27,500 levels amid the tentative recovery in risk appetite globally. Marketmen across Europe and Asia brushed aside the shock of the Trump victory in the US election. Trump pledged in his speech Wednesday to unify a deeply divided nation, helping to calm jitters in global financial markets. Investors had worried because his campaign promises carried few policy details, making him an unknown quantity compared with his rival, Hillary Clinton, seen as a safe choice. On the domestic front, sentiments remained up-beat with Union Finance Minister Arun Jaitley's statement that tax collections will go up considerably in the medium-to-long term as more people will come under the tax net due to the demonetisation of Rs 500 and Rs 1,000 currency notes. According to him, the step by the government to crack down on black money, terror financing and corruption not merely nudges the economy towards a cashless society but is a significant push in that direction. The move will establish credibility of the Indian economy in the world and will also expand the country's GDP. Some support also came with report that the Centre's net tax kitty rose up to Rs 8.51 lakh crore between April and October 2016. Net direct tax collections jumped up 10.66% to Rs 3.77 lakh crore in October, while direct tax mop-up was more robust and increased 26.7% to Rs 4.85 lakh crore. On the global front, Asian markets ended higher on Thursday, while European counterparts appeared to be in a sanguine mood in early deals. Back home, finally, the BSE Sensex gained 265.15 points or 0.97% to 27517.68, while the CNX Nifty rose 93.75 points or 1.11% to 8,525.75.

The US markets made a mixed closing on Thursday following the rally of previous session, while the Dow extended the rally mood and reached record closing high, the tech heavy Nasdaq ended in negative territory. There was some encouragement with S&P Global Ratings retaining sovereign ratings of the U.S. The rating was affirmed at 'AA+' with stable outlook and reflects the expected smooth transition of power. On the U.S. economic front, the Labor Department released a report before the start of trading showing a bigger than expected drop in initial jobless claims in the week ended November 5th. The report said initial jobless claims fell to 254,000, a decrease of 11,000 from the previous week's unrevised level of 265,000. Economists had expected jobless claims to edge down to 263,000. The Dow Jones Industrial Average surged by 218.19 points or 1.2 percent to 18,807.88 and the S&P 500 rose 4.22 points or 0.2 percent to 2,167.48, but the Nasdaq declined by 42.28 points or 0.8 percent to 5,208.80.

Crude oil futures turned lower on Thursday snapping their gaining streak, on strength in dollar and a report showing OPEC's oil production rising to record highs in October. The International Energy Agency (IEA) in its latest report said that OPEC crude output rose by 230,000 barrels a day to a record high of 33.83 million barrels a day in October. The IEA said OPEC faces a significant challenge in curbing production to meet levels discussed at a recent meeting in Algiers. Prices were also held in check after data showing a 2.4-million-barrel increase in U.S. crude inventories last week, adding to concerns about oversupply. Benchmark crude oil futures for December delivery dropped $0.61 or 1.4 percent to close at $44.66 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $0.08 or 0.17 percent to $46.43 a barrel on the ICE.

The FIIs as per Thursday'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 5175.86 crore against gross selling of Rs 7220.38 crore, while in debt segment, the gross purchase was of Rs 1351.69 crore with gross sales of Rs 747.55 crore. 

Snapping two days gaining streak, Indian rupee ended weaker against dollar on Thursday, due to fresh demand for the American currency from banks and importers. The investors failed to get any sense of relief with Union Finance Minister Arun Jaitley's statement that tax collections will go up considerably in the medium-to-long term as more people will come under the tax net due to the demonetisation of Rs 500 and Rs 1,000 currency notes. According to him, the step by the government to crack down on black money, terror financing and corruption not merely nudges the economy towards a cashless society but is a significant push in that direction. On the global front, dollar jumped to its highest level in two weeks and continued to reverse brief initial losses from the surprise election of businessman Donald Trump as U.S. president, as markets awaited more clarity on his economic policy.

The US markets made a mixed closing in last session with financial stocks moving higher amid optimism about reduced regulation under Trump. The Asian markets have made a mixed start, there was cautiousness in the regional currency markets amid speculation the Federal Reserve will boost interest rates to cap inflation as a Donald Trump-led administration steps up spending. The Indian markets rebounded in last session, covering most of the losses of previous one, as riskier assets staged a dramatic reversal following Donald Trump's stunning upset in the U.S. presidential election. Today, the start is likely to be mildly in green and the markets will show some cautiousness tailing the mixed global cues. There will be some support with the International Monetary Fund (IMF) supporting India's efforts to fight corruption through the currency control measures announced this week, but it has stressed taking care to minimise disruptions in the economy. Meanwhile, Finance minister Arun Jaitley has said that the government will continue tax reforms, even as he criticised global agencies for not fully appreciating the efforts made by the government. He also said that the government will meet its target of reining in fiscal deficit at 3.5% of GDP. There will be buzz in India Inc, with Reserve Bank of India (RBI) in a step to address corporate stress, making sweeping changes to existing loan recast schemes, given lenders additional time up to 180 days for hammering out a restructuring package under the scheme for sustainable structuring of stressed asset (S4A). Previously, the time limit was 90 days. The Tata group stock will be in action again with independent directors of Tata Chemicals reposing their faith on Cyrus Mistry leadership amidst the Tata Sons move to remove his as Chairman from all operating Tata Group companies. There will be lots of earnings announcements too, to keep the markets in action.

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

Index

Previous close

Support

Resistance

NSE Nifty

8525.75

8491.48

8579.23

BSE Sensex

27517.68

27402.00

27688.41

Nifty Top volumes

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

State Bank of India

502.28

281.30

269.63

288.58

ICICI Bank

264.89

292.60

286.73

298.43

Bank of Baroda

199.38

165.00

157.90

169.20

Hindalco

162.75

175.75

169.38

179.73

ITC

115.67

251.05

246.73

254.18

  • Hero MotoCorp, the world's largest two-wheeler manufacturer, has launched new Dawn 125 Motorcycle at the ongoing EICMA Motorcycle show in Milan.
  • Axis Bank has rolled out an augmented reality enabled feature on its Mobile App that empowers home seekers to search and locate properties which are pre-approved by the bank for financing.
  • Sun Pharmaceutical Industries' consolidated profit shot up 90.2 percent year-on-year to Rs 2,471 crore in the quarter ended September 2016, driven by operating income and lower finance cost. 
  • Cipla has reported 34.75% fall in its consolidated net profit at Rs. 354.34 crore for the quarter ended September 30, 2016 as compared to Rs. 543.02 crore for the same quarter in the previous year.
  • ITC is partnering the NHAI in its initiative to develop eco-friendly national highways by spearheading an extensive tree plantation initiative along the highways in the country.

News Analysis