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NSE Intra-day chart (25 November 2016)
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Market Commentary 28 November 2016
Markets to start the new week on a cautious note

 

A session after capitulating to late sell-off, Indian equity benchmarks managed to pull through a dazzling performance by surging over one and half a percentage points on Friday, thanks to the hefty short covering in the beaten down but fundamentally strong stocks. Sentiments remained up-beat from the start of the session, tracking Indian rupee, which recovered from its 39-month closing low on fresh selling of the US currency by banks and exporters, while low roll-overs at the expiry of monthly derivatives on Thursday spurred more buying in cash markets. Stocks suffered their worst setback in 15 months in the November future and option (F&O) series that concluded on Thursday. The Nifty lost 7.5% or 650 points to close at 7,965.60, while the Sensex fell 7.4% or 2,056 points to close at 25,860. Meanwhile, investors got come confidence with Finance Minister Arun Jaitley's statement that the government's demonetisation move is going to have a positive impact on the economy, including GDP. Jaitley said there will be a positive impact because a lot of money that operates in the shadowy economy will now become part of the banking structure and banks will have a lot more money to support the economy. IT stocks accounted for around half of the benchmarks' gain as Infosys and Tata Consultancy Services extended upmove on the rupee's weakness. A weak rupee boosts revenue of IT firms as the sector derives a lion's share of revenue from exports. Most steel stocks also gained traction after the government imposed anti-dumping duties on hot-rolled flat sheets and plates of alloy or non-alloy steel to curb cheaper imports into the country. Finally, the BSE Sensex rallied 456.17 points or 1.76% to 26316.34, while the CNX Nifty rose 148.80 points or 1.87% to 8,114.30.

 

Following the Thanksgiving Day holiday on Thursday, stocks moved mostly higher and ended the session with a gain of over one third of a percent over the course of an abbreviated trading session on Friday. With the upward move, the major averages once again reached new record closing highs. The strength on Wall Street extended the upward trend seen in reaction to President-elect Donald Trump's shocking victory earlier this month. Trading activity on the day was relatively light, however, as many traders remained away from their desks following the holiday. Most markets across the country were scheduled to close earlier than usual, with the stock markets closing at 1 pm ET. On the U.S. economic front, the Commerce Department released a report showing that the trade deficit in goods widened much more than expected in October. The report said the goods deficit widened to $62.0 billion in October from $56.5 billion in September. However, gains remained capped as traders remained on sidelines ahead of Labor Department's monthly jobs reports due next Friday. The Dow Jones Industrial Average added 68.96 points or 0.36 percent to 19,152.14, S&P 500 gained 8.63 points or 0.39 percent to 2,213.35 and Nasdaq was up by 18.24 points or 0.34 percent to 5,398.92.

 

Crude oil futures suffered sharp decline on Friday, on uncertainty about whether the members of OPEC will be able to agree on a cut in production at a meeting next week after top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply Expectations for a sizable production cut from OPEC have been building, with Saudi Arabia backing an effort to cut output by over 1 million barrels to 32.5 million barrels a day. Sentiments were also weighed down by weak economic data, the Commerce Department released a report showing that the trade deficit in goods widened much more than expected in October. The report said the goods deficit widened to $62.0 billion in October from $56.5 billion in September. Benchmark crude oil futures for January delivery plunged by $1.90 or 3.96 percent to $46.06 on the New York Mercantile Exchange. In London, Brent crude for January delivery ended lower by $1.76 or 3.59 percent at $47.24 on the ICE.

 

Snapping five days losing streak, Indian rupee appreciated against dollar on Friday supported by the suspected intervention of the Reserve Bank of India (RBI) in the currency market. Sentiments also got some support with Finance Minister Arun Jaitley's statement that the government's demonetisation move is going to have a positive impact on the economy, including GDP. Jaitley said there will be a positive impact because a lot of money that operates in the shadowy economy will now become part of the banking structure and banks will have a lot more money to support the economy. Besides, strong gains in the equity market too contributed to the rupee gain. On the global front, dollar rose to an 8-month high against the yen on Friday as U.S. bond yields resumed their rise in Asia after the Thanksgiving break shut markets in the United States. Finally, the rupee ended at 68.46, 28 paise stronger from its previous close of 68.74 on Thursday.

 

The FIIs as per Friday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 6179.41 crore against gross sell of Rs 8217.71 crore, while in the debt segment, the gross purchase was of Rs 2810.34 crore with gross sales of Rs 3770.43 crore.

 

The US markets ended modestly higher in the last session, even though the trade deficit in goods widened much more than expected in October. The Asian markets have made mostly a positive start, though sliding oil prices were weighing down the sentiments on Asian energy stocks amid concern over the outcome of this week's OPEC meeting. The Japanese market was in red on weakness in dollar against yen. The Indian markets rallied in the last session with demonatisation worries taking back seat and traders going for value buying at lower levels. Today, the start of the week is likely to be flat-to-cautious and the markets will be eyeing further development in Asian peers and the rupee movement. Markets especially the banking sector will be first reacting to the Reserve Bank of India's (RBI) surprise move during the weekend, ordering banks to transfer 100% of their cash under the central bank's cash reserve ratio (CRR) from deposits generated between September 16 and November 11. Though, RBI has said that it will review its decision asking banks to deposit their extra cash with it once the government issues an adequate quantum of market stabilisation scheme bonds to soak up liquidity. Markets will be getting some comfort with Fitch Ratings' latest statement that it expects India's GDP growth trend higher than China's in the medium term despite demonetization. It added that in India it expects GDP growth to accelerate in FY2018 on the back of reform implementation, monetary easing of the past year and infrastructure spending. Also, RBI Governor Urjit Patel has said that all necessary actions are being taken to 'ease the genuine pain of citizens' who are honest and who have been hurt. Liquidity in the banking system has increased and the intent is to normalise things as soon as possible. Currency is available and banks are working in a mission mode to take them to branches and ATMs, expressed the RBI Governor. There will be some result reactions too, with few important names announcing their numbers.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

8,114.30

8,019.95

8,165.45

BSE Sensex

26,316.34

26,012.54

26,482.04

 

Nifty Top volumes

 

Stock

Volume

(in Lacs)

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

SBI

193.04

260.95

258.03

264.18

Hindalco

173.39

180.50

177.97

183.92

ICICI Bank

151.02

260.10

257.30

262.65

Bank of Baroda

96.94

167.90

165.45

170.75

Power Grid

82.78

188.65

185.70

190.90

  • Maruti Suzuki India has unveiled limited edition 'Wagon R Felicity'.
  • Tech Mahindra has launched the Connected Service Experience Solution, which will enable the manufacturing industry to integrate connected devices with end-to-end business processes.
  • State Bank of India has unveiled its United Payment Interface app 'SBI Pay'.
  • Idea Cellular, one of the biggest cellular carrier of the country, is intending to expand its 4G services to 20 circles in FY17.
  • NTPC's Talcher Thermal Power Station has achieved its best ever highest single day generation of 11.496 million units of electricity at 104.13% Plant Load Factor on November 23, 2016.
News Analysis