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NSE Intra-day chart (22 December 2021)
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Market Commentary 23 December 2021
Benchmarks likely to make positive start on firm global cues


Extending previous session's jubilation, Indian equity benchmarks ended the Wednesday's trade with a gain of over a percent with frontline gauges recapturing their crucial 56,900 (Sensex) and 16,950 (Nifty) levels amid a positive rebound in the global market. Markets started the session on an optimistic note as traders took encouragement with the Finance Ministry's report stating that the government has initiated various measures to provide relief and financial support to various sectors of the Covid-19 hit economy, at the same time, fiscal consolidation is also under focus. Traders also took note of newly-elected president of Federation of Indian Chambers of Commerce and Industry (Ficci) Sanjiv Mehta's statement that high inflation has impacted consumption and market volumes have gone down, especially in the rural economy, but it is likely to start easing from mid-2022 as it is largely due to supply side constraints or speculation. However, gains remained capped as traders remained watchful with report showing that India's production of crude oil, which is refined to produce petrol and diesel, continued to decline in November, with lower output from state-owned firms leading to an over 2 per cent drop. Crude oil production in November was 2.43 million tonnes, down from 2.48 million tonnes a year back and 2.5 million tonnes in October 2021. Key gauges added some more gains in last leg of trade as traders took support with the ratings agency ICRA's statement that domestic IT services companies are expected to log a dollar revenue growth of 9-12 per cent in FY2022, driven by accelerated demand for digital technologies from enterprises globally and partly on account of low base of last year due to the COVID-19 impact. Meanwhile, the GST Council has not recommended bringing petroleum products under the reformed taxation regime even as certain representations have been made to the government to include petrol and diesel in GST. Finally, the BSE Sensex gained 611.55 points or 1.09% to 56,930.56 and the CNX Nifty was up by 184.60 points or 1.10% to 16,955.45.


The US markets settled in green on Wednesday, extending their previous session's rally, easing worries about Omicron and US President Joe Biden's remarks that it is still possible to reach a deal with Senator Joe Manchin to push the $2 trillion Build Back Better bill through Congress. There are signs that the US and UK were not headed for widespread lockdowns as previously feared. The strength that emerged on markets partly have reflected a positive reaction to the latest US economic data, including a report from the Conference Board showing consumer confidence improved by much more than expected in the month of December. The report showed the consumer confidence index climbed to 115.8 in December from an upwardly revised 111.9 in November. Street had been expecting the consumer confidence index to inch up to 110.7 from the 109.5 originally reported for the previous month. Lynn Franco, Senior Director of Economic Indicators at The Conference Board, noted concerns about both inflation and Covid-10 declined despite reports of continued price increases and the emergence of the Omicron variant. On the sectoral front, housing stocks saw substantial strength on the day, resulting in a 2 percent jump by the Philadelphia Housing Sector Index. The strength among housing starts came after the National Association of Realtors released a report showing existing home sales climbed to a ten-month high in November. NAR said existing home sales jumped 1.9 percent to an annual rate of 6.46 million in November after climbing by 0.8 percent to a rate of 6.34 million in October. Significant strength also emerged among gold stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Gold Bugs Index.


Crude oil futures ended higher on Wednesday, magnifying their previous session's gains, after data showed a larger than expected drop in crude inventories in the US in the week ended December 17th. Data released by the Energy Information Administration showed crude inventories in the US fell by 4.72 million barrels last week, nearly two times the expected drop. The American Petroleum Institute reported on Tuesday that US crude oil stocks fell by 3.7 million barrels last week, while gasoline supplies rose by 3.7 million barrels and distillate stocks fell by 849,000 barrels. Besides, easing worries about Omicron and US President Joe Biden's remarks that it is still possible to reach a deal with Senator Joe Manchin to push the $2 trillion Build Back Better bill through Congress also contributed to the jump in oil prices. Benchmark crude oil futures for February delivery rose $1.64 or 2.3 percent to settle at $72.76 a barrel on the New York Mercantile Exchange. Brent crude for February delivery surged $1.31 or 1.77 percent to settle at $75.29 a barrel on London's Intercontinental Exchange. 


Indian rupee ended higher against dollar on Wednesday, owing to dollar sale by exporters and banks. This is the fifth consecutive session when the rupee traded higher against dollar. Also, strong gains in domestic equity markets provided support to the rupee. Traders took encouragement with the Finance Ministry's report stating that the government has initiated various measures to provide relief and financial support to various sectors of the Covid-19 hit economy, at the same time, fiscal consolidation is also under focus. On the global front, sterling steadied against the dollar and edged up on the euro on Wednesday, despite official data showing Britain's economy grew more slowly than previously thought before the Omicron variant surge seen in recent weeks. Finally, the rupee ended 75.54 (Provisional), stronger by 5 paise from its previous close of 75.59 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6326.83 crore against gross selling of Rs 6630.07 crore, while in the debt segment, the gross purchase was of Rs 414.52 crore against gross selling of Rs 309.58 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.30 crore against gross selling of Rs 5.13 crore.


The US markets ended higher on Wednesday adding to the gains ahead of Christmas holiday. Asian markets are trading mostly in green on Thursday following Wall Street's overnight rally. Indian markets jumped over 1 percent each on Wednesday on the back of lower crude oil prices and a subdued dollar in international markets. Today, markets are likely to continue their bull run with positive start on firm global cues. Some support will come as rating agency ICRA said that profitability of sugar, fertiliser and dairy sectors will remain stable in FY22, with only three months left to close the financial year 21-22. Besides, the I-T department said income tax refunds of over Rs 1.44 lakh crore have been issued to 1.38 crore taxpayers so far this fiscal. This includes 99.75 lakh refunds of Assessment Year (AY) 2021-22 (fiscal ended March 31, 2021) amounting to Rs 20,451.95 crore. Traders may take note of MPC minutes released by the central bank showing that RBI Governor Shaktikanta Das pitched for continued policy support to nurture revival in sectors especially those which are exposed to the evolving headwinds in the wake of spread of Omicron variant of Covid. Meanwhile, Commerce and Industry Minister Piyush Goyal has pitched for simplicity while formulating measures to improve ease of living, doing business and reduce the compliance burden. However, volatility cannot be ruled out on account of potential risk from Omicron variant. India has so far recorded close to 250 cases of Omicron across 15 states and union territories even though at least 90 of the infected people have either recovered or migrated. Amid fresh concerns caused by the Omicron variant, Prime Minister Narendra Modi will hold a meeting on the Coronavirus (Covid-19) situation in the country today. There may be some cautiousness with a private report that Indian Consumer Price Index could rise as much as 150 basis points putting pressure on the central bank, if the GST council chooses to raise rates for many goods in line with the recommendations of the finance commission. There will be some buzz in the IT industry stocks with a private report that the US government has withdrawn the Donald Trump era proposal to change the process of granting H-1B visa from the current lottery system to a wage-based system, a move that could cheer the Indian IT companies. Agriculture industry stocks will be in focus with report that the year 2022 will be momentous for agriculture, as the issue of a legal guarantee of minimum support price (MSP) for crops is expected to be finally decided. There will be some reaction in telecom industry stocks as Indian telecom companies (telcos) are set to see a 40 per cent boost in their operating profits next fiscal, which will give them some room to invest in rolling out their 5G services. Moreover, Medplus Health Services shares will start trading on the stock exchanges today. Shares of Medplus Health Services were offered to investors in a fixed price band of Rs 780-796 per share.


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



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  • ITC has raised its holding to 27.34 per cent in Delectable Technologies. 
  • L&T's construction arm -- L&T construction has bagged significant order for its Buildings and Factories business to construct one of the largest residential townships in Bengaluru. 
  • Axis Bank has emerged as the highest bidder to buy Citibank's consumer banking business. 
  • Tech Mahindra has partnered with Telefonica Germany to digitally transform its microwave network with open software defined networking.
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