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NSE Intra-day chart (04 June 2018)
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Market Commentary 05 June 2018
Markets likely to make cautious start ahead of RBI's meeting outcome

 

Indian equity benchmarks ended the choppy day of trade with half a percent cut, as traders remained on sidelines ahead of services sector data for May slated to be released on June 5, while the Reserve Bank's rate decision will be announced on June 6. The RBI is expected to take a wait-and-watch approach despite the higher GDP growth figures released last week. However, Markets started the session with a gap-up opening as traders took some encouragement with Prime Minister Narendra Modi's statement that India's economy will sustain a growth of 7.5 to 8% per year. He said the Indian government has kept its economic growth forecast for the current fiscal unchanged at 7.5%, buoyed by turnaround in manufacturing and pick up in investment. Traders also took note of Union Minister Nitin Gadkari's statement that in a major policy initiative aimed at benefitting farmers, the government has done away with the licensing permits for foreign vessels for coastal movement of agriculture, fishery and animal produce, besides allowing Indian citizens to charter ships for these. But, market participants pared all of their initial gains and markets turned flat and traded choppy for most part of the day, as sentiments remain dampened on report that foreign investors pulled out a massive Rs 29,714 crore from the capital markets in May, making it the biggest outflow in 18 months, primarily due to a surge in global crude prices. Markets extended losses to end near intraday low levels, as some anxiety persist with report that collections from the Goods and Services Tax in May fell to Rs 94,016 crore, from the Rs 1.03 lakh crore collected in April. Traders paid no heed towards report that the country's Fiscal Deficit, the difference between total revenue and expenditure, has improved in the first month of the current financial year 2018-19, on the back of higher revenue and lower expenditure. As per the latest data released by the controller-general of accounts (CGA), April's fiscal deficit was at 24.3% of the budget estimates, as against 37.6% for the same period of the last fiscal year. Finally, the BSE Sensex declined 215.37 points or 0.61% to 35011.89, while the CNX Nifty was down by 67.70 points or 0.63% to 10,628.50.

 

Continuing rally for the second straight session, the US markets ended higher on Monday, as investors shrugged off global trade tensions and their focused shifted on a favorable economic backdrop instead.  Traders continued to cheer a round of solid US jobs data released on Friday, which showed the world's largest economy in better economic health than expected. That helped spur a move back into riskier assets such as stocks, after political upheaval in Italy earlier last week sparked a flight into havens such as bonds. The optimism over the US data also helped overshadow lingering concerns over global trade on Monday. A round of trade talks between the US and China broke down over the weekend with no agreement, indicating a full-on trade war between the world's two largest economies could be imminent. Meanwhile, finance ministers from Canada, France, Germany, Italy, Japan and the UK issued a rare rebuke to the US at a G-7 meeting on Saturday, expressing their unanimous concern and disappointment about President Donald Trump's decision to place tariffs on metals imports from America's major allies. On the economic front, the US factory orders fell by 0.8% in April, driven by a decline in commercial aircraft. Besides, there will be no Federal Reserve speeches as the central bank is in its so-called blackout period ahead of its June 12-13 meeting. The Dow Jones Industrial Average surged 178.48 points or 0.72 percent to 24813.69 and the S&P 500 increased 12.25 points or 0.45% to 2746.87 and the Nasdaq was up by 52.13 points or 0.69 percent to 7606.46.

 

Crude oil futures extended losses for the third straight session on Monday, as growing expectations that the Organization of the Petroleum Exporting Countries (OPEC) will decide to ease crude production curbs when it meet later this week, weighted down on the sentiments. OPEC's next regular meeting will be held on June 22 in Vienna. OPEC and 10 producers outside the cartel, including Russia, have been cutting crude output by roughly 1.8 million barrels a day since the start of 2017. Besides, investors will be eyeing the EIA's short-term energy outlook and OPEC oil report are both due June 12, and the International Energy Agency's oil report comes out June 13. Benchmark crude oil futures for July delivery dropped $1.06 or 1.6 percent to settle at $64.75 a barrel on the New York Mercantile Exchange. August Brent crude slipped $1.50 or 2 percent to settle at $75.29 a barrel on London's Intercontinental Exchange.

 

Snapping its three-day winning streak, Indian rupee ended marginally weaker against dollar on Monday, due to demand for greenback by banks and importers. Traders remained on sidelines ahead of services sector data for May slated to be released on June 5, while the Reserve Bank's rate decision will be announced on June 6. The RBI is expected to take a wait-and-watch approach despite the higher GDP growth figures released last week. Besides, heavy selling in last hour of trade in the domestic equity markets too weighed on the rupee, but dollar's reduced clout against other currencies overseas helped to cap the losses in rupee. Traders also found some support with Prime Minister Narendra Modi's statement that India's economy will sustain a growth of 7.5% to 8% per year. Further, he said the Indian government has kept its economic growth forecast for the current fiscal unchanged at 7.5%, buoyed by turnaround in manufacturing and pick up in investment. On the global front, dollar moved sharply lower against other major currencies on Monday, as investors digested the latest developments in U.S. trade talks that indicated escalated trade tensions could be on the way. Finally, the rupee ended at 67.12, 6 paise weaker from its previous close of 67.06 on Friday.

 

The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4929.33 crore against gross selling of Rs 4804.25 crore, while in the debt segment, the gross purchase was of Rs 661.81 crore with gross sales of Rs 435.34 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.41 crore against gross selling of Rs 0.08 crore.

 

The US markets ended higher on Monday as traders continued to react positively to the release of better than expected employment data last Friday. Asian markets are trading mostly in red in early deals, as trade concerns continued to linger ahead of the G-7 meeting later in the week. Indian equity benchmarks ended lower on Monday, as investors awaited cues from the Reserve Bank of India's three-day monetary policy meeting beginning on June 4th. Today, the markets are likely to make cautious start as investors will be eyeing Reserve Bank of India's (RBI's) second bi-monthly monetary policy outcome for 2018-19, due on June 6th. Traders will also be eyeing services sector data for May slated to be released later in the day. However, traders may get some support with report that as many as 16 projects, including setting up of a cold chain in Madhya Pradesh, were approved under by a commerce ministry scheme to develop infrastructure for promoting exports. Meanwhile, markets regulator SEBI has drastically slashed the additional expense charged by mutual funds to just 5 basis points to help increase the penetration of such products among investors. The move will help reduce the cost of investing in MFs and industry players believe that it may result in lower commissions for distributors. There will be buzz in sugar related stocks on report that Centre is expected to announce a fresh package of almost Rs 8000 crore to bail out the sugar sector. This will be in addition to the financial assistance of Rs 5.50 per quintal of sugarcane announced a few weeks ago, costing over Rs 1500 crore.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

10,628.50

10,574.47

10,726.42

BSE Sensex

35,011.89

34,810.90

35,384.24

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

HDFC Bank

221.99

2,046.20

2,003.77

2,122.82

ICICI Bank

171.89

286.75

283.77

291.52

Yes Bank 

145.02

342.95

339.67

348.57

SBI

129.34

263.00

260.08

267.13

Vedanta

114.84

246.75

244.35

249.30

 

  • ONGC has logged a loss of Rs 4,000 crore on natural gas output in FY18, as the government mandated price for the fuel was less than the cost of production. 
  • Hindustan Unilever is planning to launch traditional South Asian breakfast options. 
  • Dr Reddy's Laboratories is expecting to launch over 15 products in the US market in 2018-19. 
  • Lupin has launched Methylergonovine Maleate Tabs USP, 0.2 mg, having received an approval from the USFDA earlier.
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