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NSE Intra-day chart (30 June 2016)
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Market Commentary 01 July 2016
Markets to make a positive start of the new series and month


The June series futures and options contract expiry turned out to be a jubilant session for the Indian frontline equity indices as they managed to settle with gains of around a percent, with worries over the impact of the Britain's decision to leave the European Union known as Brexit receded. Investors remained optimistic for most part of the session with the report that implementation of the much-awaited pay hike for over 1 crore central government employees and pensioners will be a positive for the economy as it will push up consumption and its impact on inflation is likely to be moderate.  The Cabinet has cleared the recommendations of the 7th Pay Commission according to which the overall hike in salary and allowance of central government employees and pensioners comes to 23.5 per cent. Besides, appreciation in Indian rupee against the dollar too aided sentiments. Indian rupee firmed up by 15 paise to 67.52 against the dollar at the time of equity markets closing, following sustained selling of the US currency by exporters and banks. Some support also came with Finance Minister Arun Jaitley's statement that the Non Performing Assets (NPA) situation is under control as the economic conditions are showing signs of improvement. He pointed to some factors mentioned in the FSR including the numbers of declining weak companies and the number of stressed companies deleveraging quite fast. Meanwhile, after disappointing on first half of June, Monsoon have gathered pace in second half of the month, leading to significant drop in countrywide rainfall deficiency. As on June 29, the countrywide cumulative rainfall deficiency stands at 12%, which had once mounted to 25% earlier. On the global front, Asian markets closed mostly higher, while European shares too rose in early deals. Back home, the benchmark started the day on an optimistic note tracking the Asian peers which traded mostly in the green following the upbeat overnight cues from the Wall Street where banks and other financial companies led another broad surge. The frontline indices soon gathered momentum and traded with over a percent gains. Finally, the BSE Sensex surged 259.33 points or 0.97% to 26999.72, while the CNX Nifty rose 83.75 points or 1.02% to 8,287.75.


The US markets closed higher on Thursday, for a third session on mounting expectations for more accommodative policies from global central banks following the UK's vote to leave the European Union last week. All three indexes are near the levels they were trading at ahead of last week's UK referendum as initial jitters over Brexit subsided. On the economy front, a measure of Chicago-area economic activity surged in June on a big advance in the number of purchasing managers indicating improving production and new orders. The Chicago PMI rose to 56.8, a rise of 7.5 points to move the index comfortably above the 50 mark indicating improving conditions. The new-orders index rose to the highest level since October 2014. Order backlogs were the strongest since March 2011. For the second quarter as a whole, the Chicago PMI index fell slightly to 52.2 from 52.3. However, the number of Americans filing for unemployment benefits rose last week, but remained below a level associated with a healthy labor market. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 268,000 for the week ended June 25. The Dow Jones Industrial Average was up by 235.31 points or 1.33 percent to 17,929.99, Nasdaq added 63.42 points or 1.33 percent to 4,842.67, while S&P 500 gained 28.09 points or 1.36 percent to 2,098.86.


Crude oil futures declined on Thursday, retreating from two-week highs amid heavy profit taking. Investors continued to digest Wednesday's bullish inventory report, which said U.S. commercial crude oil inventories decreased by 4.1 million barrels last week. However, crude snapped the second quarter with one of its strongest three-month rallies in seven years, amid a host of global supply disruptions in recent weeks. Benchmark crude oil futures for August delivery declined by $ 1.54 or 3.09 percent to $48.34 a barrel after trading in a range of $48.27 and $49.62 a barrel on the New York Mercantile Exchange. In London, Brent crude for September delivery closed at $49.66, down $1.66 or 3.23 percent on the ICE.


Extending its gaining streak for second consecutive session, Indian rupee appreciated against dollar on Thursday on sustained selling of the American currency by exporters and banks and a strong domestic equity markets. Besides, dollar's weakness against some other currencies overseas provided added momentum to the rupee. Optimism that the government's move to implement the wage hike for its employees this year would stoke demand and help growth also supported the domestic currency. On the global front, dollar remained near a 3-1/2-month high against a basket of currencies hit in the wake of Britain's stunning vote to exit from the European Union. Finally, the rupee ended 67.52, 16 paise stronger from its previous close at 67.68 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity, the gross buying was of Rs 3609.86 crore against gross selling of Rs 3464.28 crore, while in the debt segment, the gross purchase was of Rs 827.26 crore with gross sales of Rs 154.06 crore.             


The US markets surged in last session, extending their rally mood for the third straight day after Bank of England Governor Mark Carney hinted at providing further stimulus and traders largely shrugged off a Labor Department report showing that initial jobless claims rose by slightly more than expected. The Asian markets have made mostly a positive start, heading for the weekly gains and limiting the fallout from the UK's decision to leave the European Union, though a private gauge of China's manufacturing industry unexpectedly fell.   The Indian markets rallied in the last session, making a strong close of the June F&O series, with major averages gaining around two and half a percent for the series. Today, the start of the new series is likely to be in green on positive global cues and encouragement from World Bank's statement that India is a bright spot. The World Bank president has said that he is pleased with the progress that's been made in six priority areas. He added that Prime Minister Modi and his entire Cabinet have set extremely difficult and important targets. However, there will be some cautiousness too, as the Core sector growth fell  sharply to a five-month low in May at 2.8% after hitting a 16-month high in April, indicating further softening in already weak industrial activity. Also, there are reports that India and Cyprus are poised to ink a new tax treaty which, like in the case of a similar deal with Mauritius, shuts the door on investors using the country's tax loopholes to avoid paying taxes in India. There will be some buzz in the PSU oil marketing stocks, as the Petrol price has been cut by 89 paise a litre and diesel by 49 paise a litre, the first decrease in rates in two months.

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  • HDFC Bank has launched SMe Bank, India's first full-fledged digital banking service for small-and medium enterprises.
  • Tata Power Solar, a wholly owned subsidiary of Tata Power, has successfully commissioned a 100 kW rooftop solar project for Toyota Kirloskar Auto Parts near Bengaluru.
  • Axis Bank has launched 'Thought Factory', an innovation lab facility aimed at accelerating the development of innovative technology solutions for the banking sector.
  • Coal India and Solar Energy Corporation of India Limited signed two agreements for implementation of 200 MW Solar Power Project in the State of Madhya Pradesh.
  • Maruti Suzuki India has signed a Memorandum of understanding with Government of Andhra Pradesh to set up Institute of Driving Training and Traffic Research.
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