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NSE Intra-day chart (01 June 2016)
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Market Commentary 02 June 2016
Markets consolidation to get a extension with a cautious start


Indian benchmarks despite getting a wonderful start and surging to around three fourth of a percent in first half of the session, failed to maintain the lead and ended with gain of around quarter a percent only. Sentiments were sanguine from the start of trade with the report that India's GDP grew 7.6% in the year ended March, outstripping previous leader China and faster than last year's 7.2%.  January-March growth sped up to 7.9% from the preceding quarters, suggesting that despite the caveats, India will remain an island of relative prosperity in a world afflicted by economic uncertainty. Indicating yet another better tiding for the economy, Core sector production continued on its positive trajectory for the fifth straight month, with April growth accelerating the fastest in 17 months at 8.5%.  Core sector output has been growing steadily from December, with monthly readings being 0.9%, 2.9%, 5.7% and 6.4%, respectively, through March.  Some support also came with the report that India's manufacturing PMI in May stood at 50.7 as against 50.5 in April, indicating an uptick in the manufacturing data. However, weak trend in global markets coupled with depreciation in rupee value limited the gains. On the global front, Asian markets ended mostly in red on Wednesday, while European stocks traded lower in early trade. Back home, the local benchmark indices got off to a rollicking opening as investors rejoiced after macro-economic indicators such as GDP numbers and core sector growth showing the country's economy has gained momentum. Besides, a strong rupee, decent fourth quarter results and advancement of monsoons too were aiding the sentiments. The indices in no time climbed to intraday highs and traded around the psychological 26,850 (Sensex) and 8,200 (Nifty) levels. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors and drifting European markets weighed down the local bourses by the end of session. Finally, the BSE Sensex gained 45.97 points or 0.17% to 26713.93, while the CNX Nifty rose 19.85 points or 0.24% to 8,179.95.


The US markets closed higher on Wednesday, as investors focused on the positive aspects of the latest batch of data that showed the US economy plodding along. The Federal Reserve's Beige Book, a collection of anecdotes about the economy, indicated that most districts were seeing only moderate performance and that consumer spending and employment posted mostly modest growth. The Chicago and Kansas City districts reported that the pace of growth had slowed, while the Dallas district reported minimal growth. The New York Fed's activity in its district was flat. Several districts reported rising demand for high-skilled workers. Atlanta and Richmond noted that low-skilled positions were also getting harder to fill. About the best thing mentioned in the report was that the US central bank's business contacts were generally optimistic about the future, with firms expecting growth to continue at its current pace or to increase. Also, the US manufacturers grew in May but at a very slow pace, suggesting the sector is unlikely to speed up anytime soon. The Institute for Supply Management stated that its manufacturing index rose to 51.3% last month from 50.8% in April. The Dow Jones Industrial Average was up 2.47 points or 0.01 percent to 17,789.67, Nasdaq was higher by 4.19 points or 0.08 percent to 4,952.25 while, S&P 500 gained 2.37 points or 0.11 percent to 2,099.33.


Crude oil futures despite paring sharp losses of early trade ended lower on Wednesday, as OPEC members worked to revive a dormant pact aimed at freezing output, shortly after Russia announced that it will no longer participate in such a deal due to the rising cost of oil. Traders were also eyeing the American Petroleum Institute's oil inventories data, with reports of US stockpiles starting to dwindle after surging to record highs. Benchmark crude oil futures for July delivery declined by $0.02 or 0.04 percent to $49.08 a barrel after trading in a range of $47.76 and $49.10 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $49.81, down $0.08 or 0.16 percent on the ICE.


Indian rupee continued its weakness for the third straight session on Wednesday, on fresh dollar demand from importers. However, the domestic currency made a positive start in early deals on sustained bouts of dollar selling from banks and exporters, after macro-economic indicators such as GDP numbers and core sector growth showed that the country's economy has gained momentum. Also, the government was able to keep the fiscal deficit in check. But later the rupee lost its momentum with local equity markets showing some volatile trend. There were some reports that RBI governor Raghuram Rajan doesn't want an extension of his term and that too weighed on the sentiments. On the global front, the dollar turned lower against the other major currencies, weighed down by last session's mixed US economic reports. Finally, the rupee ended at 67.45, 19 paise weaker from its previous close at 67.26 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity, the gross buying was of Rs 18838.52 crore against gross selling of Rs 18818.86 crore, while in the debt segment, the gross purchase was of Rs 286.05 crore with gross sales of Rs 537.52 crore.



The US markets managed a modestly positive close in last session, coming out of their early weakness. Though, the trade remained choppy but a report from Institute for Supply Management showing an unexpected uptick in the pace of growth in manufacturing activity in May, supported the markets. The Asian markets have made a mixed start and the decliners were led by the Japanese market, which was down close to two percent in morning trade, as uncertainty over the outlook for Japanese stimulus policy revived the yen. The Indian markets despite paring their early jubilation of good economic data and going through a volatile trade, managed a modestly positive close in last session. Today, the start is likely to be a bit cautious and further consolidation can be expected with no major supportive cues in sight. However, traders will be getting some support with Organisation for Economic Cooperation and Development (OECD) in its Global Economic Outlook stating that India's growth rate is expected to hover near 7.5% this year as well as next even as many emerging market economies continue to lose momentum.  Meanwhile, Finance Minister Arun Jaitley has said that the roll-out of GST will convert India into one common market, prevent tax-on-tax and make goods and services cheaper. He also said that the country is on an "upward curve" and a good monsoon, GST passage and increased infra and rural spending will further accelerate the growth. The consumer goods stocks will continue to remain in action, with service tax proposals announced during the Union Budget 2016 coming into effect from June 1, imposing 0.5 percent Krishi Kalyan Cess and increasing the total incidence of service tax to 15 percent.


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Tata Motors






  • Maruti Suzuki India has registered a rise of 7.1% in its total car sales for the month of May 2016 at 123,034 units, as against 114,825 units in May 2015.
  • Bharat Heavy Electricals has successfully commissioned another 520 MW coal-based thermal generating unit in Andhra Pradesh.
  • M&M has reported its auto sales numbers which stood at 40,656 units during May 2016 as against 36,703 units during May 2015, representing a growth of 11%.
  • Hero MotoCorp has reported a 2.32% increase in sales at 583,117 units of Two-wheeler in May 2016.
  • ONGC Videsh, the overseas investment arm of ONGC, has completed acquisition of 15% equity from Rosneft Oil Company, in JSC Vankorneft.
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