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NSE Intra-day chart (29 June 2018)
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Market Commentary 02 July 2018
Markets to make slightly negative start


Snapping two-day losing streak, Indian equity benchmarks ended Friday's session on optimistic note, with key gauges recapturing there crucial 35,400 (Sensex) and 10,700 (Nifty) levels, amid firm global markets. The bourses started the session in green with the International Monetary Fund (IMF) suggesting steps to sustain the high growth rate which India has achieved. It said that the country should carry out banking sector reforms; continue with fiscal consolidation, simplify and streamline GST; and renew impetus on reforms. Investors took some encouragement with Economic Affairs Secretary Subhash Chandra Garg's statement that India has adequate ‘firepower' of foreign exchange reserves to deal with the current volatility in the rupee. Some support also came with Secretary of the Department of Expenditure under Finance Ministry Ajay Narayan Jha's statement that the fiscal deficit, which is the difference between total revenue and expenditure, for the current financial year (FY19), will be maintained at 3.3% of the gross domestic product (GDP) and the fiscal consolidation of the country is as per the ‘commitment'. In the second half of the session, the key indices rallied further to reach near their intraday high points, on the back of fresh buying by funds and retail investors. The markets participants took support with a private report stating that the second quarter of calendar year 2018 saw the biggest ever private equity (PE) investments in India. The PE firms have invested a record $8.2 billion during the quarter ended June 2018, an increase of 60% compared with $5.1 billion in the same period last year. The street paid no heed towards the World Bank's latest report stating that the India may see 2.8% fall in GDP by 2050, amid rising temperatures and changing monsoon rainfall patterns from climate change. Investors even overlooked Finance Minister Piyush Goyal's statement that strong action would be taken against illicit Swiss deposits. He further noted that India would start getting details of bank accounts from Switzerland under a bilateral treaty. Finally, the BSE Sensex rose 385.84 points or 1.10% to 35,423.48, while the CNX Nifty was up by 125.20 points or 1.18% to 10,714.30.


The US markets ended slightly higher for second straight day on Friday, as markets surrendered most of an early gain as worries about rising tariffs once again dampened investors' enthusiasm as the second quarter came to an end. However, some support came with the Federal Reserve allowing 32 of the 35 largest banks in the US to raise their quarterly dividends and buy back more stock. The central bank determined that those institutions are in good enough financial shape to weather a major downturn in the economy. Meanwhile, after nine hours of talks, European Union leaders reached a deal over the crisis of migration in the early hours of Friday, taking pressure off German Chancellor Angela Merkel who had been pushing hard for an agreement. On the economic front, the personal-consumption expenditures index, the Federal Reserve's preferred inflation gauge, rose 0.2% as did the core rate that strips out food and energy. The rate of inflation over the past 12 months rose to 2.3%, the fastest pace since March 2012. Besides, Chicago PMI climbed to a reading of 64.1 in June, up from 62.7, the fastest reading since January and the highest level in six month. Any reading above 50 indicates improving conditions. Further, the final University of Michigan consumer sentiment index for June came in at 98.2, slightly below forecasts. The Dow Jones Industrial Average gained 55.36 points or 0.23 percent to 24,271.41, the S&P 500 rose 2.06 points or 0.08 percent to 2,718.37 and the Nasdaq was up by 6.62 points or 0.09 percent to 7,510.30.


Crude oil futures extended gains for fourth straight session on Friday, as long-running efforts by the Organization of the Petroleum Exporting Countries (OPEC), anticipated increases in demand and supply disruptions combined to thrust prices higher. Besides, output concerns linked to Venezuela, Libya and Canada, as well as uncertainty surrounding Iranian exports, contributed to gains in oil prices. Further, recent sharp declines in US crude supplies supported the rally. According to oilfield-services firm Baker Hughes, the number of oil rigs declined by four to 858. The number is up 102 from a year ago. The number of gas rigs fell by 1 to 187 and stands 3 higher than at this time in 2017. Benchmark crude oil futures for August delivery surged 70 cents or 1 percent to settle at $74.15 a barrel on the New York Mercantile Exchange. August Brent crude gained $1.59 or 2 percent at $79.44 a barrel on London's Intercontinental Exchange.


Halting a four-day slide, Indian rupee ended considerably stronger against dollar on Friday, due to increased selling of the American currency by exporters and banks. Traders remained optimistic with a private report stating that the second quarter of calendar year 2018 saw the biggest ever private equity (PE) investments in India. The PE firms have invested a record $8.2 billion during the quarter ended June 2018, an increase of 60% compared with $5.1 billion in the same period last year. Besides, strong rally in local equity market and sustained capital inflows also propped up the rupee. However, gains got restricted with report that the fiscal deficit of Rs 3.45 lakh crore during April-May period, or 55.3% of the budgeted target for the current fiscal year. On the global front, the dollar held firm versus the yen on Friday, supported by quarter-end buying as well as an absence of any fresh escalation in trade-related tensions between the United States and its major trading partners. The dollar is also broadly supported thanks to the prospects of rising US interest rates on the back of solid expansion in the US economy. Finally, the rupee ended at 68.47, 32 paise stronger from its previous close of 68.79 on Thursday.


The FIIs as per Friday's data were net seller in equity and debt segments both. In equity segment, the gross buying was of Rs 7415.39 crore against gross selling of Rs 8093.13 crore, while in the debt segment, the gross purchase was of Rs 618.12 crore with gross sales of Rs 1614.08 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.84 crore against gross selling of Rs 2.50 crore.


The US markets ended higher on Friday, after announcing buybacks and dividend hikes following the Federal Reserve's annual stress test. Asian markets were trading mixed on Monday, with trade tensions between the US and its trading partners still a key concern for investors. Indian equity markets rallied on Friday, as the July derivatives contracts kicked off on a strong note coupled with a firming trend at other Asian markets amid recovery in the rupee supported the markets. Today, the start is likely to remain cautious, as traders will be concern about a report that foreign direct investment (FDI) in India seems to be petering out with the inflows growth rate recording a five-year low of 3% at $44.85 billion in 2017-18. Also, there will be negative reaction on India's budgetary fiscal deficit for April-May 2018-19 stood at 55.3% -- Rs 3.45 lakh crore -- of the full year's target of Rs 6.24 lakh crore. Besides, the Reserve Bank of india in latest report stated that India's external debt stood at $529.7 billion at the end of March 2018, recording an increase of $58.4 billion year-on-year, primarily on account of a rise in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. Meanwhile, revenue collection from Goods and Services Tax (GST) rose to Rs 95,610 lakh crore in June, as compared with Rs 94,016 crore a month ago. There will be buzz in steel sector stocks, with Union Steel Minister Chaudhary Birender Singh's statement that the US' levy of heavy tariffs on imported steel and aluminum would not have any major impact on steel production in India as steel export to US was only 3.3% of total exports. Besides, the auto sector stocks will also be in action, reacting to their monthly sales numbers.

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  • UltraTech Cement has commissioned the second unit of 1.75 mtpa cement grinding capacity at Manavar District - Dhar, Madhya Pradesh. 
  • Wipro has completed the divestment of its data centre business in Germany and the UK on June 28, 2018, along with the company's Data Centre and Cloud Services, for a consideration of $399 million. 
  • Lupin and the Municipal Corporation of Greater Mumbai have united and launched a joint campaign to detect and address active cases of TB in Mumbai. 
  • Vedanta is planning to raise funds up to Rs 1,500 crore through issuance of offer rated, secured, redeemable, non-cumulative, NCDs in one or more tranches.
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