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NSE Intra-day chart (01 July 2019)
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Market Commentary 02 July 2019
Benchmarks to make a cautious start on Tuesday


Indian equity benchmarks gave a firm start to the month of July, with Sensex and Nifty closing higher by around 300 and 80 points, respectively. The start of the day was fabulous, as the Reserve Bank of India (RBI) relaxed the leverage ratio (LR) for banks to help them boost their lending activities. The leverage ratio stands reduced to 4% for Domestic Systemically Important Banks (DSIBs) and 3.5% for other banks effective from the quarter commencing October 1, 2019. The street remained enthusiastic amid report that the finance ministry will come up with further reforms in the indirect tax system with the introduction of new return system, rationalization of cash ledger system and a single refund-disbursing mechanism, among others. Rally continued throughout the day, amid report that foreign investors infused a net amount of Rs 10,384 crore into the Indian capital markets in June and remained net buyers for the fifth month in a row on expectations of continued economic reforms. Some support also came with a report stating that the government is working on a proposal to extend tax benefits to retail investors in its two exchange-traded funds - CPSE and Bharat-22 ETF. Optimism remained among market participants, even though Indian manufacturing sector lost growth momentum in the month of June, on the back of softer increase in output. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) eased to 52.1 in June from 52.7 in May. Finally, the BSE Sensex gained 291.86 points or 0.74% to 39,686.50, while the CNX Nifty was up by 76.75 points or 0.65% to 11,865.60.


The US markets ended in green terrain on Monday, as traders took some encouragement with report that President Donald Trump and Chinese President Xi Jinping agreed to restart stalled trade negotiations. Trump met with Xi on the sidelines of the G20 summit in Osaka, Japan, over the weekend, stating the meeting was excellent, as good as it was going to be and we're right back on track. In his closing G20 press conference, Trump revealed that he will not follow through on threats to raise tariffs on all remaining Chinese imports at least for the time being. The president also suggested that the U.S. would allow American companies to sell products to Chinese tech giant Huawei that do not pose national security concerns. In return for holding off on tariffs and loosening restrictions on sales to Huawei, Trump said China has agreed to purchase large quantities of U.S. agricultural products. However, markets pared some of their gains in late trade by reports from the Institute for Supply Management showing a continued slowdown in the pace of growth in U.S. manufacturing activity in the month of June. The ISM said its purchasing managers' index edged down to 51.7 in June after slipping to 52.1 in May, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to dip to 51.0. With the continued decrease, the index dropped to its lowest level since hitting a matching reading in October of 2016. Dow Jones Industrial Average surged 117.47 points or 0.44 percent to 26,717.43 and S&P 500 jumped 22.57 points or 0.77 percent to 2,964.33 and Nasdaq was up by 84.92 points or 1.06 percent to 8,091.16.


Crude oil futures ended significantly higher on Monday, despite giving up a substantial portion of its earlier gains, as Organization of Petroleum Exporting Countries' (OPEC's) decision to extend its current 1.2 million barrel per day output cuts for another nine months instead of the expected six month extension. Reports also suggested that Russia and Saudi Arabia will likely to agree with the decision. Saudi Arabia's Energy Minister Khalid al-Falih reportedly said most OPEC members would like to see a nine-month deal extension. Benchmark crude oil futures for August rose $0.62 cents or 1.1 percent to settle at $59.09 a barrel on the New York Mercantile Exchange. August Brent gained 0.5 percent to settle at $65.07 a barrel on London's Intercontinental Exchange.


Indian rupee ended marginally higher on Monday on selling of dollars by banks and exporters. Besides, positive trend in equity market too supported the rupee.  However, gains were capped as investors remained cautious with monthly survey showing that the Indian manufacturing sector growth moderated in June, largely owing to softer increase in new work intakes, which in turn translated into slower rises in output and employment. The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) was at 52.1 in June, down from May's three-month high of 52.7, indicating a slight setback in the Indian manufacturing sector.  On the global front, dollar rose to one-week highs against a currency basket on Monday as a trade truce between the U.S. and China dampened demand for safe haven currencies, such as the yen and the Swiss franc. Finally, the rupee ended at 68.94, 8 paise stronger from its previous close of 69.03 on Friday.


The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment.  In equity segment, the gross buying was of Rs 5382.69 crore against gross selling of Rs 5951.53 crore, while in the debt segment, the gross purchase was of Rs 2478.95 crore with gross sales of Rs 613.32 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.44 crore against gross selling of Rs 4.09 crore.


The US markets ended higher on Monday after President Donald Trump and Chinese President Xi Jinping agreed to restart stalled trade negotiations. Asian markets are trading mostly higher on Tuesday after the US and China over the weekend agreed to a timeout in their tariff war and agreed to resume trade negotiations. Indian equity markets ended higher on Monday on the back of buying by participants, tracking positive global sentiment stemmed from trade truce between the US and China. Today, the start of the session is likely to be a cautious on some sluggish regional cues. Traders will remain concern on report that Goods and Services Tax (GST) receipts in June fell to Rs 99,939 crore, down from over Rs 1 trillion in the previous month. The total gross GST revenue collected in the month of June, 2019 was Rs 99,939 crore of which Central-GST was Rs 18,366 crore, State-GST was Rs 25,343 crore, Integrated-GST was Rs 47,772 crore (including Rs 21,980 crore collected on imports) and cess was Rs 8,457 crore (including Rs 876 crore collected on imports). There will be some cautiousness too with India Meteorological Department's statement that Monsoon deficiency in June this year was the highest for the month since 2015. The month ended with 33 per cent deficiency which translates to around 67 per cent of the Long Period Average (LPA). Several parts of the country have been witnessing drought-like situation. The Central Water Commission data revealed that as on June 27, of the 91 major reservoirs in the country, 62 water bodies reported 80 per cent or below normal storage. However, traders may take some support later the day on report that the eight core sector industries recorded a growth of 5.1 per cent in May on the back of healthy output in steel and electricity. The eight core sector industries - coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity - grew by 4.1 per cent in May last year. Steel and electricity output increased by 19.9 per cent and 7.2 per cent, respectively, during the month under review. The MSMEs stocks will keep buzzing on report that Govt is working on new credit scheme for MSMEs to encourage job creation.


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  • Coal India's coal supply to the power sector has declined by 2.6 per cent to 80.9 MT in the first two months i.e April to May of the ongoing fiscal.
  • Bajaj Auto has registered a marginal rise of 0.05% in total sales to 404,624 units in June 2019 against 404,429 units in June 2018.
  • Tata Motors' wholly owned subsidiary -- JLR is looking to accelerate its business in India, building on the foundation laid in the last one decade.
  • Maruti Suzuki India has reported total sales of 124,708 units in June 2019, as compared 144,981 units in June 2018, registering fall of 14%.
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