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NSE Intra-day chart (01 August 2018)
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Market Commentary 02 August 2018
Markets likely to start slightly in red on weak global cues


Snapping record hitting spree, Indian equity benchmarks ended the volatile day of trade with marginal losses, after Reserve Bank of India (RBI) raised repo rate. Markets started the session in green terrain with traders taking encouragement from the commerce and industry ministry's data showing that growth of eight core sectors expanded to 7-month high of 6.7% in June on the back of better performance by cement, refinery and coal segments. Some support also came with a private report that the Indian economy is likely to have witnessed solid economic growth in the April-June quarter but leading indicators suggest a slowdown in the coming months. The report stated that GDP growth to peak in April-June quarter and then moderate to 7.2% in the second half of 2018 from around 7.8% in first half. Traders also took note of report that the United States on Monday designated India as a Strategic Trade Authorization-1 (STA-1) country - a status that will allow the country to buy highly advanced and sensitive technologies from America. However, sentiments turned pessimistic after the RBI's Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to 6.50%. It is the first time since October 2013 that the rate has been increased at consecutive policy meetings. Markets showed some strength to pare all of their losses in last leg of trade, but the recovery proved short lived and key gauges settled in red terrain, as sentiments turned downbeat on report that growth in India's manufacturing industry slowed last month, largely pressured by a modest weakening in demand and output, though overall conditions remained solid. The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, decreased to 52.3 in July from June's 53.1. Finally, the BSE Sensex declined 84.96 points or 0.23% to 37,521.62, while the CNX Nifty was down by 10.30 points or 0.09% to 11,346.20.


The US markets ended mostly lower on Wednesday after the Federal Reserve left interest rates unchanged but signaled another imminent rate increase. With the decision widely anticipated, closer attention was paid to the accompanying statement, which included only minor changes from the June statement. Further, the Fed is scheduled to hold its next monetary policy meeting in late September, with CME Group's FedWatch Tool currently indicating a 91 percent chance for a quarter-point rate hike. Fresh worries over US-China trade friction too dampened sentiment amid report that Donald Trump's administration is considering raising the proposed tariff on $200 billion worth of Chinese imports to 25 percent from the 10 percent announced last month. On the economic front, payroll processor ADP released a report showing private sector employment increased by much more than expected in the month of July. ADP said private sector employment jumped by 219,000 jobs in July after climbing by an upwardly revised 181,000 jobs in June. The street had expected an increase of about 185,000 jobs compared to the addition of 177,000 jobs originally reported for the previous month. Meanwhile, a separate report from the Institute for Supply Management showed a slowdown in the pace of growth in manufacturing activity in the month of July. The S&P 500 lost 2.93 points or 0.10 percent to 2813.36 and the Dow Jones Industrial Average was down by 81.37 points or 0.32 percent to 25,333.82, while the Nasdaq jumped 35.50 points or 0.46 percent to 7,707.29.


Crude oil futures ended lower for the second straight day on Wednesday on account of surprise rise in US crude inventories. The Energy Information Administration (EIA) reported that domestic crude supplies rose by 3.8 million barrels for the week ended July 27. However, EIA data showed total domestic crude production for the week fell by 100,000 barrels a day to 10.9 million barrels a day. That was from a record level of 11 million barrels a day. Besides, investors also remained cautious that global supply levels are on the upswing, as production from the Organization of the Petroleum Exporting Countries (OPEC) and Russia increased. Benchmark crude oil futures for September lost $1.10 or 1.6 percent to settle at $67.66 a barrel on the New York Mercantile Exchange. October Brent crude declined $1.82 or 2.5 percent at $72.39 a barrel on London's Intercontinental Exchange.


Indian rupee strengthened for second consecutive session on Wednesday, on dollar selling by exporters and banks. The rupee sentiment was buoyed after the RBI's Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to 6.50%. It is the first time since October 2013 that the rate has been increased at consecutive policy meetings. Some support also came with a report that growth of eight core sectors expanded to 7-month high of 6.7% in June due to better performance by cement, refinery and coal segments. However, further up-move got restricted as anxiety remained among traders with weather forecasting agency Skymet cutting 2018 monsoon estimate to 92% of the long period average (LPA) from the earlier normal monsoon prediction, noting that as of now, the oceanic parameters are not at all favourable for enhancing monsoon rain during the second half of the season. On the global front, Pound Sterling eased lower on Wednesday after July's IHS Markit manufacturing PMI left traders with little incentive to place big bets on the currency ahead of the Bank of England (BoE) interest rate decision due Thursday. Finally, the rupee ended at 68.43, 12 paise stronger from its previous close of 68.55 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 6185.95 crore against gross selling of Rs 5282.23 crore, while in the debt segment, the gross purchase was of Rs 997.74 crore with gross sales of Rs 290.19 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.92 crore against gross selling of Rs 12.51 crore.


The US stocks ended mostly lower on Wednesday, after the Federal Reserve left interest rates unchanged but signaled another imminent rate increase. Asian markets were trading mostly in red in early deals on Thursday, with sentiment fragile after the latest escalation in Sino-US trade war while global bond markets were rattled by Washington's increased borrowing and Japan's new tolerance for higher yields. Indian equity markets ended Tuesday's session in negative territory, recovering partly from the day's low, followed by Reserve Bank of India's (RBI) decision to hike key interest rates by 25 basis points to 6.5%. Today, the markets are likely to make flat-to-negative start amid weak global cues. Traders will be concerned with RBI Governor Urjit Patel flagging the risks to macroeconomic stability from a potential currency war in the wake of rising global trade tensions. Also, there will be negative reaction on EEPC India chairman Ravi Sehgal's statement that the 25 basis points increase in the interest rates by the RBI is a big negative for exporters, as they would become less competitive in a tough global market that is already facing the threat of tariff war. However, traders may get some support later in the day with report that RBI has maintained its growth outlook for the economy, estimating the country's Gross Domestic Product (GDP) to grow at 7.4% in 2018-19. It noted that GDP growth would range between 7.5-7.6% in H1 and 7.3-7.4% in H2. There will be some support with the Ministry of Finance's statement that Goods and Services Tax (GST) revenue collections for the month July reached Rs 96,483 crore, which remains broadly on expected lines. The tax revenue from GST collection increased in comparison to Rs 95,610 crore seen during the month of June. Meanwhile, the Cabinet has approved GST laws amendments which included hiking threshold limit for availing composition scheme dealers to Rs 1.5 crore, among other things. There will be lots of earnings announcements too, to keep the markets in action.


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  • Bajaj Auto has registered a rise of 30% in total sales to 400,343 units in July 2018 against, 307,727 units in July 2017. 
  • M&M's direct subsidiary -- Ssangyong Motor Company has incorporated a subsidiary company namely -- SsangYong Australia Pty -- in Australia, on July 31, 2018. 
  • Power Grid has reported 9.17% rise in its net profit at Rs 2,240.54 crore for Q1FY19 as compared to Rs 2,052.41 crore for Q1FY18. 
  • Eicher Motors' motorcycle division has reported 7% rise in sales at 69,063 units in July 2018 as compared to 64,459 motorcycles sold in July 2017.
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