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NSE Intra-day chart (30 June 2017)
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Market Commentary 03 July 2017
Markets to make a flat-to-cautious start on mixed global cues


Indian equity markets started the session on a sluggish note but managed to eke out some gains by the end of trade, as the benchmark indices clawed back into the green terrain in the last leg of trade on getting some supportive leads from the European markets. The session largely remained characterized by choppiness as investors remained cautious ahead of the landmark tax reform Goods and Services Tax (GST), which is set to launch today midnight. The indices ended the month of June in negative, first monthly loss this year. Broader markets managed a touch better than the larger peers, as the BSE's midcap and smallcap indices settled with gains of 0.63% and 0.66% respectively. Sentiments got some support with Industry body FICCI's report that the rollout of GST will bring about significant gains to India's economy and it looks forward to working with the government for successful implementation of the crucial tax reform. Also, Arun Jaitley said that GST is an efficient and simple system with less corruption, adding that prices should decline after GST is in place July 1, while anticipating some teething troubles. On the global front, Asian equity markets ended mostly lower on Friday, as major central banks signalled that the era of cheap money was coming to an end, which hurt both U.S. markets overnight. Japanese shares hit two-week lows, with a stronger yen, weak overnight cues from Wall Street and mixed economic reports weighing on sentiment. Back home, shares of telecom companies declined after ICRA's latest report indicated that intense competition and pricing pressure will continue to take a toll on the telecom sector with industry revenue expected to fall another 6 percent during the current financial year. Further, mixed reaction was observed in real estate stocks after the government on Thursday hiked the GST rate for the construction sector to 18% from 12%, but removed land value from computation of tax liability. Auto stocks edged lower on worries that GST would push up prices of cars and lead to a decline in sales. Finally, the BSE Sensex gained 64.09 points or 0.21% to 30921.61, while the CNX Nifty was up by 16.80 points or 0.18% to 9,520.90. 


The US markets closed mostly higher on Friday, after trimming gains in the last few minutes of the session. However, steep losses in technology and health-care stocks earlier in the week resulted in poor weekly and mixed monthly performances for all three benchmarks. Still, the main benchmarks posted solid quarterly gains, while the S&P 500 index and Nasdaq Composite ended their first half of the year with the largest gains in several years. On the economy front, a regional index of business conditions in the Chicago area rose in June to the highest level in more than three years, suggesting steady growth in the US economy. The Chicago Business Barometer rose to 65.7 in June from 59.4 in May. That's the highest level since May 2014. New orders climbed to the highest level in three years and backlogs for orders reached a 23-year high, potentially reflecting large bookings for Boeing jets. An employment gauge fell slightly but still remained quite healthy. Companies were worried about a scarcity of skilled workers, an increasingly frequent complaint. The Dow Jones Industrial Average added 62.6 points or 0.29 percent to 21,349.63, S&P 500 edged higher by 3.71 points or 0.15 percent to 2,423.41, while Nasdaq dropped 3.93 points or 0.06 percent to 6,140.42.


Crude oil futures extended their gaining streak and surged on Friday, on reports that the US oil rig count dropped for the first time in five months, suggesting that U.S. production could be tightening, easing oversupply jitters. Oil services firm Baker Hughes reported that the number of active US rigs drilling for oil declined by two to 756 rigs this week. The rig count had risen 23 weeks in a row. The surprise dip in the number of active US drilling rigs comes amid a rebound oil prices, as investors seemed to take advantage of the recent slump in oil prices into bear market territory. Benchmark crude oil futures for August delivery surged by $1.11 or 2.5 percent to $46.04 on the New York Mercantile Exchange. In London, Brent crude for August delivery ended up 0.53 cents at $48.60 a barrel on the ICE.


Indian rupee wiped off early losses to end marginally higher against the American currency on Friday on the back of dollar sales by exporters and bank. Rupee snapped its three day losing streak to end stronger supported by local equity markets which somehow managed a positive close. Some support also came with Industry body FICCI's report that the rollout of GST will bring about significant gains to India's economy and it looks forward to working with the government for successful implementation of the crucial tax reform. On the global front, dollar plunged to a 12-month low against euro as odds rose that there could be shifts in monetary policy by the European Central Bank and the Bank of England. Finally, the rupee ended at 64.57, 5 paise stronger from its previous close of 64.62 on Thursday.


The FIIs as per Friday'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 6901.94 crore against gross selling of Rs 7634.23 crore, while in the debt segment, the gross purchase was of Rs 2195.77 crore with gross sales of Rs 1483.58 crore.


The US markets ended mostly in green terrain on Friday on report showing that personal income rose by slightly more than anticipated in the month of May, while personal spending inched up in line with estimates. Asian markets were trading mostly in red, though Japanese Nikkei edged higher on the back of Bank of Japan's better-than-expected quarterly Tankan survey results. Indian shares recovered from early losses to end modestly higher on Friday. Today, markets are likely to make a flat-to-cautious start on mixed global cues. Traders will be reacting to the launch of ambitious pan-India indirect tax regime, the GST on July 1. Traders will remained concerned with report that growth in eight core sector slowed to 3.6% in the month of May 2017, as compared to 5.2% in May last year on account of contraction in output of coal and fertilizer, though it was higher as compared to 2.8% in April 2017, with a sharp rise in the output of electricity, refinery and natural gas production. Traders will remain concerned on private report stating the Seventh Pay Commission and implementation of GST has put inflation in an uncertain zone, and prices are expected to rise temporarily. However, traders will get some support with Moody's statement that Implementation of the GST will be positive for India's rating as it will lead to higher GDP growth and increased tax revenues. Also, industry body CII said the GST rollout will impart major competitiveness to Indian industry, incentivise exports and help expand the tax net. It said the implementation of the crucial tax reform gives tremendous confidence to the industry that the government will continue to facilitate investments and simplify the business environment. Traders will also get some encouragement with report that the government has ramped up capital spending by nearly 60% in the first two months of the current financial year. The revenue performance in the first two months has also been better than last year, with total receipts adding up to 5.4% of the budget estimates against 4.8% last year. Total spending in the first two months was 21.4% of the full year budget, compared with 15.1% a year earlier.


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  • Reliance Industries' telecom arm - Reliance Jio Infocomm has launched the Asia-Africa-Europe submarine cable system.
  • ONGC has scrapped the initial agreements it signed with oilfield services providers Schlumberger and Halliburton.
  • Infosys has signed an agreement for divestment of its entire investment in Cloudyn Software for a total consideration of approximately $4,400,000.
  • IndusInd Bank has sold 75,00,000 equity shares of face value of Rs 10 each of Kesoram Industries at a price of Rs 137 each on June 30, 2017.
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