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NSE Intra-day chart (03 July 2017)
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Market Commentary 04 July 2017
Markets to get a mildly positive start despite sluggish global cues

Indian equity indices showcased a courageous performance and went on to outclass indices around the world by vivaciously rallying by close to a percent in the session and settled above the psychological 9,600 (Nifty) and 31,200 (Sensex) levels. Sentiments got a boost with report that the government has ramped up capital spending by nearly 60% in the first two months of the current financial year, in a bid to perk up investment sentiment and crowd in private investment. Early passage of the budget in March has allowed the government start spending from the beginning of the new financial year in April. In April-May, the government spent Rs 52,536 crore, 58% more than the year earlier period.  Adding optimism among investors, Moody's said GST will be credit positive for India. Implementation of the goods and services tax (GST) will be positive for India's rating as it would lead to higher GDP growth and increased tax revenues. Some support also came with IMD report indicating that the first month of monsoon has been heartening with India recording a 4% surplus in rainfall combined with a well-distributed pattern, except in the eastern regions. The average rainfall in June was 170.2mm, 7mm higher than the usual 163.6mm. Traders paid no heed to the report stating that manufacturing activity in India fell to a four-month low in June amid softer rise in factory new orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI)-a composite single-figure indicator of manufacturing performance-slipped to 50.9 in the month of June as against 51.6 in the month of May. Finally, the BSE Sensex gained 300.01 points or 0.97% to 31221.62, while the CNX Nifty was up by 94.10 points or 0.99% to 9,615.00.


The US markets closed mostly higher on Monday, on the first day of trading in July and the second half of 2017 in positive territory - though off the day's best levels - on the back of a rally in energy and financials, but tech shares lagged behind. Gains accelerated in an abbreviated session ahead of holiday on Tuesday, after an upbeat report on manufacturing. American manufacturers are growing at the fastest pace in almost three years, reflecting improved economic conditions both at home and abroad. The Institute for Supply Management said its manufacturing index rose to 57.8% in June from 54.9%. That's the highest reading since mid-2014. Some 15 of 18 industries tracked by ISM said they grew in June. Separately, construction spending in May was virtually unchanged when compared with upwardly revised April data. Outlays for all construction ran at a seasonally adjusted annual rate of $1.23 trillion, about 1% higher than April's pace, which was originally reported as $1.22 trillion. The Dow Jones Industrial Average added 129.64 points or 0.61 percent to 21,479.27, S&P 500 edged higher by 5.6 points or 0.23 percent to 2,429.01, while Nasdaq dropped 30.36 points or 0.49 percent to 6,110.06.


Crude oil futures continued their upmove on for the eighth straight session, the longest such streak in months and ended up by over two percent on Monday, after data pointed to diminished US output, though analysts said news of rising OPEC production could cap gains. Meanwhile, traders continued getting support with report that the U.S. rig count fell last week for the first time in about five months, while US government data showed crude output fell in April for the first time this year. Benchmark crude oil futures for August delivery surged by $1.03 or 2.2 percent to $47.07 on the New York Mercantile Exchange. In London, Brent crude for August delivery ended up 0.91 cents at $49.68 a barrel on the ICE.


Starting the new month on a weak note, Indian rupee extended losses and ended considerably weaker against US dollar on Monday, on account of selling of American currency by banks and exporters. Sentiments remained subdued with report that the growth of eight core sectors slowed to 3.6% in May, as against 5.2% in May last year, due to fall in output of coal and fertiliser. Also, activity in India's manufacturing sector eased to a four-month low of 50.9 in June, as against 51.6 in the month of May, amid a slowdown in output and new orders as softer domestic consumption partly offset strong foreign demand. Besides, firm dollar against a basket of other currencies overseas too added pressure on the domestic unit. Finally, the rupee ended at 64.87, 30 paise weaker from its previous close of 64.57 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5833.55 crore against gross selling of Rs 4378.89 crore, while in the debt segment, the gross purchase was of Rs 1463.01 crore with gross sales of Rs 765.03 crore.


The US markets made a mixed closing in the last session following the release of a report from the Institute for Supply Management showing acceleration in the rate of growth in the U.S. manufacturing sector, while construction spending was unchanged in May. The Asian markets have made a mixed start and some of the indices were down by about half a percent. The Japanese market too has given up most of the gains after the yen briefly spiked on a report that North Korea launched a missile. The Indian markets rallied in last session on expectations that the biggest tax reform in independent India will support higher government revenue generation, after the goods and services tax (GST) kicked in on July 1. Today, the start is likely to be in green and the markets may extend the gains, despite sluggish global cues. Also, Chief Economic Adviser to Finance Ministry Arvind Subramanian has asked to wait till fiscal end before assessing GST impact. Meanwhile, Railway Minister Suresh Prabhu has termed the Goods and Services Tax as a great unifying factor, both in societal and political spheres in the country. Markets may get some support with reports that India has told the World Bank that it has improved processes for granting construction permits sufficiently to pip the current topper, New Zealand, in the next edition of the Doing Business report. India was ranked 185 among 190 nations surveyed on the parameter of getting a construction permit in the study conducted last year. There will be some buzz in the oil stocks, as the International Energy Agency (IEA) has said that emerging and developing countries in Asia, particularly China and India will account for about 90 per cent of the net increase in road freight oil demand till 2050.


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  • Mahindra & Mahindra has reported its auto sales performance for June 2017 which stood at 35,716 vehicles, compared to 39,009 vehicles during June 2016.
  • Coal India has reported provisional production of 39.66 million tonnes in June 2017, as against a target of 43.18 million tonnes.
  • Maruti Suzuki India has slashed prices of its models by up to 3 per cent with immediate effect in order to pass on GST benefit to its customers.
  • Bajaj Auto has registered a fall of 23% in total sales to 244,878 units in June 2017 against 316,969 units in June 2016.
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