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NSE Intra-day chart (03 August 2016)
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Market Commentary 04 August 2016
Markets to get a strong rebound on GST passage


Indian benchmarks indices extended the sorrow of closing in the red territory for the fourth consecutive session on Wednesday, as worries over global economic growth prospects prompted marketmen to take profits off the table. Sentiments also remained dampened with a private report stating that consumer confidence in India declined in the second quarter this year with concerns over fuel prices and rising inflation, making the country lose the top position it occupied for the last two years as the most confident globally, adding some pessimism on the street. Besides, India's consumer goods market slowed in the June quarter from the year earlier, indicating that buyers are still being careful about discretionary spending as they wait for more concrete signs of an economic recovery, also weighing on the sentiments. Investors failed to drew any comfort with a private survey showing India's services sector expanded at the fastest pace in the three months ended July, backed by a strong inflow of business amid strong underlying demand conditions. The Nikkei India Services Business Activity Index, which tracks changes in activity at service companies on a monthly basis, increased to 51.9 in July, up from 50.3 in June. Further, market participants were awaiting the outcome on the Goods and Services Tax (GST) constitutional amendment bill in Parliament, amidst strong indications that the most far-reaching taxation reform would be supported by Congress and all other major political parties. Meanwhile, Steel counters gained traction on the report that India is expected to impose an anti-dumping duty of up to $557 per tonne on imports of certain steel products from six countries, including China, Japan and Korea. On the flip side, banking stocks came under pressure on the global rating agency S&P's report that banks in India and China will continue to face pressures on their asset quality, profitability, and capitalization over the next 12-24 months. On the global front, Asian stock markets ended mostly lower, while the European stocks too edged lower in the early deals. Back home, the local benchmark got off to a somber opening, extending the downtrend for the fourth straight session as pessimistic sentiments prevailed across Asian markets. The selling pressure accentuated in the mid morning trades as investors took to across the board risk aversion. Finally, the BSE Sensex ended lower by 284.20 points or 1.02% to 27697.51, while the CNX Nifty dropped 78.05 points or 0.91% to 8,544.85.


The US markets closed higher on Wednesday, with the Dow industrials snapping its seven-session losing streak and the broader market logging a moderate advance on the back of a rebound in crude-oil futures. On the economy front, private-sector hiring held steady in July, as employers added 179,000 jobs in July after a revised 176,000 job gains in the prior month. The Automatic Data Processing Inc. (ADP) has shown steady job growth while the government data has been volatile. The strong nonfarm-payrolls report in June followed a gain n May that was cut to a paltry 11,000. In addition to the ADP report, Markit released its final reading on activity in the services sector in July, showing it was unchanged in July at 51.4 and revised from the preliminary reading of 50.9. However, in nonmanufacturing data, the Institute for Supply Management's services-sector index dropped to 55.5 in July, below expectations of 56. The Dow Jones Industrial Average added 41.23 points or 0.23 percent to 18,355.00, Nasdaq gained 22.01 points or 0.43 percent to 5,159.74, while S&P 500 was up by 6.76 points or 0.31 percent to 2,163.79. 


Crude oil futures bounced back on Wednesday from 14-week lows and Nymex crude crawled back above $ 40 a barrel mark on report of an unexpected draw in gasoline inventories last week. Traders were also encouraged by Payroll processor ADP showing stronger than expected private sector job growth. ADP said private sector employment increased by 179,000 jobs in July after climbing by an upwardly revised 176,000 jobs in June. Meanwhile, the US Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that Gasoline Inventories declined by 3.3 million barrels for the week ending on July 29. Benchmark crude oil futures for September delivery surged by $1.29 or 3.26 percent to close at $40.80 a barrel after trading in a range of $39.33 and $41.03 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery was up by $1.22 or 2.92 percent to $43.03 a barrel on the ICE.


Indian rupee concluded substantially weaker against dollar on account of continued dollar demand from importers and banks. Dollar strengthens against some global currencies also weighed on the rupee sentiment. Investors failed to drew any comfort with a private survey showing India's services sector expanded at the fastest pace in the three months ended July, backed by a strong inflow of business amid strong underlying demand conditions. The Nikkei India Services Business Activity Index, which tracks changes in activity at service companies on a monthly basis, increased to 51.9 in July, up from 50.3 in June. Besides, losses in the local equity market combined with investors' cautiousness ahead of decision on the Goods and Services Tax (GST) Bill also dampened sentiments. On the global front, dollar edged higher against the other major currencies on Wednesday. Finally the rupee ended at 66.99, weaker by 26 paise from its previous close of 66.73 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 4936.77 crore against gross selling of Rs 4689.67 crore. While in the debt segment, the gross purchase was of Rs 833.85 crore with gross sales of Rs 2132.94 crore. Thus, FIIs stood as net sellers of Rs 1299.09 crore in debt.


The US markets made modest recovery in the last session and the Dow snapped its seven days losing streak, led by the gains in energy stocks after the crude prices bounced back. Though, traders were concerned with mixed batch of economic reports and seemed somewhat reluctant to make more significant moves. The Asian markets have made a mixed start and some of the indices are marginally in red, though others are moving higher driven by mining and energy shares. The Indian markets suffered sharp cuts in last session and the major averages lost over a percent on profit taking ahead of the crucial decision on long pending GST Bill. Today, the start is likely to be jubilant and markets will see good recovery with a gap-up start, as in the biggest tax reform since Independence, the national sales tax or GST Bill has been approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system. Finance Minister Arun Jaitley has said that manufacturing taxes and VAT will come down with the new national sales tax but the same for services tax will be decided by states and centre. Meanwhile, the Union Cabinet has approved the Motor Vehicle (Amendment) Bill, 2016, providing for hefty penalties for violation of road safety rules. There will be some buzz in the telecom stocks, as the cabinet has approved the weighted average spectrum usage charge (SUC) at a minimum of 3 per cent of annual revenue, clearing the stage for holding the largest ever auction in September this year. The oil & gas stocks too will be in action, as the Petroleum Minister Dharmendra Pradhan has asked Finance Ministry to cut cess on domestically produced crude oil to 10-12 percent from current 20 percent to provide relief to producers hit by slump in prices. There will be lots important earnings announcements to keep the markets buzzing.


                                Support and Resistance: CNX Nifty and BSE Sensex


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HCL Tech







  • Bharti Airtel has entered into partnership with Verizon Digital Media Services to launch new points of presence in Mumbai, Chennai, Bangalore and New Delhi.
  • Mahindra and Mahindra's South Korean subsidiary SsangYong Motor, has sold a total of 12,784 units in July 2016, of total 7,546 units in domestic sales and 5,238 in exports.
  • Bharat Heavy Electricals has successfully commissioned the second 500 MW thermal units at Marwa Thermal Power Station in Chhattisgarh.
  • Coal India, the world's largest coal miner by output, has reported provisional production of 36.74 million tonnes in July 2016, as against target of 40.29 million tonnes.
  • Maruti Suzuki India, country's largest car maker, has reported 2.59% rise in its production to 136,761 units in July 2016 as compared to 133,311 units in July 2015.
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