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NSE Intra-day chart (04 July 2016)
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Market Commentary 05 July 2016
Markets to see some consolidation after streak of gains


Indian equity indices showcased yet another euphoric performance on Monday, as investors mounted more bullish bets amid good progress in monsoon rains and firming Asian cues. Heavy showers during the weekend have lifted monsoon out of the 'deficient' zone, the first real signal of a good kharif harvest that should lower food inflation and pave the way for a cut in interest rates.  The season's rainfall deficit has contracted to only 6% from a worrying 25% two week ago. Besides, appreciation in Indian rupee against the dollar too aided sentiments. Indian rupee firmed up on fresh selling of the American currency by exporters. Some support also came with the report that foreign investors brought in over Rs 3,700 crore into Indian stock markets in June, taking the total to more than Rs 20,600 crore so far this year. However, investors remained cautious with RBI Governor Raghuram Rajan who warning against expecting too much from central banks, stated that it is wrong on their part also to always claim a ‘bazooka' left up their sleeves. Rajan further stated that the ability to get a coherent economic policy in this environment is much more limited that what we have been experiencing for so many years in the past. On the global front, Asian markets ended in green on Monday as commodity producers rallied, while Stocks in Europe slipped in early trade. Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the key indices capitalized on the momentum and touched intraday highs in early noon session as participants indulged in broad based buying. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors appeared after European markets drifted lower. Finally, the BSE Sensex surged by 133.85 points or 0.49% to 27278.76, while the CNX Nifty rose 42.35 points or 0.51% to 8,370.70.


The US markets remained closed on Monday on account of 'Independence Day' holiday.


Crude oil futures turned lower in a holiday thinned trade, as the floor trading on Nymex remained closed due to Independence Day holiday. Also, there was some concern with Saudi Energy Minister Khaled Al-Faleh stating that the market was heading toward balance were tempered by slowing demand in Asia, pockets of gasoline oversupply and signs crude output could rise. Benchmark crude oil futures for August delivery was down 0.28 or 0.58 percent to close at $49.13 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent oil futures for September delivery declined by 0.25 or 0.47 percent to $50.10 a barrel on the ICE.


Indian rupee ended substantially stronger against dollar on last day of the week on sustained selling of greenback by banks and exporter, tracking firm cues from other Asian currency markets. This was the third day of consecutive gains for the domestic currency. Indian currency looked strong from the very beginning and was supported by the gains in the local equity markets. Sentiments got boost with the report that Indian manufacturing activity surged to a three-month high in June, driven by stronger demand. The Nikkei/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.7 in June from May's 50.7, above the 50 mark that separates growth from contraction. On the global front, yen has higher against the dollar on Friday on speculation the Bank of Japan will expand its already massive stimulus programme, while the greenback was also hurt by waning US interest rate hike expectations. Finally, the rupee ended at 67.32, 20 paise stronger from its previous close at 67.52 on Thursday.


The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity, the gross buying was of Rs 3096.10 crore against gross selling of Rs 3359.53 crore, while in the debt segment, the gross purchase was of Rs 1153.98 crore with gross sales of Rs 743.48 crore.


The US markets remained closed in last session, unable to give any cue to the other global markets. The Asian markets have made mostly a lower start, declining for the first time in last one week of trade, as commodities turned weak and on cautiousness with the possibility of bank bailouts in Italy. Japanese market too has snapped its six days winning streak on strength in yen. The Indian markets showing mostly a steady trade moved further high in last session. Today, the start is likely to be somber and some fatigue is likely to appear on the Indian markets too, amid weak global cues. The post-Brexit relief rally seems to be fading worldwide and demand for safe-haven assets is once again increasing. Traders will be concerned with a private report stating that investments in projects remained elusive in the first quarter of the financial year 2016-17 with stalled projects running into an estimated Rs 11.2 lakh crore. The report has further said that most of the stalled projects are in the electricity (31%) and steel (25%) sectors. Meanwhile, the SBI Chairman Arundhati Bhattacharya has said that Brexit is "not good" for the world, as becoming less inclusive and less connected is not the right thing and nations will benefit more by globalization. Markets may get some support with Finance Minister Arun Jaitley's statement, who calling India a 'sweet spot' in the subdued global economy has said that indication of "good rains" will further boost the country's growth momentum. Also, an India Ratings report has said that the Reserve Bank of India has successfully turned the banking system to neutral from a high cash-crunch zone three-four months ago. Power stocks will keep buzzing on report that power generation growth has been 9.5 percent this year so far, which is almost double of 5.65 percent achieved during 2004 to 2014. Traders will also be eyeing the expansion of the Union Cabinet, and some industry specific actions can be seen on ministry allocations.


Support and Resistance: CNX Nifty and BSE Sensex


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  • Tata Motors' total passenger and commercial sales in June 2016 were at 44,276 vehicles, a growth of 8%, over 40,869 vehicles sold in June 2015.
  • Bajaj Auto, the second-largest motorcycle manufacturer, has registered fall of 4% in total sales to 316,969 units in June 2016 against 331,317 units in June 2015.
  • Mahindra and Mahindra's South Korean subsidiary SsangYong Motor has sold a total of 14,167 units in June 2016 - 9,750 units in domestic sales and 4,417 in exports including CKD kits.
  • Tata Power, together with all its subsidiaries and joint ventures, Tata Power Group companies' CSR spend in FY16 stood at Rs 47.02 crores.
  • State Bank of India has signed an agreement with the World Bank for a $625 million facility to support grid connected rooftop solar programme in India.
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