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NSE Intra-day chart (05 July 2018)
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Market Commentary 06 July 2018
Markets likely to open weak on feeble Asian cues


Indian equity benchmark ended the choppy day of trade in red terrain on Thursday, with frontline gauges breaching their crucial 35,600 (Sensex) and 10,750 (Nifty) levels, as traders booked some of their gains from previous two sessions' rally, ahead of June quarter earnings season to be starting next week. Traders remained cautious on report that the Securities and Exchange Board of India has issued a fresh show-cause notice to the National Stock Exchange and some of the key officials - including former CEOs Ravi Narain and Chitra Ramkrishna - on Wednesday, asking them to explain the allegations of preferential access to a few high-frequency traders and brokers to its trading platform. Traders also remained cautious with global credit rating agency, Moody's Investors Services' latest report that high oil price is the biggest risk to India's Gross domestic product (GDP) growth. However, it also said that risks to sovereign credit dynamics from oil has lessened in recent years following subsidy reforms to petroleum and diesel fuel and only liquefied petroleum gas and kerosene oil remain subsidized. Selling in Reliance Industries too dampened sentiments post its 41st AGM. However, losses remained capped as traders got some solace with Union Minister Arun Jaitley's statement that the government's fiscal deficit target would not be breached on account of higher MSP for 14 crops as large provisioning for food subsidy has already been made in the Budget for current fiscal. Market participants also took some comfort with Niti Aayog's Vice-Chairman, Rajiv Kumar's statement that food and fuel are not contributing to the overall inflationary pressures in the economy. So this constant talk about inflationary pressures because of the MSP is quite misplaced. Finally, the BSE Sensex declined 70.85 points or 0.20% to 35,574.55, while the CNX Nifty was down by 20.15 points or 0.19% to 10,749.75.


The US markets ended in green on Thursday on the back of easing trade concerns amid reports Trump might suspend threats to impose tariffs on cars imported from Europe if duties on U.S. cars are lifted. Positive sentiment was also generated by a report from the Institute for Supply Management showing growth in activity in the U.S. service sector unexpectedly accelerated in the month of June. The ISM said its non-manufacturing index rose to 59.1 in June after climbing to 58.6 in May, with a reading above 50 indicating growth in the service sector. The street had expected the index to edge down to 58.3. Meanwhile, a report from payroll processor ADP showed private sector employment increased by less than expected in the month of June. ADP said private sector employment climbed by 177,000 jobs in June after jumping by an upwardly revised 189,000 jobs in May. A separate report from the Labor Department showed a modest uptick in first-time claims for U.S. unemployment benefits in the week ended June 30th. The report said initial jobless claims inched up to 231,000, an increase of 3,000 from the previous week's revised level of 228,000. The Dow Jones Industrial Average gained 181.92 points or 0.75 percent to 24356.74, the S&P 500 rose 23.39 points or 0.86 percent to 2736.61 and the Nasdaq was up by 83.75 points or 1.12 percent to 7586.43.


Crude oil futures ended lower on Thursday, with benchmark suffering from a drop to its lowest finish in just over a week, after data revealed a surprise run-up in domestic crude inventories- the first in a month. Energy Information Administration (EIA) report showed that crude stockpiles rose by 1.2 million barrels for the week ended June 29. Further, Trump's recent demand that the Organization of the Petroleum Exporting Countries move to counteract a rally that has prices near three and half year high also contributed to pressure on oil prices. Benchmark crude oil futures for August delivery fell $1.20 or 1.6 percent to settle at $72.94 a barrel on the New York Mercantile Exchange. September Brent crude dropped 85 cents or 1.1 percent at $77.39 a barrel on London's Intercontinental Exchange.


Extending previous session's losses, Indian rupee ended lower against dollar on Thursday, on increased demand for the US currency from importers. Sentiments remained down-beat with a private report stating that the government decision to significantly increase minimum support price (MSP) for several kharif crops to boost farmers' incomes could push inflation upwards and widen the fiscal deficit. The Reserve Bank of India could subsequently raise interest rates to counter the potential inflationary impact. Besides, lackluster trade in the equity markets also affected the rupee value. However, losses remained capped with Commerce and Industry Minister Suresh Prabhu's statement that India's export is likely to grow at around 20% in June month. He also noted that India will not be affected by the headwinds at global trade level. On the global front, pound rose to a seven-day high on Thursday as traders strengthened bets on an interest rate hike this summer, but concerns about a crucial Brexit meeting on Friday kept gains in check. Finally, the rupee ended at 68.93, 19 paise weaker from its previous close of 68.74 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5212.17 crore against gross selling of Rs 4137.78 crore, while in the debt segment, the gross purchase was of Rs 657.58 crore with gross sales of Rs 388.56 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.72 crore against gross selling of Rs 1.65 crore.


The US markets ended higher on Thursday, on easing trade concerns amid reports that President Donald Trump might suspend threats to impose tariffs on cars imported from Europe if duties on US cars are lifted. Asian markets were trading mostly in red on Friday, with investors bracing for developments on the trade front as markets awaited tariffs from the US and China to take effect later today. Indian markets ended Thursday's session in red terrain, as investors remained on sidelines ahead of second quarter earnings season to be starting next week. Today, markets likely to make a pessimistic start amidst caution ahead of a US deadline to impose tariffs on Chinese imports later in the day. Traders may remain concern on private report that the increase in minimum support prices (MSP) by the government is set to bump up the Reserve Bank of India's already heightened inflation forecast and will likely lead to higher interest rates at the next monetary policy review on August 1 and possibly another before the year ends. However, some support may come later in the day with private report that a lower base in the previous year's quarter and likely good show by select companies in sectors such as automobiles, capital goods, FMCG, IT, and metals should help the Nifty 50 companies report a double-digit growth in aggregate sales and profits for the June 2018 quarter. Telecom stocks will be in focus after telecom regulator Trai prescribed amendments to the interconnect regulations, proposing certain changes in terms and conditions for an operator to seek fresh call connect ports from other telcos. There will be buzz in IT space on report that Nasscom chairman Rishad Premji and president Debjani Ghosh said US administrative measures on immigration have not had  a significant impact on Indian IT, and that the industry has adjusted by drastically reducing dependence on H-1B visas. Shares of all the three broadband service providers are likely to be in focus, after Reliance Industries Chairman Mukesh Ambani unveiled an ultra-high-speed fixed line fibre broadband for homes and enterprises across 1,100 cities on Thursday.


Support and Resistance: NSE (Nifty) and BSE (Sensex)



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Nifty Top volumes




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