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NSE Intra-day chart (06 June 2016)
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Market Commentary 07 June 2016
Markets to get a cautious but positive start; RBI policy eyed


Indian stock markets prolonged the lull for the second consecutive day and finished the session mildly in red, as market participant adopted cautious approach ahead of the central bank's decision on policy rates and with a number of global risk events scheduled for later this month, including a US Federal Reserve meeting and the "Brexit" referendum. Further, with crude oil price touching 7-month high of $ 50 a barrel, Finance Minister Arun Jaitley has said India can handle the current level but higher rates will impact the economy and lead to inflationary pressure. India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore more for every dollar per barrel increase in crude oil prices while also see surge in inflation.  However, investors got some encouragement with the report that India has jumped 13 positions from last year to rank second among 30 developing countries this year on ease of doing business. According to 2016 Global Retail Development Index (GRDI), which ranks top 30 developing countries for retail investment worldwide, a pickup in GDP growth and better clarity regarding FDI regulations have helped India achieve a second ranking. Appreciation in the rupee too provided some support to domestic markets. Indian rupee strengthened by 30 paise to 66.95 against the US dollar at the time of equity markets closing on increased selling of the American currency by exporters amid foreign fund inflows. Meanwhile, Telecom stocks took a hit after Reliance Jio started taking registrations from interested people for network trials, indicating that a launch may be around the corner, while sugar companies gained after the private report that stated the profitability trend for domestic sugar mills is likely to be better during the crushing season 2015-16 on supply correction. On the global front, Asian markets ended mostly higher on Monday, while European stocks rose in early trade. Back home, after getting cautious start, the local benchmark indices traded in tight range near neutral line for most part of the session, as investors and traders adopted a cautious approach, ahead of the RBI's bi-monthly monetary policy review on Tuesday. Even through some mild selling was witnessed in late afternoon session; the indices recovered most of their losses by the end of the session. Finally, the BSE Sensex ended lower by 65.58 points or 0.24% to 26777.45, while the CNX Nifty dropped 19.75 points or 0.24% to 8,201.05.


The US markets closed higher on Monday, with the S&P 500 notching its best finish of the year, even as Federal Reserve Chairwoman Janet Yellen stated that a rate-hike following an ugly jobs report on Friday was still a possibility. The Fed boss cautioned investors against placing too much emphasis on a disappointing jobs report and added that although Friday's labor data were concerning, rising employment, household incomes, and consumer confidence, signaled that the domestic economy is in relatively good shape. Yellen raised concern that even though the financial stresses that had emanated from abroad at the start of this year have eased, global risks require continued attention. China still faces considerable challenges and investors' perception of risk can change abruptly. The Dow Jones Industrial Average was up by 113.27 points or 0.64 percent to 17,920.33 Nasdaq gained 26.19 points or 0.53 percent to 4,968.71 while, S&P 500 added 10.28 points or 0.49 percent to 2,109.41.


Crude oil futures surged on Monday to near its eight month high, as the dollar softened on dovish comments from Federal Reserve Chair Janet Yellen. She made no mention of her recent assessment that rate hikes were likely in the coming months. Meanwhile, brent settled at its highest closing level of 2016 as fresh supply outages in Nigeria helped temporarily ease concerns related to persistent supply glut on global energy markets. The latest series of attacks by a group of militants known as the Niger Delta Avengers pushed daily output in Nigeria below 1 million barrels per day. Benchmark crude oil futures for July delivery inched up by $1.06 or 2.18 percent to $49.70 a barrel after trading in a range of $48.72 and $49.89 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $50.51, up $0.86 or 1.73 percent on the ICE.


Indian rupee strengthened substantially against dollar on Monday due to increased selling of dollar by banks and exporters, amid mix cues from Asian currency markets. The domestic currency was looking strong from the very beginning, but somewhere the gain was capped on account of weakness in the local equity markets. Meanwhile, investors were awaiting the bi-monthly policy, which the Reserve Bank of India (RBI) will announce on Tuesday, which is widely expected to leave interest rates unchanged. On the global front, dollar was high on Monday, having hit more than three-week lows against a basket of major currencies after a poor employment report prompted investors to rule out the chance of a hike in U.S. interest rates in June. Finally, the rupee ended at 67.00, 26 paise stronger from its previous close at 67.26 on Friday.


The FIIs as per Monday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity, the gross buying was of Rs 5604.19 crore against gross selling of Rs 3992.39 crore, while in the debt segment, the gross purchase was of Rs 279.31 crore with gross sales of Rs 1099.84 crore.            


The US markets ended higher in last session with S&P posting its highest closing in 2016 as the crude inched higher, though Fed Chair Janet Yellen raised hopes the ultra-low interest rate environment will continue through 2016. The Asian markets have made mostly a positive start, with many of the indices extending their gains for the third day after comments by Federal Reserve Chair Janet Yellen quelled speculation U.S. interest rates will be raised in July. The Indian markets turned cautious in the final hours of the trade in last session and ended lower by about a quarter percent. Today, the start is likely to be in green but there will be cautiousness on the street, as the Reserve Bank of India (RBI) will be announcing its second bi-monthly monetary policy later in the day. While, expectations of a rate cuts are low, traders would focus on the governor's commentary on the policy stance. Traders will get some support with a private report stating that India jumped 13 positions and was placed second in retail potential in the 2016 Global Retail Development Index (GRDI). It also said that India has become the world's fastest growing economy. That coupled with a large population base and the easing of FDI regulations in the sector has made it an even more attractive market. There will be some buzz in the PSU banking stocks, as Minister of State for Finance Jayant Sinha has said that the government will examine the capital requirements of various public sector banks (PSBs) for the current fiscal to meet credit growth and NPA provisioning. The pharma stocks are likely to come under pressure with government's move to cap prices of 56 drugs under its drug price control mechanism.


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Axis Bank






  • BHEL has commissioned all the 3 supercritical units of 660 MW each at the 1980 MW coal-based Lalitpur Super Thermal Power Project, in Uttar Pradesh within a span of just 85 days.
  • NTPC is targeting commissioning 5,000 megawatts capacity in fiscal year 2017.
  • Larsen & Toubro's construction arm L&T Constructions has won orders worth Rs 2161 crore across its various businesses.
  • Maruti Suzuki India, country's largest car maker, has reported 1.70% rise in its production to 129,509 units in May 2016 as compared to 127,343 units in May 2015.
  • Sun Pharma's arm has entered into an agreement with Frontida BioPharm, Inc for divestment of its two oral solid dosage manufacturing facilities located at Philadelphia, PA, and Aurora, IL both in the US, along with 15 related pharmaceutical products.
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