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NSE Intra-day chart (05 July 2016)
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Market Commentary 07 July 2016
Markets to get a flat-to-positive start


Indian benchmark indices showed a lackadaisical performance on Tuesday as they failed to extend their gaining streak and settled below the neutral line amid weak global cues. Today's session largely remained characterized by choppiness as the aimless indices oscillated in a very tight range and investors took a breather and resorted to mild profit booking in heavyweights after sharp gains in the previous six sessions. Sentiments came under pressure with the report that growth in India's services firms fell to a seven-month low of 50.3 in June as compared to the previous month of May as new business grew at its slowest pace in the previous 11 months. The Nikkei/Markit Services Purchasing Managers' Index (PMI) cooled for the third straight month in June, having declined to 51 points in May, the weakest since November 2015. Some weakness also came with the Global rating agency Moody's report that stated India's economic growth over the next two years will face challenge from lacklustre global demand and high leverage in some corporate sectors. According to the report, continued high corporate leverage, low nominal domestic growth and lack of corporate pricing power, will hold back investment activity for at least several quarters. However, investors got some comfort with Finance Minister Arun Jaitley's statement, who calling India a 'sweet spot' in the subdued global economy said that indication of “good rains” will further boost the country's growth momentum. Also, the increase in intensity and coverage of rainfall over the past weekend resulted into a sharp decline in the deficit so far this monsoon season. On the global front, Asian markets ended mostly in red on Tuesday, while European stocks fell. Back home, the local benchmark indices started the session on a somber note, investors largely remained influenced by the daunting sentiments prevailing in Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 111.89 points or 0.41% to 27166.87, while the CNX Nifty dropped 34.75 points or 0.42% to 8,335.95. Indian markets remained closed on Wednesday on account of Eid-ul-Fitr.


The US markets closed higher on Wednesday, as investors shook off worries tied to the UK's vote late last month to exit the European Union. A stronger-than-expected report on nonmanufacturing activity helped nudge investors back into equities, while minutes from the Federal Reserve's June policy meeting showed the majority of policy makers were in favor of keeping rates on hold. Dovish Federal Reserve policymakers are growing more vocal, pushing a divided committee firmly on the side of taking no action, a close reading of the June meeting minutes revealed. When the central bank met in mid-June, an abysmal May jobs report had just startled markets, and the upcoming British referendum on European Union membership loomed large. The Institute for Supply Management's service sector index jumped to 56.5% in June, a much stronger reading than expected and a sign the economy may have pushed past the rough patch it hit in May. The Dow Jones Industrial Average was up by 78.00 points or 0.44 percent to 17,918.62, Nasdaq added 36.26 points or 0.75 percent to 4,859.16, while S&P 500 gained 11.18 points or 0.54 percent to 2,099.73.


Crude oil futures bounced back on Wednesday, coming off their six weeks low on the back of short covering, though oversupply concerns remained in focus. There was some support with dollar weakness too. Traders continued to monitor developments in the UK after two additional commercial property firms froze their funds on Wednesday, citing exceptional liquidity pressures in the wake of the Brexit vote. Benchmark crude oil futures for August delivery gained by $0.75 or 1.63 percent to close at $47.35 a barrel after trading in a range of $45.94 and $47.66 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery ended up by $0.74 or 1.59 percent to $48.69 a barrel on the ICE.


Indian rupee concluded substantially weaker against dollar on account of sustained dollar demand from importers and banks. Besides, losses in the domestic equity market and firming up of dollar against some global currencies also weighed on the rupee sentiment. The domestic currency remained down-beat with the report that growth in India's services firms fell to a seven-month low of 50.3 in June as compared to the previous month of May, as new business grew at its slowest pace in the previous 11 months. The Nikkei/Markit Services Purchasing Managers' Index (PMI) cooled for the third straight month in June, having declined to 51 points in May, the weakest since November 2015. On the global front, the yen rose against the dollar on fears about Italian banks' finances, while the resignation of a leading Brexit campaigner sparked renewed worries about Britain's political situation as it prepares to break from the EU. Finally the rupee ended at 67.45, weaker by 18 paise from its previous close of 67.27 on Monday


The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 2964.68 crore against gross sell of Rs 2815.60 crore, While in the debt segment, the gross purchase was of Rs 774.71 crore with gross sales of Rs 527.89 crore.


The US markets coming off the early decline posted decent gains in last session; traders took comfort from the release of a report from the Institute for Supply Management showing faster than expected growth in the US service sector activity in the month of June. The Asian markets have made a mixed start, though some markets are still closed. The Japanese market was trading weaker, as the yen strengthened for a third day, while some markets are higher taking cues from upbeat US economic data. The Indian markets after suffering cut of about half a percent in last trading session, took a day of break and the start today is likely to be in mildly in green, with bourses showing signs of some recovery after IMD stated that the Southwest monsoon rainfall has shown a marginal rise of one per cent with a good amount of precipitation in several parts of the country for the period between June 1 and July 6. Also, the newly appointed Minister of State for Finance Santosh Gangwar has said that the government is confident of getting the much-delayed GST Bill passed in the upcoming Monsoon session of Parliament, beginning later this month. However, there will be some concern with the US stating India's growth rate target of 7.5% seems "overstated" due to "depressed investor sentiment" stemming from its failure to implement crucial market reforms, but it lauded Reserve Bank governor Raghuram Rajan for his "monetary stewardship". Meanwhile, the Government has said that it has set up a committee, headed by former CEA Shankar Acharya, to examine the feasibility of having a new financial year, replacing the existing April-March period. The committee, which will submit its report by December, will examine merits and demerits of various dates for commencement of a financial year, including the existing dates (April-March). There will be some buzz in the pharma sector stocks on report that India maintained its supremacy over China in pharmaceutical exports in 2015 with a growth of 7.55 percent to $ 12.54 billion.



Support and Resistance: CNX Nifty and BSE Sensex


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  • Adani Ports and Special Economic Zone has raised Rs 252 crore by allotment of 2,520 Rated, Listed, Secured, Taxable, Redeemable, Non-Convertible Debentures of the face value of Rs 10 lakh each on private placement basis.
  • Larsen & Toubro through its joint venture companies L&T-MHPS Boilers and L&T-MHPS Turbine Generator has secured export orders worth $ 71.3 million from Mitsubishi Hitachi Power Systems.
  • Reliance Industries has reportedly received approval from the Ministry of Environment & Forests to drill eight additional exploratory wells in Tamil Nadu.
  • Tata Steel has reported 16.66 percent rise in its hot steel production at 3.01 million tonnes for the first quarter ended June 30, 2015 as compared to 2.58 MT for the same quarter in the previous year.
  • Bank of Baroda has exited its investment by selling five percent stake in Cibil to global credit information company TransUnion.
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