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NSE Intra-day chart (06 July 2017)
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Market Commentary 07 July 2017
Markets to make a soft start on weak global cues

Indian stock markets witnessed a fairly stable day of trade on Thursday, as sanguinity got reinforced after minutes from the Federal Reserve's last meeting showed a lack of consensus on the future pace of interest rate increases. Wednesday's optimism got spilled over into the Thursday's session helping the frontline indices in extending the winning momentum for second successive session, as sentiments got a boost after International Monetary Fund's (IMF's) report that India's growth outlook has improved as the impact of last year's demonetization exercise seems to be fading and recent key structural reforms continue to pay off. Besides, hopes of positive quarterly earnings and smooth roll-out of the goods and services tax (GST) also lifted sentiment. Some support also came with a private report indicated that Indian economy is expected to recover in the coming quarters and the country is expected to clock a real GDP growth of 6.9 percent in this financial year. The report also noted that the negative effects from the demonetization measure is already wearing off, and the Indian economy will likely benefit from positive demographic trends, greater external stability (due to improved terms of trade from low oil prices), and continued reforms that should help to improve the country's admittedly poor business environment. Investors' morale remained upbeat as Finance Minister Arun Jaitley said that despite the anticipation of initial disruptions on account of the GST, the rollout of the new indirect tax regime from July 1 was smooth and without any significant glitches. Meanwhile, PSU Banking stocks gained traction after brokerage houses upgraded leading PSUs such as Bank of Baroda and Punjab National Bank as valuations turned reasonable after recent correction on NPA concerns. Finally, the BSE Sensex gained 123.78 points or 0.40% to 31369.34, while the CNX Nifty was up by 36.95 points or 0.38% to 9,674.55.


The US markets closed lower on Thursday, as investors continued to rotate out of battered technology names. A combination of geopolitical jitters and growing signs that global central banks are inching closer to unwinding policies that have helped to support both stocks and government bonds is also weighing on the broader market. A round of economic data, including readings on private-sector payrolls and weekly layoffs, did little to soothe worries about the expected muted pace of the Federal Reserve's policy plans. On the economy front, the trade deficit fell 2.3% in May, largely because of fewer imports of cellphones and other consumer goods, but the longer-run outlook for the US was still grim. The deficit slipped to $46.5 billion in May from $47.6 billion in April. Exports continued to improve as the US shipped $192 billion worth of goods and services to other countries, a 0.4% increase. Meanwhile, the number of Americans who applied for unemployment benefits rose slightly at the end of June but remained near the lowest level in years. Initial jobless claims in the period running from June 25 to July 1 increased 4,000 to a seasonally adjusted 248,000. The Dow Jones Industrial Average lost 158.13 points or 0.74 percent to 21,320.04, Nasdaq dropped 61.4 points or 1.00 percent to 6,089.46, and S&P 500 edged lower by 22.79 points or 0.94 percent to 2,409.75. 


Crude oil futures recovered a bit on Thursday, amid a surprisingly large drop in U.S. oil stockpiles. The Energy Information Administration (EIA) said that inventories of U.S. crude fell by roughly 6.3m barrels in the week ended June 30, confounding expectations of draw of about only 2.3m barrels. Gasoline inventories too unexpectedly fell by roughly 3.7m barrels, while distillate stockpiles fell by 1.85m barrels. Benchmark crude oil futures for August delivery gained $0.39 or 0.7 percent to $45.52 on the New York Mercantile Exchange. In London, Brent crude for August delivery ended up by $0.16 at $47.95 a barrel on the ICE.


Indian rupee ended marginally higher against dollar on Friday due to sustained selling of the US currency by exporters and banks. Local currency got some support with International Monetary Fund's (IMF's) statement that India's growth outlook has improved as the impact of last year's demonetization exercise seems to be fading and recent key structural reforms continue to pay off. Moreover, positive gains in the local equity markets coupled with weak dollar against some currencies overseas too gave the rupee some support. On the global front, dollar's bounce stalled on Thursday after the US Federal Reserve's policy minutes failed to provide a clear picture of future interest rate increases, although investors were reluctant to add bearish bets before some key US data. Finally, the rupee ended at 64.77, 1 paise stronger from its previous close of 64.78 on Wednesday.


The FIIs as per Thursday'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 3521.81 crore against gross selling of Rs 3396.90 crore, while in the debt segment, the gross purchase was of Rs 541.52 crore with gross sales of Rs 1199.50 crore.


The US markets extending their sluggishness deposed around a percent in last session, following the release of a report from payroll processor ADP showing weaker than expected private sector job growth in the month of June. The Asian markets have made mostly a lower start with some indices declining by around half a percent in early deals. Japanese market was down tracking the weak cues overnight from Wall Street as well as rising global bond yields. The Indian markets despite slowing down in the final hours managed gains of about half a percent in last session. Today, the start may remain cautious on sluggish global cues, however there will be some support to the markets in latter trade with report that net direct tax collection grew by 14.8 per cent to Rs. 1.42 lakh crore at the end of first quarter on account of surge in advance tax payments. As per the finance ministry the net direct tax collection represents 14.5 per cent of the total Budget Estimates of direct taxes of Rs 9.8 lakh crore for 2017-18. Meanwhile, Finance Minister Arun Jaitley has said that the rollout of the Goods and Services Tax has been smooth, without causing much disruption. He said the economy has not been disrupted and we don't expect any disruption ahead, refuting critics who had thought that the GST rollout would impact trade and industry. Markets are also likely to get some support with Labour Minister Bandaru Dattatreya's statement that the retirement fund body EPFO's investment in stocks through exchange traded funds (ETFs) would cross the Rs 45,000-crore mark by the end of this fiscal. There will be some buzz in the PSU banking stocks on report that the government is likely to infuse more money in state-run banks amid a crackdown on bad loans and increasing capital needs under Basel III guidelines. The exact amount will be decided after the first quarter earnings of banks are available.


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  • Axis Bank has launched Super Bike Loans for 500cc and above bikes.
  • ICICI Bank has inked an agreement with Employees Provident Fund Organisation for collection of remittances and payments to beneficiaries, at zero transaction charges.
  • Mahindra & Mahindra has reported 7.38% rise in its production to 38872 units in June 2017 as compared to 36199 units in same month last year.
  • Bharti Airtel is planning to sell controlling stake in tower arm Bharti Infratel to pare over $14 billion of debt and release funds for network expansion.
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