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NSE Intra-day chart (05 August 2016)
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Market Commentary 08 August 2016
Markets to extend the jubilation with a positive start


Indian benchmark indices staged a blockbuster performance on the last day of the week by strongly rallying over a percent in the session and re-conquering their psychological levels. Investors continued to build hefty positions across the board, as sentiments got a boost after Union Finance Minister Arun Jaitley said that the government is working on a roadmap to roll out GST from April 1, 2017. GST can make the indirect tax system very efficient and will benefit all stakeholders including manufacturers, sellers, the ultimate consumers and the tax collecting governments apart from giving a substantial boost to GDP growth. According to Moody's investors Service, GST implementation will be positive for the country's economic growth without any significant impact on inflation. Investors' morale also remained upbeat after the Bank of England announced an interest rate cut and fresh stimulus package to counter the fallout from Britain's vote to quit the European Union. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 559.49 crore on August 04, 2016. Meanwhile, metal stocks gained traction after the government extended its floor price regime on steel imports for a further two months, as the world's third-biggest producer seeks to insulate domestic mills from a global glut. Besides, Auto counter extended their gains for another session as the sector is likely to benefit the most from the implementation of the GST Bill as the effective tax rate is likely to be lower than the current tax of nearly. On the other hand, mild selling was witnessed in selected Textiles stocks on reports that India's handloom export declined by 30% within a year after a gradual rise for several years. On the global front, Asian equity markets edged higher on Friday, while European shares gained in early trade. Back home, the local benchmarks got off to a rollicking opening as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the frontline indices slowly but steadily started gathering steam and surged by around a percent by late morning trades. Finally, the BSE Sensex surged by 363.98 points or 1.31% to 28078.35, while the CNX Nifty rose by 132.05 points or 1.54% to 8,683.15.


The US markets closed higher on Friday, after a stellar jobs report outstripped Wall Street expectations, showing sustained improvement in a labor market that has been spotty over the past few months. The US generated 255,000 new jobs in July, furnishing fresh proof that companies are still hiring plenty of workers even though the economy is operating at a lower pace. The second-straight large gain in hiring largely puts to rest any doubts about the health of the economy after unusually weak employment gains in May that at first raised alarms about the seven-year-old US recovery. The much stronger than expected increase in new jobs also boosts the odds that the Federal Reserve might raise interest rates as early as September. The central bank held off after job creation appeared to slow in May. The unemployment rate, meanwhile, was unchanged 4.9%. Separately, the US trade deficit jumped 8.7% in June to a 10-month high of $44.5 billion, reflecting the higher cost of oil and more imports of consumer goods such as cell-phones and drugs. The Dow Jones Industrial Average jumped 191.48 points or 1.04 percent to 18,543.53, Nasdaq gained 54.87 points or 1.06 percent to 5,221.12, while S&P 500 was up by 18.62 points or 0.86 percent to 2,182.87. 


Crude oil futures got a halt to their two day winning streak and ended marginally lower on Friday, after dollar bounced back with a strong US monthly jobs report augmented hawkish arguments for a near-term rate hike. The US Department of Labor said in its monthly employment report that the economy added 255,000 nonfarm payrolls in July, marking the second consecutive month that the labor market has added more than 200,000 jobs. Meanwhile, oil services firm Baker Hughes said in its Weekly Rig Count report that US oil rigs last week increased by seven to 381 for the week ending on July 29. It represented the sixth consecutive week of weekly increases among oil rigs nationwide. Benchmark crude oil futures for September delivery dropped $0.13 or 0.31 percent to close at $41.80 a barrel after trading in a range of $41.06 and $42.09 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $0.02 or 0.05 percent to $44.27 a barrel on the ICE.


Indian rupee made stronger closing against dollar on Friday due to increased selling of American currency by banks and exporters. Sentiments got some support after Union Finance Minister Arun Jaitley said that the government is working on a roadmap to roll out GST from April 1, 2017.  According to Moody's investors Service, GST implementation will be positive for the country's economic growth without any significant impact on inflation. Besides, strong gains in the domestic equity market and dollar weakness against other currencies overseas also aided to the rupee sentiments. However, Investors remained cautious ahead of the Reserve Bank of India's (RBI) bi-monthly policy on August 9, 2016. On the global front, dollar edged down as traders awaited a monthly U.S. labour market report for clues. Finally, the rupee ended at 66.78, 14 paise stronger from its previous close at 66.92 on Thursday.


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4140.67 crore against gross sell of Rs 3591.25 crore. While in the debt segment, the gross purchase was of Rs 1456.86 crore with gross sales of Rs 994.02 crore. Thus, FIIs stood as net buyers of Rs 462.84 crore in debt.


The US markets posted good gains in the last session, rejoiced by good jobs data. Though, the stronger than expected job growth pointed to strength in the labor market, the investors assumed that Federal Reserve remains unlikely to raise interest rates next month. The Asian markets have made a strong start and some of the indices are up by over a percent following the rally on Wall Street. Japanese shares led the rally as the US dollar extended its advance against the yen. The Indian markets surged in last session on the back of global cues after aggressive stimulus measures were unveiled by the Bank of England, and on hopes of timely GST implementation. Today, the start of the new week is likely to be in green and the markets will be extending the gains on jubilant global cues. Today, the Lok Sabha will give the final parliamentary seal of approval to the enabling of the Constitution amendment bill for GST that the Rajya Sabha cleared last week. Prime Minister Narendra Modi has said that the Goods and Service Tax Bill will take India closer to achieving financial equality, adding that the Bill is an important legislation for 'ek bharat shreshth bharat (One India Excellent India)' initiative. Meanwhile, Finance Minister Arun Jaitley has said that Indian economy has defied global slowdown and geo-political tensions and is now poised to seize the opportunity to grow faster. Traders will also be getting some support with a joint study by Confederation of Indian Industry (CII) and the Indian Banks' Association (IBA) stating that the overall financial conditions index in India rose 28 per cent sequentially to 61.1 in the first quarter of 2016-17 from 47.8 in the previous quarter of 2015-16, indicating healthy improvement. There will be some buzz in the oil & gas sector stocks, on reports that government may cut gas price for producers by 20% in October. The gas price was last cut on April 1 from $ 3.82 per mmBtu to $3.06 per mmBtu. If it happens, it will be the fourth consecutive reduction since the implementation of the domestic gas pricing formula. There will be lots scrip specific actions based on earnings announcements.



                                 Support and Resistance: CNX Nifty and BSE Sensex


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  • Tata Motors' subsidiary Jaguar Land Rover has reported its best ever July retail sales of 44,486 vehicles, up 34% compared to July 2015.
  • Reliance Industries has reportedly set up a record by investing Rs 1,12,000 crore in FY16, which was the highest ever by any corporate in India's history.
  • NTPC has raised Rs 2000 crore through issuance of green masala bonds in an overseas market.
  • Coal India s looking at entering into a pact with a South African government miner to jointly acquire coal mines in that country.
  • Bharti Airtel has launched two new postpaid plans under its 'myPlan Infinity' series, offering unlimited voice calls along with bundled 3G/4G data at just Rs 1199.
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