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NSE Intra-day chart (09 July 2019)
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Market Commentary 10 July 2019
Benchmarks likely to make a cautious start on Wednesday


Paring almost all of their losses, key Indian equity benchmarks ended Tuesday's trading session on flat note. After a weak start, markets remained lackluster, impacted by CARE Ratings' report stating that economic slowdown has begun to dent the credit profile of India Inc. There has been a deterioration in the credit quality of entities rated in the first quarter of the current financial year, showing effect of the prevailing slowdown in the Indian economy. The street also got cautious with a private report that India's decision to raise duties on gasoline and diesel is unlikely to threaten the inflation outlook, keeping alive expectations of more interest rate cuts from the central bank. But, in noon deals, key indices staged a sharp recovery to end near their neutral lines. Losses got trimmed, with the Reserve Bank of India (RBI) Governor Shaktikanta Das' statement the financial system is hugely surplus with liquidity and this would facilitate the better transmission of rate cuts implemented by the RBI. Market participants took some support with Minister of State for Finance, Anurag Singh Thakur's statement that the government has infused over Rs 3.15 lakh crore into public sector banks (PSBs) in the 11 years through 2018-19 (FY09 to FY19). He also said as per RBI guidelines, banks in India are required to maintain a minimum capital to risk-weighted assets ratio (CRAR) of 9 per cent. Finally, the BSE Sensex gained 10.25 points or 0.03% to 38,730.82, while the CNX Nifty was down by 2.70 points or 0.02% to 11,555.90.


The US markets ended mostly higher on Tuesday, however overall trading activity was subdued, as traders looked ahead to Powell's testimony, hoping for signs of a near-term interest rate cut. Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday. The Fed chief is not likely to specifically lay out the central bank's plans to lawmakers, but traders are likely to closely analyze his comments for clues about the outlook for rates. Wednesday will also see the release of the minutes of the Fed's last monetary policy meeting, which may shed additional light on the central bank's decision to make notable changes to its accompanying statement. Besides, a notable drop by 3M (MMM) weighed on the markets, with the diversified manufacturer sliding by 2.1 percent after RBC Capital Markets downgraded its rating on the company's stock to Sector Perform from Outperform. Besides, trade policy concerns may also be weighing on market sentiment, after the US announced new preliminary tariffs on certain steel imports from Mexico and China, pending an investigation into subsides, with a final decision due in November. The US and China are set to relaunch trade talks this week after a two-month hiatus, but a year after their trade war began there is little sign their differences have narrowed. Nasdaq surged 43.35 points or 0.54 percent to 8141.73 and S&P 500 was up by 3.68 points or 0.12 percent to 2979.63, while Dow Jones Industrial Average slipped 22.65 points or 0.08 percent to 26783.49.


Crude oil futures ended higher on Tuesday buoyed by tensions with Iran that threaten the global flow of oil and by expectations for a weekly decline in US crude supplies. Meanwhile, the European Union urged Iran to reverse its scaled-up uranium enrichment that breaches a nuclear deal it agreed in 2015. The Trump administration withdrew from the accord last year and imposed oil-focused economic sanctions. Besides, in a monthly report released, the Energy Information Administration (EIA) forecast 2019 US crude production of 12.36 million barrels a day, up 0.3% from the June forecast. It also lifted its 2019 WTI price outlook by 0.5% to $59.58 a barrel. For Brent crude, however, it expects an average of $66.51 a barrel this year, down 0.3% from the June forecast. Benchmark crude oil futures for August gained 17 cents or 0.3 percent to settle at $57.83 a barrel on the New York Mercantile Exchange. September Brent added 5 cents or nearly 0.1 percent to settle at $64.16 a barrel on London's Intercontinental Exchange.


Indian rupee strengthened against dollar on Tuesday, due to selling of the US currency by exporters and banks. Market participants drew some support with Union minister Nitin Gadkari stating that innovative funding modules are on the anvil for the ambitious Rs 7.5-lakh-crore highway building programme as the sector can help achieve government's dream of making India a $5 trillion economy. However, dollar's strength against major global currencies overseas along with lackluster trade in the equity markets restricted the further up move. On the global front, euro dipped a three-week low against a stronger dollar on Tuesday as investors re-assessed their expectations of how much the Federal Reserve may cut interest rates by this month. Finally, the rupee ended at 68.51, 15 paise stronger from its previous close of 68.66 on Monday.


The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3633.81 crore against gross selling of Rs 3963.66 crore, while in the debt segment, the gross purchase was of Rs 4687.97 crore with gross sales of Rs 3358.40 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.36 crore against gross selling of Rs 20.62 crore.


The US markets ended mostly higher on Tuesday as tech stocks boosted the sentiments, but worries about the effect on earnings of a protracted US-China trade dispute capped the gains. Asian markets are trading mixed on Wednesday as investors await Fed chairman Jerome Powell's testimony before Congress for further cues on Federal Reserve's monetary policy. Indian markets trimmed most of the losses and ended flat on Tuesday on the back of a recovery in large-cap stocks and ahead of first quarter earnings. Today, the start is likely to be cautious amid mixed cues from global markets coupled with higher crude oil prices. There will be some cautiousness with Moody's Investors Service's statement that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. Traders will be concerned with Crisil in its earnings preview stating that India Inc will see the slowest quarterly revenue growth in two years, which will more than halve to 6 percent from 14-15 percent, due to a deceleration in consumption and lower realisations. It added that not just the topline, but corporate India is also staring at a sharp fall in profitability, with operating profit growth expected to come in at a low 3 percent as against an average of 13 percent in the past four quarters. However, some support may come later in the day with Vice-chairman of Niti Aayog Rajiv Kumar's statement that the target of achieving an economy of $5 trillion within 2024-25 was eminently doable and the private sector would have to take the lead. He added that there are several initiatives mentioned in the budget which point out to the willingness of the government to work along with the private sector. There will be some buzz in the consumer durables stocks with a private report that the consumer durables industry in India will reach $36 billion by 2023 and a whopping $23 billion sales would be digitally influenced. There will be some reaction in power stocks with private report that imposition of auction ceiling prices and delays in commissioning of awarded projects have lowered near-term growth outlook of wind power sector in India. There will be some result reactions too, to keep the markets in action.


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  • Hero MotoCorp has made an upward revision in the ex-showroom prices of its motorcycles and scooters, effective July 08, 2019. 
  • HCL Technologies and NLC Insurance Companies have rolled out Guidewire Insurance Platform with SmartCOMM for Agents and Policyholders. 
  • Reliance Industries has joined hand with Turkish textile company Kivanc Tekstil.  
  • Tata Motors has received an order for over 200 units of its sports utility vehicle Hexa from Bangladesh Army.
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