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NSE Intra-day chart (11 June 2018)
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Market Commentary 12 June 2018
Markets to make negative ahead of macro-economic data


Monday turned out to be a disappointing day of trade for Indian equity benchmarks, as frontline gauges failed to hold initial jubilation and ended with marginal gains as traders booked most of their early gains ahead of the outcome of a historic meeting between the US President Donald Trump and the North Korean leader Kim Jong Un. Markets gained strength after making flat-to-positive start, as traders took some encouragement with CII's statement that Industry is expecting the GDP to grow by close to 8% over the next couple of years, as strong reforms process and fiscal prudence have laid a solid foundation for growth. Markets extended northward journey in noon deals as some support came with report that foreign direct investment (FDI) in India increased to $61.96 billion in 2017-18. FDI inflows stood at $60 billion in the previous fiscal. During the four years of the BJP government, foreign inflows jumped to $222.75 billion from $152 billion in the previous four-year period. Adding to the optimism, Commerce Minister Suresh Prabhu said that India's GDP growth is likely to cross 8% in the next two years and the government is taking a number of steps including formulation of a new industrial policy to double the economy's size to $5 trillion in 7-8 years. Further, investors also took some support with a report highlighting that Central Board of Indirect Taxes and Customs (CBIC) cleared over Rs 7000 crore worth Goods and Services Tax (GST) refunds of exporters during the initial phase of the special refund drive undertaken by the authorities. However, market participants pared most of their initial gains as sentiments turned pessimistic, as anxiety spread on the street with Former finance minister P Chidambaram's statement that state of the economy was bad in the country due to the wrong policies of the NDA government and tyres of three (Exports, Private Investment, Private Consumption) of the four wheels on which the economy rides were punctured. Sentiments also weighed down on report that annual consumer price inflation (CPI) likely to increase at 4.83% in May, the highest since January and above April's 4.58%. Finally, the BSE Sensex gained 39.80 points or 0.11% to 35,483.47, while the CNX Nifty was up by 19.30 points or 0.18% to 10,786.95.


The US markets ended higher for second straight session on Monday, as investors shrugged off concerns over a tumultuous G-7 meeting over the weekend at which President Donald Trump lashed out at US allies. President Trump and his administration escalated criticism of Canadian Prime Minister Justin Trudeau and international trade over the weekend at the annual G-7 summit that took place in Quebec, Canada. The conclusion of the two-day summit, where Trump met with leaders from Europe and Canada, resulted in the US incumbent refusing to endorse the joint G-7 statement that called for a reduction of tariffs - sparking tensions between him and fellow G-7 leaders. Wall Street also prepared for the hotly anticipated meeting between Trump and North Korea leader Kim Jong Un in Singapore, set to occur on Tuesday. Besides, investors focus now shifted towards central-bank meetings this week. The Federal Reserve, led by Chairman Jerome Powell, is expected to raise interest rates after its two-day meeting that begins Tuesday, while European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative on Thursday. The Dow Jones Industrial Average gained 5.78 points or 0.02 percent to 25,322.31, the Nasdaq surged 14.41 points or 0.19 percent to 7,659.92 and the S&P 500 was up by 2.97 points or 0.11% to 2782.00.


Crude oil futures edged higher on Monday, getting a lift from expected supply disruptions in Iran and Venezuela, even after a report of rising crude output from Saudi Arabia ahead of a much-anticipated producer meeting later this month. The most influential member of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia, had begun to increase its output after two years of leading efforts to curtail global output, with the kingdom boosting production in recent weeks by more than 100,000 barrels a day. That has raised Saudi overall output to about 10 million barrels a day. Benchmark crude oil futures for July delivery gained 36 cents or 0.60 percent to settle at $66.10 a barrel on the New York Mercantile Exchange. August Brent crude settled flat at $76.46 a barrel on London's Intercontinental Exchange.


Indian rupee appreciated against dollar on Monday, on increased selling of American currency by exporters and banks. Weak dollar against other major currencies pushed the rupee higher. Some support came with Commerce Minister Suresh Prabhu's statement that India's GDP growth is likely to cross 8% in the next two years and the government is taking a number of steps including formulation of a new industrial policy to double the economy's size to $5 trillion in 7-8 years. Rupee sentiments remained optimistic with Assocham stating that reducing taxes is the best solution to check the spurt in fuel prices which would also tremendously help India on the exports front. Meanwhile, traders await consumer price index (CPI)-based inflation and index of industrial production (IIP) data which will be released on Tuesday. On the global front, US dollar weakened against other currencies overseas ahead of outcome of a historic meeting between the US President Donald Trump and the North Korean leader Kim Jong Un. Moreover, global investors will also look forward to the outcome of monetary policy reviews by the world's three biggest central banks. Finally, the rupee ended at 67.43, 8 paisa stronger from its previous close of 67.51 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 segment, the gross buying was of Rs 4916.79 crore against gross selling of Rs 4899.75 crore, while in the In the debt segment, the gross purchase was of Rs 546.91 crore with gross sales of Rs 1138.05 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.05 crore against gross selling of Rs 1.95 crore.


The US markets ended mostly higher on Monday, as traders looked ahead to the historic summit between President Donald Trump and North Korean leader Kim Jong Un on Tuesday. Asian markets trading lower in early deals as investors awaited monetary policy announcements by three major central banks and the most crucial House of Commons votes on Brexit. Indian equity benchmarks ended with marginal gains as investors turned cautious ahead of some crucial economic data. Today, the markets are likely to make pessimistic start as investors await crucial economic data on consumer inflation and industrial output for direction. India's retail inflation likely to jump further in May to a four-month high, primarily driven by a surge in energy prices. Traders may remain concern after President Donald Trump has taken a swipe at India along with the world's other top economies and accused New Delhi of charging 100 percent tariff on some of the US' goods, as he threatened to cut trade ties with countries who are robbing America. Traders may also remain anxious on report that 1,300 fresh foreign portfolio investors (FPIs) were registered with Securities and Exchange Board of India (Sebi) in 2017-18 as compared to 3,500 new FPIs were registered in the preceding financial year.  However, traders may get some solace later in the day with report that the Reserve Bank came out with draft guidelines on loan system for delivery of bank credit to improve discipline among larger borrowers enjoying working capital facility from the banking system. Meanwhile, the recent amendments in the bankruptcy resolution framework will help reduce timelines, enhance transparency and improve realisations. There will be buzz in steel and power companies with Union minister Piyush Goyal's statement that the government was looking at opening auctions of coal mines to the steel and power sectors, and that a robust framework was being worked out for commercial mining.


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  • Larsen & Toubro's construction arm -- L&T Construction -- has won orders worth Rs 2210 crore across two business segments. 
  • State Bank of India will conduct auction of 12 non-performing accounts (NPAs) later this month to recover dues of over Rs 13.25 billion. 
  • Reliance Industries' wholly owned subsidiary -- Reliance Brands has purchased 100% stake in Rhea Retail.  
  • Coal India has reported 31% growth in average realisation from e-auctions during the March quarter and 20% growth for FY18 on higher demand and international prices.
News Analysis