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NSE Intra-day chart (11 June 2019)
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Market Commentary 12 June 2019
Markets likely to make a cautious start amid weak global cues


Indian equity markets ended higher for third straight session on Tuesday, with Sensex and Nifty gaining 165 and 42 points respectively. After a firm start, markets witnessed volatility just for short duration and then staged recovery to remain positive throughout the day, amid reports that SEBI proposed an informant mechanism to blow the whistle on insider trading cases, wherein genuine whistleblowers could get monetary reward of Rs 1 crore as well as amnesty from regulatory action. Traders remained optimistic with the Micro, Small and Medium Enterprise (MSME) ministry's additional secretary Ram Mohan Mishra's statement that ministry is working on developing enterprise facilitation centres at block level across the country to make MSMEs more competitive and help them integrate with big enterprises. Market participants were seen taking encouragement with Crisil's latest report which stated that the system-wide non-performing assets (NPAs) stock declined massively to 9.3 per cent in last fiscal year (FY19), after tripling to 11.5 per cent in the four fiscals till March 2018. The decline was much faster than the Reserve Bank of India's (RBI) estimate. However, key indices failed to hold day's high points at the end of the session, after Arvind Subramanian, Narendra Modi government's former chief economic adviser, said that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. Finally, the BSE Sensex gained 165.94 points or 0.42% to 39,950.46, while the CNX Nifty was up by 42.90 points or 0.36% to 11,965.60.


The US markets ended marginally lower on Tuesday as traders await further developments regarding the ongoing trade dispute between the US and China. The US-China trade conflict largely took a back seat to President Donald Trump's threatened tariffs on Mexico but may move back into the spotlight ahead of the G20 summit later this month. Trump and Chinese President Xi Jinping are expected to meet at the summit, with the US president warning that he will impose new tariffs on Chinese goods if his counterpart does not attend. However, optimism about a potential interest rate cut by the Federal Reserve has contributed to the recent rebound on Wall Street, with the central bank due to make its latest monetary policy decision next week. The Fed is widely expected to leave interest rates unchanged next week, although the chances for a rate cut next month have spiked since Fed Chairman Jerome Powell pledged to act as appropriate to support the economic expansion. On the economic front, producer prices in the US showed a modest increase in the month of May, according to a report released by the Labor Department. The Labor Department said its producer price index for final demand inched up by 0.2 percent in May after rising by 0.2 percent in April. The slight increase in producer prices came as higher prices for services were partly offset by a sharp pullback in energy prices. The report said energy prices tumbled by 1.0 percent in May after surging up by 1.8 percent in April, with gasoline prices leading the way lower. Core prices edged higher as prices for services climbed by 0.3 percent in May following a 0.1 percent uptick in the previous month. Dow Jones Industrial Average declined 14.17 points or 0.05 percent to 26048.51, Nasdaq fell 0.60 points or 0.01 percent to 7822.57 and S&P 500 was down by 1.01 points or 0.04 percent to 2885.72.


Crude oil futures settled almost unchanged as traders weighed uncertainty surrounding a supply decision by Organization of the Petroleum Exporting Countries (OPEC) and its allies and awaited a report that is expected to reveal a modest, second straight weekly rise in US crude supplies. The Energy Information Administration (EIA) reduced its forecasts for 2019 oil prices and US crude-oil production. The EIA forecasts 2019 domestic crude production of 12.32 million barrels a day, down 1% from the May forecast. It also cut its 2020 output view by 0.9% to 13.26 million barrels a day. For 2019, the government agency lowered its WTI crude price outlook by 5.6% to $59.29 a barrel and its Brent view by 4.2% to $66.69. It left its 2020 price forecasts unchanged. Benchmark crude oil futures for July gained 1 cents or 0.02 percent to settle at $53.27 a barrel on the New York Mercantile Exchange. August Brent settled unchanged at $62.29 a barrel on London's Intercontinental Exchange.


Snapping three day falling streak, Indian rupee staged a smart recovery against dollar on Tuesday, following heavy dollar selling from banks and exporters. Besides, positive trend in equity market too supported the rupee. Trades overlooked Arvind Subramanian, Narendra Modi government's former chief economic adviser's statement that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. On the global front, dollar was mixed against main rivals, while the pound won support from official data showing UK unemployment held at a 45-year low point with a rate of 3.8 percent. Finally, the rupee ended at 69.44, 21 paise stronger from its previous close of 69.65 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 3760.79 crore against gross selling of Rs 3440.36 crore, while in the debt segment, the gross purchase was of Rs 3270.55 crore with gross sales of Rs 1484.87 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.97 crore against gross selling of Rs 7.13 crore.


The US markets ended marginally lower on Tuesday as investors wavered between fears of rising trade tensions and hopes that policy makers will bolster markets with fresh stimulus measures. Asian markets are trading mostly in red on Wednesday as US-China trade issue remained unresolved and ahead of key economic data from China. Indian markets extended their northward journey for third straight session and ended higher on Tuesday on the back of strong buying in banking, metal and energy stocks amid positive global cues. Today, the markets are likely to make cautious start amid weak global cues and ahead of macro-economic data. Retail inflation and industrial production data for May and April, respectively, due to be released later in the day. There is expectation that retail inflation likely accelerated to a seven-month high in May on rising food prices. However, some respite may come later in the day with the Reserve Bank of India's (RBI) statement that it will infuse Rs 15,000 crore into the financial system through bond purchases on June 13. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of (six) Government securities under OMOs through multi-security auction using the multiple price method. Traders may take note of a report that RBI's new guidelines to deal with bad loans will provide lenders the headroom and flexibility for resolution of large ticket stressed asset cases under the Insolvency and Bankruptcy Code (IBC). Meanwhile, the Finance Ministry said that the new monthly GST return filing system will be rolled out from October. The rollout is three months behind the schedule. There will be some buzz in the Information Technology (IT) stocks with ICRA's report that the Indian IT services sector is expected to register a growth of 6-8 per cent in US dollar terms during 2019-20. It added that Indian IT firms could also see higher wage bills and lower margins on account of increased onsite hiring as they tackle tighter visa scrutiny and reduction in H1-B visa approvals. There will be some reaction in metal stocks with report that the Steel Ministry has suggested its commerce counterpart to bring certain changes in norms used for imposing anti-dumping duties with a view to making them more effective for protecting domestic players from cheap imports.


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  • Bharti Airtel has further upgraded its mobile network in Delhi NCR with the deployment of LTE 900 technology on the 900 Mhz spectrum. 
  • Reliance Industries is all set to temporarily shut down a crude distillation unit at its old refinery at Jamnagar for maintenance and inspection for up to four weeks from June 20. 
  • UltraTech Cement has received approval from environment ministry for Rs 2,500 crore project in Andhra Pradesh. 
  • Maruti Suzuki India has cut vehicle production by over 18 percent in May.
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