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NSE Intra-day chart (11 July 2016)
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Market Commentary 12 July 2016
Markets to extend gains ahead of the IIP and CPI data


Indian markets showcased a gung ho performance on Monday galloping over one and half percent in the session, as fervent bulls relentlessly piled up hefty positions not only in heavyweight stocks but across the broader markets too. The surprise triple digit rally helped the benchmarks to conquer a lot of psychological levels on their northbound journey and scale highest levels seen in last eleven months. Sentiments across the globe remained highly sanguine in the session after strong US monthly jobs data reassured investors about the health of the world's largest economy. While strong June jobs report put to rest lingering worries about the labor market and the broader economy, investors veered around to the view that the Federal Reserve will not hike interest rates in the near term, given the uncertain consequences of Brexit and the November presidential election. On the domestic front, local investors also cheered NITI Aayog Vice Chairman Arvind Panagariya's statement that the government has put the economy on the path of reform to achieve a high growth trajectory though there are significant lags between policy decisions and outcomes which need to be addressed. He also mentioned that today, the economy is far healthier compared to the last year of UPA II in all macroeconomic parameters. Besides, the increasing possibility of GST approval as Congress indicated softening of its stand and satisfactory progress of the monsoon in the country so far, also improved sentiments. Around 89% of the country has received normal and excess rainfall, owing to a good amount of monsoon in several parts, while large parts of Gujarat have recorded deficiency of more than half. Overall, the country has recorded 254 mm of rainfall from June 1 to July 10, as against 251 mm, which is one percent more. On the global front, Asian stock markets ended higher on Monday, while European shares rose for the third straight session. Back home, the NSE's 50-share broadly followed index Nifty, settled with triple digit gains above the crucial 8,400 support level, while Bombay Stock Exchange's Sensitive Index, Sensex accumulated around five hundred fifty points to close above the important psychological 27,600 levels. Finally, the BSE Sensex surged 499.79 points or 1.84% to 27626.69, while the CNX Nifty rose 144.70 points or 1.74% to 8,467.90.


The US markets closed higher on Monday, with S&P 500 finishing at a record high, as investors bought stocks amid a reinvigorated appetite for assets perceived as risky following a surprisingly strong jobs report last Friday. Markets were also boosted by the election in Japan over the weekend. Meanwhile, Federal Reserve Bank of Kansas City president Esther George stated that she wants the US central bank to get back to raising short-term interest rates gradually to reflect progress on hiring and inflation. George deemed the current level of short-term rates maintained by the Fed as too low given the progress Fed has seen in the economy. She also added that keeping rates at super-low levels raises the risk financial markets will run into trouble as an additional factor arguing in favor of lifting the cost of borrowing. The Dow Jones Industrial Average was up by 80.19 points or 0.44 percent to 18,226.93, Nasdaq added 31.88 points or 0.64 percent to 4,988.64 while, S&P 500 gained 7.26 points or 0.34 percent to 2,137.16.


Crude oil futures extended their weakness on Monday and tested the two months low intraday, on concerns related to global oversupply and the ramifications of the UK's decision to leave the European Union remained in focus. Traders also remained concerned with OPEC failing to cap output and Iran pumping oil at a furious pace just as North American production is picking up. Meanwhile, the US Energy Information Administration (EIA) said that it anticipates lower oil prices through 2017 to have a considerable effect on restraining production over the next year, before rebounding sharply over the next two decades. Benchmark crude oil futures for August delivery was down by $0.62 or 1.38 percent to close at $44.79 a barrel after trading in a range of $44.55 and $45.77 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery declined by $0.50 or 1.05 percent to $46.26 a barrel on the ICE.


Rising for the third straight day, Indian rupee ended stronger against dollar due to sustained selling of American currency by banks and exporters. The Sentiments got some support with the improvement in US jobs data that eased fears of an economic slowdown in the world's largest economy. The latest jobs data from the US showed that the US economy had added 287,000 jobs during the month of June, beating expectations. Additional support also came after the India Meteorological Department (IMD) reported that around 89 percent of the country has received normal and excess rainfall, owing to a good amount of monsoon in several parts, while large parts of Gujarat have recorded deficiency of more than half. Besides, strong gains in local equity markets also supported the rupee. On the global front, the safe-haven yen tumbled against the dollar after upbeat US jobs data, though the prospect of more stimulus to counter a weak global growth outlook kept low-risk sovereign bond yields near record lows. Finally the rupee ended at 67.13, 24 paise stronger from its previous close of 67.37 on Friday


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4288.11 crore against gross sell of Rs 3652.91 crore, While  in the debt segment, the gross purchase was of Rs 559.34 crore with gross sales of Rs 499.79 crore.


The US markets extended their gains in the last session with the S&P500 closing at a record high, though there were no major economic announcements but traders continued taking cues from the Friday's jobs report. The Asian markets have made a positive start, with Japan once again leading the pack, heading for the steepest two-day climb since February after Prime Minister Shinzo Abe said he will order a fresh fiscal stimulus package. Meanwhile, the Bank of Japan's Producer prices in Japan were down 0.1 percent on month in June. The Indian markets participated in the global rally with a huge gain in last session and the major bourses surged to near there one year high, with soaring global economic growth outlook after US came with a better than expected jobs data. Today, the start is likely to be in green and the markets will be extending the gains on sanguine global cues and Nifty may retest the crucial psychological levels of 8500. Though, traders will be eyeing the key economic data of Industrial Production and CPI inflation, slated to be announced after the market hours. Markets will be getting some support with the global rating agency Crisil's latest report that Indian economy is likely to grow at 7.9 percent in the current fiscal provided the country receives normal monsoon as it will boost agriculture growth and lift rural demand. The rating agency also expects the Reserve Bank of India to continue its accommodative monetary stance and cut the repo rate by another 25 bps this fiscal. Also, there will be some comfort with report that the rains are set to cover the entirety country within the next 48 hours. The good rains prospects have rekindled the hopes of rate cut by RBI and the rate sensitive stocks are likely to continue moving up. There will be some result announcements too.


                             Support and Resistance: CNX Nifty and BSE Sensex


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  • Bharti Airtel, a leading global telecommunications services provider, has received the clearance from the Indian telecom ministry for 4G spectrum trading deal with Aircel.
  • Tata Motors Group global wholesales in June 2016, including Jaguar Land Rover, were at 92,551 units, higher by 21%, over June 2015.
  • Sun Pharmaceutical Industries has rolled-out Gemcitabine InfuSMART in Europe. InfuSMART is a technology in which oncology products are developed in a Ready-To-Administer bag.
  • HDFC said it will issue rupee denominated bonds worth Rs 2,000 crore, with a greenshoe option of Rs 1,000 crore to foreign investors outside the United States.
  • Mahindra First Choice Services, a wholly owned subsidiary of Mahindra & Mahindra is aiming to nearly double its franchise outlets to 1,500 from 800 they have at present, which is a pretty rapid pace of growth.
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