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NSE Intra-day chart (12 July 2016)
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Market Commentary 13 July 2016
Markets to make a positive start on sanguine global cues


Indian equity markets showcased yet another courageous performance on Tuesday as the local indices rallied by over half a percent in the session, settling above the psychological 8,500 (Nifty) and 27,800 (Sensex) levels. Last session's optimism got spilled over into the today's session helping the frontline indices in extending the winning momentum for second successive session, as encouraging global developments buttressed domestic sentiments. Shares across the world gained on speculation the policy makers will act to stem any fallout from the UK decision to leave the European Union, with the Bank of England tipped to cut rates this week. Investors continued to build hefty positions across the board as sentiments got a boost after strong US monthly jobs data reassured investors about the health of the world's largest economy.  On the domestic front, sentiments also got some support with global ratings agency Crisil report that India's economy will grow at 7.9 percent in the current financial year compared with 7.6 percent in fiscal 2016, if the country receives normal monsoon, 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. Besides, the strong likelihood of a Goods and Services Tax Bill being passed in the monsoon session of Parliament, which starts on July 18, and hopes of a good start to the quarterly earnings season also boosted investor sentiment. Market participants got some confidence with report that monsoon rains, the lifeblood of India's agriculture-dependent economy, will cover the whole of India in the next 48 hours, boosted the hopes of a rise in farm output and incomes after two straight years of drought. On the global front, Asian stock markets climbed for a second day on Tuesday, while European markets extended their gains for fourth consecutive day. Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The key indices remained sluggish through the morning trades but saw a sudden spurt in buying post the sanguine European market opening.  Second half of the session saw the key gauges capitalizing on the momentum further and spurting to session's highest levels in dying hour. Finally, the BSE Sensex surged 181.45 points or 0.66% to 27808.14, while the CNX Nifty rose 53.15 points or 0.63% to 8,521.05.


The US markets closed higher on Tuesday, with the Dow Jones Industrial Average and the S&P 500 index both closing at fresh all-time highs. A stronger-than-expected second-quarter report from Alcoa Inc. viewed as the unofficial launch of corporate-earnings season - engendered optimism on Wall Street. On the economy front, small-business sentiment rose for the third straight month in June, but remained muted compared to its long-term average. The optimism index from the National Federation of Independent Business rose 0.7 point to 94.5. Only three of ten components declined in June, and the biggest jump was in the number of people who expect the economy to improve. Still, the index has spent most of the economic expansion well below its long-term average of 98. Small-business owners continue to have trouble finding workers. More than half reported hiring or trying to hire, but 48% reported no or few qualified applicants for the open positions. The Dow Jones Industrial Average was up by 120.74 points or 0.66 percent to 18,347.67, Nasdaq added 34.18 points or 0.69 percent to 5,022.82 while, S&P 500 gained 14.98 points or 0.70 percent to 2,152.14.


Crude oil futures bounced back, surging by over four percent on Tuesday and bouncing from near two-month lows, after OPEC predicted in its first 2017 forecast that the demand for global oil will exceed production levels of crude next year. The report eased the worries regarding the long-term implications of a massive supply glut. Meanwhile, OPEC in its monthly Oil Market Report for June, said its crude oil production averaged 32.86 million barrel per day in June, representing an increase of 264,000 bpd from the prior month. Benchmark crude oil futures for August delivery surged by $2.00 or 4.47 percent to close at $46.76 a barrel after trading in a range of $44.52 and $46.92 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery gained $2.15 or 4.65 percent to $48.40 a barrel on the ICE.


Indian rupee ended marginally stronger against dollar ahead of the key macroeconomic data, scheduled to be released later in the day. The government will issue the Index of Industrial Production (IIP) and Consumer Price Index (CPI) based inflation data for May and June. Besides, strong gains in the domestic equity market and dollar weakness against other currencies overseas added to the rupee gains. Sentiments got some support with global ratings agency Crisil report that India's economy will grow at 7.9 percent in the current financial year compared with 7.6 percent in fiscal 2016, if the country receives normal monsoon, it will boost agriculture growth and lift rural demand. On the global front, the yen hit its lowest in nearly three weeks against the dollar on Tuesday, as a weekend election victory by Japan's ruling coalition paved the way for more stimulus, bolster risk sentiment. Finally, the rupee ended 67.18, 5 paise stronger from its previous close at 67.13 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 4883.46 crore against gross sell of Rs 3810.24 crore. While, in the debt segment the gross purchase was of Rs 786.91 crore with gross sales of Rs 316.27 crore.


The US markets continued their surge in last session and the Dow and the S&P 500 reached new record closing highs, while the Nasdaq hit its best levels of the year. Sharp rise in crude along with optimism about stimulus from Japan and China supported the markets to move higher. The Asian markets too have made a positive start, with Japanese stocks joining the global markets in reversing their Brexit referendum losses on the on hopes of further stimulus. The Indian markets overcoming the early choppiness posted decent gains in the last session. Today, the start is likely to be in green and Nifty will come close to 8550 level in early trade, with traders reacting to the macro data announced after the market hours yesterday. While, industrial production recovered, growing by 1.2 percent in May compared to (-) 0.8 percent in April, the retail inflation based on Consumer Price Index (CPI) rose marginally to 5.77 percent in June as against 5.76 percent in May. Meanwhile, Chief Economic Advisor, Arvind Subramanian has said that India would have to pursue an outward orientation strategy if it were to achieve 8-10 per cent GDP growth levels. Subramanian also said that India and other developing countries have strong incentives to keep global markets open. There will be buzz in the fertilizer stocks, as the government has asked private firms to slash retail prices of non-urea fertilisers by up to Rs 5,000 per tonne, in line with public-sector firms, or else it will cut down the subsidy provided to them. There will some action in export oriented stocks too, on report that the government has disbursed Rs 1,433 crore up to March under the interest subsidy scheme to exporters.


                            Support and Resistance: CNX Nifty and BSE Sensex


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  • Tata Motors' subsidiary -- Jaguar Land Rover has demonstrated a range of innovative research technologies that would allow a future autonomous car to drive itself over any surface or terrain.
  • Tata Power has decided to raise Rs 3,500 crore through issuance of non-convertible debentures in one or more tranches on a private placement basis. 
  • IndusInd Bank has opened IFSC Banking Unit at the Gujarat International Finance Tec-City to meet the requirements of offshore banking operations from India. 
  • HDFC, the country's premier housing finance entity has decided to raise Rs 3,000 crore through synthetic bonds, the first ever by an Indian company.
  • State-run Coal India said its board has approved buyback of 10.89 crore shares worth Rs 3,650 crore.
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