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NSE Intra-day chart (12 July 2018)
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Market Commentary 13 July 2018
Markets to make a cautious amid weak macro-economic data



Extending jubilation for fifth straight session, Indian equity benchmarks ended the Thursday's trade with a gain of three fourth of a percent, with Sensex hitting new lifetime high, while Nifty ending above its crucial 11,000 mark. The rally was mainly fuelled by a solid decline in crude prices, in fact, the most in two years. Markets made an optimistic start and traded jubilantly throughout the session, as sentiments remained up-beat with a report that India has become the world's sixth largest economy overtaking France. According to World Bank data on gross domestic product (GDP) of countries for 2017, India's gross domestic product (GDP) stood at $2.597 trillion at the end of 2017, compared to $2.582 trillion for France. Traders also got some encouragement with the International Labour Organization (ILO), an arm of the United Nations, report that if 40% of India's electricity comes from renewables by 2030 (from 7.5% in February 2018), the country could add about 3 million new jobs. Adding to optimism, the estimated savings and gains since the inception of Aadhaar-based Direct Benefit Transfer (DBT) stood at over Rs 90,000 crore as on March 31 this year. However, traders booked some of their gains at higher levels in last leg of trade awaiting May industrial growth (IIP) data and June retail inflation (CPI) data due later in the day. Some concerns came with a private report stating that global debt rose to a record $247 trillion in the first quarter, more than $29 trillion higher than the end of 2016. Traders also took note of Chief Economic Adviser (CEA) Arvind Subramanian's statement that a three-tier structure under new tax regime is possible as revenues stabilise. He also said that GST, India's biggest reform in indirect taxes still remains a work in progress and there is a need for further simplification of rates with fewer exemptions and simpler policies. Finally, the BSE Sensex soared 282.48 points or 0.78% to 36,548.41, while the CNX Nifty was up by 74.90 points or 0.68% to 11,023.20.


After the pullback seen in the Wednesday's session, the US markets ended higher on Thursday, on account of optimism about the upcoming earnings season, with several leading financial companies due to report their quarterly results on Friday. Further, easing trade concerns also contributed to the rally following report of US threats of a new 10% tariff on $200 billion worth of Chinese imports contributed to the weakness on Wednesday. China vowed to take countermeasures in response to the new tariffs, although the markets responded positively to the lack of an announcement of specific retaliation by the Chinese. Traders also seem optimistic the continued tariff threats will eventually bring the US and China to the table for talks that could result in a long-term trade agreement. Besides, Tech firms led the stock markets higher, as investors returned to the pro-growth investment strategy that has worked throughout much of the long-running rally. On the economic front, the Labor Department released a report showing consumer prices edged slightly higher in the month of June. The Labor Department said its consumer price index inched up by 0.1% in June after rising by 0.2% in May. Street had expected consumer prices to increase by 0.2%. Excluding food and energy prices, core consumer prices rose by 0.2% for the second consecutive month, matching street estimates. While consumer prices showed only a modest monthly increase, the annual rate of growth still accelerated to a more than six-year high of 2.9% in June from 2.8% in May. Core consumer price growth also edged up to 2.3% in June from 2.2% in May, reaching its highest level since January of 2017. The Dow Jones Industrial Average gained 224.44 points or 0.91 percent to 24924.89, the S&P 500 surged 24.27 points or 0.87 percent to 2798.29 and the Nasdaq was up by 107.31 points or 1.39 percent to 7823.92.


Crude oil futures ended slightly lower on Thursday, but global benchmark prices rebounding from the three-week low they hit a day earlier. A monthly report from the International Energy Agency hinted at a coming slowdown in crude demand and revealed an uptick in global supplies. Traders also looked to the resumption of Libyan oil exports and mulled the impact of the US-China trade dispute on the global economy, and oil demand. Benchmark crude oil futures for August dropped 5 cents or less than 0.1 percent to settle at $70.33 a barrel on the New York Mercantile Exchange. September Brent crude rose $1.05 or 1.4 percent at $74.45 a barrel on London's Intercontinental Exchange.


Indian rupee strengthened for second consecutive session on Thursday, on dollar selling by exporters and banks. The rupee sentiment was buoyed with a report that India has become the world's sixth largest economy overtaking France. According to World Bank data on gross domestic product (GDP) of countries for 2017, India's gross domestic product (GDP) stood at $2.597 trillion at the end of 2017, compared to $2.582 trillion for France. Besides, good going in the local equity markets too supported the domestic unit. However, gains remained capped as anxiety spread among the traders ahead of key economic data - industrial production (IIP) numbers for May and retail inflation for June - to be released later in the day. On the global front, dollar steadied near a six-month high against the Japanese yen and held firm against its major peers on Thursday after the latest US economic data reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year. Finally, the rupee ended at 68.57, 20 paise stronger from its previous close of 68.77 on Wednesday.


The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5220.19 crore against gross selling of Rs 4299.98 crore, while in the debt segment, the gross purchase was of Rs 829.49 crore with gross sales of Rs 100.63 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.33 crore against gross selling of Rs 1.63 crore.


The US markets ended higher on Thursday, as Wall Street's appetite for risk improved on signs China is willing to make concessions to avert a trade war. Asian markets were trading in green on Friday, as some relief coming from the lack of escalation in trade tensions between the US and China. Indian equity markets ended higher with Sensex settling at the highest closing level of 36,548.41 mark, as sentiments got boost on expectations of strong corporate numbers coupled with renewed flows from foreign investors. Today, the markets are likely to make a cautious start amid weak macro-economic data. The Central Statistics Office's (CSO) data highlighted that Retail inflation soared to five-month high of 5% in June compared to 4.87% in May, on the back of a depreciating rupee and skyrocketing fuel prices, while India's Industrial Production (IIP) declined to a seven-month low of 3.2% in May as compared to 4.8% in April, mainly due to slow manufacturing activity and sluggish performance of power and FMCG sector. There will be some cautiousness with the Reserve Bank of India's (RBI) statement that higher expenditure on salaries and farm loan waivers, coupled with a revenue shortfall on Goods and Services Tax (GST) implementation, led to a slippage of 0.35% in states' fiscal targets to 3.1% in 2017-18. Traders will also be reacting to the Organisation for Economic Cooperation and Development's (OECD) statement that big emerging economies like China and India will suffer more than developed countries if trade tariffs return to 1990 levels. However, traders will be getting some encouragement later in the day with Finance Minister Arun Jaitley's statement that India could soon emerge as the world's fifth largest economy if it continues to maintain its current pace of growth.


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  • Power Grid Corporation of India has commenced commercial operation of its 100% wholly owned subsidiary namely Powergrid Warora Transmission on July 10, 2018. 
  • Cipla's wholly owned subsidiary - Cipla Medpro South Africa has signed an agreement to acquire 100% stake in Mirren. 
  • L&T's construction arm -- L&T Construction has won orders worth Rs 2,388 crore. 
  • Airtel Payments Bank, a subsidiary of Bharti Airtel, has received requisite approvals from the RBI to start on-boarding new customers.
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