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NSE Intra-day chart (13 June 2016)
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Market Commentary 14 June 2016
Markets to make a negative start reacting to inflation data


Indian benchmarks started the new week on a disappointing note, as sharp decline in the rupee, slide in crude oil prices and weakness among global peers led to sell off across the board by investors. Sentiments remained dismal as worries over global economic growth prospects prompted marketmen to take profits off the table after official data released earlier on Monday showed China's fixed-asset investment growth eased to 9.6 percent on-year in the January-May period, below market expectations, while the statistics bureau said downward pressures still exist in the economy. Sentiments were undermined by the industrial output, which contracted by 0.8 per cent in April, the first decline in three months, due to drastic fall in capital goods production and manufacturing activities. Disappointed over the latest Index of Industrial Production data, India Inc has said that industrial revival is going to be a major challenge going ahead but expressed hope that the growth will pick up on account of the recent measures taken by the government. Meanwhile, some traders remained on the sidelines and refrained from any buying activity ahead of key macroeconomic data i.e. consumer price index (CPI) to be released later in the day and inflation based on the wholesale price index (WPI) for May to be released on Tuesday. Caution also prevailed ahead of the key central bank meetings this week in the United States, the UK, Switzerland and Japan. All are expected to hold monetary policy steady against a backdrop of caution heightened by the global impact from a possible Brexit. Earlier on Dalal Street, the benchmark got off to a gap down opening, in tandem with the somber sentiments prevailing in Asian markets amid jitters over the forthcoming referendum on whether the UK would remain in the European Union scheduled on June 23, 2016. The selling pressure accentuated in the early afternoon as investors took to across the board risk aversion immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 238.98 points or 0.90% to 26396.77, while the CNX Nifty dropped 59.45 points or 0.73% to 8,110.60. 


The US markets closed lower for a third straight session on Monday, as concerns about the pending Fed policy meeting, which concludes Wednesday, and the UK referendum set for June 23 on Britain's membership in the EU have raised the collective level of anxiety among investors. Recent polls have shown the race is tight, with some polls showing a majority of British voters are in favor of exiting the EU. The central bank's two-day meeting will start Tuesday, with a decision on interest rates Wednesday afternoon. Fed Chairwoman Janet L. Yellen is scheduled to hold a news conference after the interest rate decision. The CBOE Market Volatility Index, known as the fear index, rose above the 20-level for the first time since March 1 on mounting worries about the state of the global market. The Dow Jones Industrial Average was down by 132.86 points or 0.74 percent to 17,732.48, Nasdaq lost 46.11 points or 0.94 percent to 4,848.44 while, S&P 500 dropped 17.01 points or 0.81 percent to 2,079.06.


Crude oil futures declined further on Monday, albeit modestly, as OPEC left its world oil demand growth forecasts unchanged amid further evidence of declines in Chinese crude imports. OPEC left its 2016 global oil demand growth forecast unchanged at 1.20 million barrels per day to 94.18 million. OPEC supply growth estimates also remained steady at a contraction of 0.74 million bpd, totaling 56.40 million bpd for the year. OPEC expects downward revisions in Canada, Brazil and Colombia to offset gains in the US, UK, Russia and Azerbaijan. Traders also remained concerned awaiting a highly-anticipated interest rate decision by the Federal Reserve on Wednesday. Benchmark crude oil futures for July delivery declined by $0.21 or 0.42 percent to $48.86 a barrel after trading in a range of $48.16 and $49.27 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $50.32, down $0.22 or 0.44 percent on the ICE.


Extending its weakness for the third straight session, Indian rupee depreciated substantially against dollar on Monday on strong demand for the American unit from importers and banks. The rupee again crossed the 67-mark against the US dollar, tracking the losses in global equity markets. Losses in local equity market too pressurized rupee. Besides, weak domestic factory output data released on Friday and cautiousness over the CPI data scheduled later in the day, too weighed heavily on the domestic currency. On the global front, yen was high against the dollar and euro on Monday, as investors sought refuge in traditional safety of the Japanese currency on lingering fears about the U.K. referendum on European Union membership next week. Finally, the rupee ended at 67.14, 39 paise weaker from its previous close at 66.75 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity, the gross buying was of Rs 3523.58 crore against gross selling of Rs 3304.48 crore, while in the debt segment, the gross purchase was of Rs 292.22 crore with gross sales of Rs 52.17 crore.             


The US markets once again ended in red in the last session, with the S&P 500 further pulling back off its ten-month closing high, as traders reacted to the mass shooting in a nightclub in Orlando over the weekend and traders kept looking ahead to the Federal Reserve's monetary policy announcement on Wednesday. The Asian markets have continued their downtrend with most of the indices trading lower. Risk aversion was prevailing in the markets on mounting concern over the UK's vote on European Union membership after new polls indicated more Britons favor leaving the EU than want to remain. Japanese market was once again leading the decliners as the yen strengthened against all its peers. The Indian markets lost considerably in the last session, extending their declining streak amid weak global cues and ahead of this week's Fed and BOJ meetings and the upcoming Brexit referendum later this month. Today, the start is likely to remain sluggish on weak global cues, traders will also be reacting negatively to the report of rise in retail inflation, which accelerated to a near two-year high of 5.76 percent in May, dampening hopes of a rate cut by the RBI. Now traders will be eyeing the wholesale price index inflation data slated to be announced later in the day. However, some stabilization can be expected in the latter part of the trade and traders will be getting some support with Minister of State for Finance Jayant Sinha's statement that the government has enough backing from smaller regional parties to pass the Bill in Rajya Sabha without support from the main opposition Congress party and if we can pass it in the monsoon session of Parliament, then we can implement it in April 1, 2017. There will be some buzz in the banking and realty companies, as the Reserve Bank of India has thrown a lifeline for overleveraged companies and banks to put an end to future bad loans by permitting capital restructuring which would see banks taking equity in companies. Power sector stocks too will be in action on a key energy report stating that weak coal and gas prices will not stop record investment in renewables over the coming decades as the cost of generating clean energy drops.


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Idea Cellular





Tata Motors






  • Vedanta is planning to acquire coal mines through auctions as the mining conglomerate seeks to ensure fuel security for its energy guzzling aluminium plants.
  • RBI has notified increase in Yes Bank's FIIs/RFPIs limit to 74% from existing 60% under the Portfolio Investment Scheme.
  • Dr. Reddy's has inked pact with Teva Pharmaceutical Industries and an affiliate of Allergan plc to acquire a portfolio of eight ANDAs in the US for $350 million in cash at closing.
  • In order to fund its business growth model, Housing Development Finance Corporation, the country's largest mortgage lender has decided to raise Rs 1000 crore by issuing debentures.
  • TCS has entered into a global partnership with Randstad Global IT Solutions, to design and deploy one of the world's largest end-to-end public cloud marketplaces for IT infrastructure services.
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