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NSE Intra-day chart (14 July 2016)
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Market Commentary 15 July 2016
Markets to remain in euphoric mood ahead of Infosys and RIL numbers


A session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying over half a percent on Thursday,  as investors turned cheerful after reports of talks between the Congress and the government fuelled hopes that the crucial Goods and Services Tax (GST) Bill is likely to be passed soon. Further, Union Minister Nitin Gadkari also expressed confidence that the crucial Goods and Services Tax (GST) Bill will be passed in the coming Monsoon session of Parliament as he touted the various reform measures implemented by the government to boost economic growth and attract billions of dollars of foreign investment and technical expertise across sectors. Besides, appreciation in Indian rupee too aided sentiments. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 290.53 crore on July 13, 2016. However, gains remained capped with the hardening of the WPI index follows an uptick in retail inflation, which hit a 22-month high of 5.77 per cent in June, dampening chances of a rate cut by RBI at its next policy meet scheduled for August 9, 2016.  Wholesale price index-based inflation accelerated for the third straight month in June hitting 1.62 per cent on costlier food and manufactured items. On the global front, Asian markets ended mixed on Thursday, as investors remained cautious ahead of a Bank of England meeting and Friday's release of China's GDP data. However, European stocks rallied in early trade. Back home, Indian market got off to a soft start as the indices showed signs of consolidation in early trade, ahead of quarterly corporate results and an expected government announcement on who would take over as the country's next central bank chief. Short covering intensified in late hours of trade which stoked the bourses to the highest point in the session. Finally, the BSE Sensex surged 126.93 points or 0.46% to 27942.11, while the CNX Nifty rose 45.50 points or 0.53% to 8,565.00.


The US markets closed higher on Thursday, with the Dow industrials and the S&P 500 notching new closing highs.  Stronger-than-expected results from large financial institutions, as well as upbeat economic data, powered the climb, which has added to a record run by stocks. The number of Americans who applied for unemployment benefits last week was unchanged at 254,000, from July 3 to July 9, offering more proof that the US labor market remains sound despite a slower pace of hiring in 2016. Claims have been below the key 300,000 threshold for 71 weeks, the longest stretch since 1973. The average of new jobless claims over the past month fell by 5,750 to a two-and-a-half month low of 259,000. Still, job creation has tapered off this year to a monthly rate of 172,000 from 229,000 in 2015. Continuing jobless claims climbed 32,000 to 2.15 million in the week ended July 2. Separately, US producer prices jumped 0.5% in June - the biggest increase in more than a year - largely owing to higher oil prices and margins for financial services. The Dow Jones Industrial Average was up by 134.29 points or 0.73 percent to 18,506.41, Nasdaq added 28.33 points or 0.57 percent to 5,034.06, while S&P 500 gained 11.32 points or 0.53 percent to 2,163.75.


Crude oil futures bounced back on Thursday, mainly on the back of short covering after the sharp fall in previous session, as investors expressed significant concerns on a global oil and gasoline supply glut in the wake of a bearish U.S. stockpile report from the previous session. Meanwhile, the International Energy Agency warned that "restrained by the ongoing downturn in the Chinese economy, demand stuttered severely in May." Benchmark crude oil futures for August delivery plunged by $0.77 or 1.72 percent to close at $45.53 a barrel after trading in a range of $44.96 and $45.80 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery slumped by $0.96 or 2.08 percent to $47.22 a barrel on the ICE.


Indian rupee ended substantially stronger on fresh selling of American currency by banks and exporters. Besides, healthy growth in the domestic equity market and dollar weakness against other currencies overseas added to the rupee gains. Sentiments turned upbeat with the India Meteorological Department (IMD) report that monsoon rains has covered the whole of India in, boosting hopes of a rise in farm output and incomes after two straight years of drought. On the global front, the pound rose firmly against other major currencies on Thursday, as investors waited for the Bank of England's first post-Brexit policy decision to see if the central bank will cut rates for the first time in seven years. Finally, the rupee ended at 66.91, 14 paise stronger from its previous close at 67.05 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 5081.45 crore against gross sell of Rs 4757.79 crore, while in the debt segment, the gross purchase was of Rs 2477.14 crore with gross sales of Rs 903.19 crore.


The US markets strengthened further in last session and the Dow and the S&P 500 reached to new record closing highs on continued optimism about additional monetary stimulus from central banks. The Asian markets have made a positive start, with Chinese economic data beating estimates. China's GDP increased 6.7 percent from a year earlier in the second quarter. Growth in factory output and retail sales also beat estimates. The Japanese equities too rallied as the yen fell on prospects for stimulus. The Indian markets returned to the jubilation mood and moved higher in the last session after a day of mild consolidation. Today, the start is likely to be good on euphoric global cues and supported by the better than expected Q1 numbers from IT bellwether TCS. The company reported a 9.4% rise in net profit during the first quarter, after new cloud computing and mobile services helped shore up revenue. Today, all eyes will be on other two major result announcements of Infosys and Reliance Industries. Marketmen will also be getting some support with report that Monsoon rains in India were 11 per cent above average in the week ended July 13. The June-September monsoon has so far delivered 4 percent higher rainfall than average. Markets will keep buzzing with the government extending the deadline for payment of tax and penalty under the black money disclosure scheme and allowing declarants to pay the amount in three installments by September 30 next year. There will be some cautiousness too, and some impact of European markets can be seen later in the day, as the Bank of England kept interest rates on hold on Thursday, but held out the prospect of a stimulus package soon to help the economy. The export oriented stocks will be in action, as the Commerce and Industry Minister Nirmala Sitharaman has said that Decline in exports have bottomed out and the outbound shipments are expected to witness gradual improvement in the coming months depending upon pick up in global demand.


                           Support and Resistance: CNX Nifty and BSE Sensex


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