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NSE Intra-day chart (15 July 2016)
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Market Commentary 18 July 2016
Markets to make a positive start of the new week


Indian stocks markets showed a volte-face on the last day of the trading week, as what started on a promising note ended as a dismal show. Earlier the market started the session on positive note tracking firm trade in other regional markets, but sentiments turned pessimistic in late morning session after IT major Infosys posted lower-than-expected dollar revenue growth in the first quarter and lower guidance of constant currency revenue growth in FY 17 to 10.5 percent -12 percent from 11.5 percent -13.5 percent earlier.  Infosys, which declined up to 10 percent intra-day, reported 4.5 percent drop in consolidated net profit at Rs 3,436 crore for the quarter ended June 2016 (Q1FY17) on sequential basis. Selling was also witnessed in TCS, which posted better-than-expected profit and operational performance in April-June quarter. Brexit remained a worry for TCS, given the fact that over 27 per cent of its revenue comes from Europe and 16 per cent from the UK.  Besides, weak trend in European stocks coupled with depreciation in rupee value against the US dollar also weighed on the sentiment. Investors also remained cautious ahead of another major result announcement of Reliance Industries, as the company is expected to report a modest profit growth, while the income is likely to fall marginally, impacted by a planned refinery shut down and lower refining margins. However, auto and FMCG stocks firmed up in an otherwise weak market on expectation of volume growth in wake of above normal monsoon and renewed demand post the implementation of the 7th Pay commission. Banking stocks too edged higher after report that the government is likely to announce capital infusion in public sector banks.  Some support also came with hopes for smooth passage of much-awaited GST bill in the coming monsoon session of the parliament, after Congress leadership accepted the NDA government's invitation for further negotiations and discussion on alternative proposals on capping of the rate. On the global front, Asian markets ended the session on positive note, while European stock markets fell in early trade. Back home, after getting a positive start, the local benchmark indices drifted into the negative zone in mid morning trades and slipped to intraday lows in early noon session post weak opening of European markets. Finally, the BSE Sensex ended lower by 105.61 points or 0.38% to 27836.50, while the CNX Nifty dropped 23.60 points or 0.28% to 8,541.40.


The US markets closed mostly lower on Friday, while the Dow Jones Industrial Average edged higher to post its fourth straight record close. On the economy front, sales at US retailers rose sharply in June, a sign consumers are spending at a healthy clip and propping up the US economy after a slow start earlier in the year. Retail sales rose a seasonally adjusted 0.6% to mark the third straight strong gain. The June retail sales add to evidence of a rebound in US growth in the recently ended second quarter. Industrial production in June grew at the fastest monthly rate in eleven months, on the back of strong auto and utility output. The industrial production grew 0.6% in June. This is the fastest growth since last July. In addition, May's decline was revised to a 0.3% fall from an initially reported 0.4% drop. For the second quarter as a whole, industrial production fell at an annual rate of 1%, its third consecutive quarterly decline and the fifth out of the past six. Compared to a year ago, production was down 0.7%. Meanwhile, consumer prices rose in June for the fourth straight month as the cost of gasoline, rent and medical care continued to go up, according to a government index that tracks the cost of living. The Nasdaq lost 4.47 points or 0.09 percent to 5,029.59, S&P 500 was down 2.01 points or 0.09 percent to 2,161.74 while, Dow Jones Industrial Average was up by 10.14 points or 0.05 percent to 18,516.55. 



Crude oil futures gained modestly on Friday, though the trade remained choppy for the day and traders were a bit concerned with the report of oil rig count in the US moving higher for a third consecutive week. Oil services firm Baker Hughes reported that US oil rigs rose by six to 357 for the week ending on July 8, increasing for the sixth time over the last seven weeks. Despite the continued gains, oil rigs throughout the US are still down by 281 over the last 12 months. The strength in dollar too capped gains of the crude. Dollar strengthened amid strong retail sales and industrial production data. Benchmark crude oil futures for August delivery was up $0.27 or 0.55 percent to close at $45.95 a barrel after trading in a range of $45.05 and $46.30 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery gained $0.20 or 0.42 percent to $47.56 a barrel on the ICE.


Snapping its six day gaining streak, Indian rupee ended weaker against dollar on Friday with fresh dollar demand by banks and importers. The domestic currency erased its initial gains to end weaker amid losses in local equity market. Besides, dollar gains against other currencies overseas too hit the rupee sentiment. Rising hopes for smooth passage of much-awaited GST bill in the coming monsoon session of the parliament, after Congress leadership accepted the NDA government's invitation for further negotiations and discussion on alternative proposals on capping of the rate, too failed to support the rupee. On the global front, the yen hit a three-week low against the dollar on Friday and was set for its biggest weekly fall in 17 years after data pointed to stabilization in the Chinese economy, bolstering global risk sentiment. Finally, the rupee ended at 67.06, 15 paise weaker from its previous close at 66.91 on Thursday.


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 3877.96 crore against gross sell of Rs 3040.02crore. While, in the debt segment the gross purchase was of Rs 1603.86 crore with gross sales of Rs 1172.18 crore.


The US markets made a mixed closing in last session, after failing to sustain an initial upward move in reaction to report from the Commerce Department showing much stronger than expected retail sales growth in the month of June. The Asian markets have made a mixed start with some indi9ces trading modestly in red, however the Japanese market has extended its lead as the yen extended its biggest weekly decline since 2009. The Indian markets losing the early momentum ended lower by over a quarter percent in last session. Today, the start of the crucial new week is likely to be in green, reacting to the report that exports snapped18-month downward spiral and rose by1.27% in June to $22.28 billion. Rising exports and decline in imports also brought down the trade deficit in June to $ 8.11 billion as against $10.82 billion in the year-ago month. Though there will be cautiousness too, with the Monsoon session of the Parliament starting from today with key economic bills including the long pending GST Bill to be passed.   Prime Minister Narendra Modi has sought the cooperation of Opposition parties in getting the GST bill passed in the Monsoon Session of Parliament. Meanwhile, the industry body Assocham too has said that government and the main opposition party should get the long-stalled Constitutional Amendment Bill on GST passed in the Rajya Sabha in first few days of the monsoon session of Parliament. Also, the rate sensitives may show some reaction to RBI governor Raghuram Rajan's statement ahead of his last monetary policy review on August 9, rejecting criticism that the central bank is behind the curve in reducing interest rates. There will be buzz in the telecom stocks, as the telecom department (DoT) has found faults in the Telecom Regulatory Authority of India's (Trai) revised formula to calculate telcos' annual spectrum usage charge (SUC). There will some important result announcements and reaction to those who reported their earnings over the weekend.


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  • Tata Consultancy Services  has reported 2.57% rise in its net profit at Rs 5778 crore for the quarter ended June 30, 2016 as compared to Rs 5633 crore for the same quarter in the previous year.
  • Bharat Heavy Electricals has successfully commissioned another 250 MW unit based on eco-friendly Circulating Fluidized Bed Combustion technology, using low quality coal as the primary fuel.
  • Hero MotoCorp the world's largest two-wheeler manufacturer has launched the new Splendor iSmart 110 - the first motorcycle to be developed completely in-house, with Hero's own technology.
  • NTPC's JV - BIFPCL has signed contract agreement for Main Plant EPC Package with Bharat Heavy Electricals, India to construct 2x660 MW Maitree Super Thermal Power Project at Rampal Upazila under Bagerhat district of Bangladesh.
  • Infosys has reported consolidated net profit of Rs.3,436 crore in the April-June quarter was 13.4% higher than Rs 3,028 crore in the same period a year ago, though it was 4.5 percent lower sequentially.
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