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NSE Intra-day chart (18 July 2019)
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Market Commentary 19 July 2019
Markets to open in green territory amid firm global cues


Bears made a comeback on Dalal Street on Thursday, with Sensex and Nifty closing the day lower by around 300 & 100 points, respectively. After a negative start, key indices remained lackluster throughout the day, as Asian Development Bank (ADB) in its supplement to the Asian Development Outlook 2019 slashed India's gross domestic product (GDP) growth forecast to 7 percent for the current fiscal (FY20), from 7.2 percent projected earlier, on the back of fiscal shortfall concerns. Adding more worries, the International Monetary Fund (IMF), which has warned that the US-China trade war could cost the global economy about $455 billion next year, said recent trade policy actions were weighing on global trade flows, eroding confidence, and disrupting investment. In the last leg of the trade, markets extended their losses to end near their intraday low points, tracking weak global markets. Domestic sentiments got hit with the India Meteorological Department's (IMD) statement that the country's monsoon rains were 20 per cent below average in the week ending on Wednesday, as rainfall was scanty over the central, western and southern parts of the country. It also raised concerns over the output of summer-sown crops. Monsoon rains are crucial for farm output and economic growth, as about 55 per cent of India's arable land is rain-fed, and agriculture forms about 15 per cent of a $2.5 trillion economy that is the third biggest in Asia. Finally, the BSE Sensex lost 318.18 points or 0.81% to 38,897.46, while the CNX Nifty was down by 90.60 points or 0.78% to 11,596.90.


The US markets ended marginally higher on Thursday as investors refocused on a potential US rate cut following fresh commentary from Federal Reserve officials. In remarks at the Central Bank Research Association's annual meeting in New York, Federal Reserve President John Williams argued it pays to act quickly to lower rates at the first sign of economic distress. He added I think about monetary policy near the zero lower bound-or ZLB for short -in much the same way. It is better to take preventative measures than to wait for disaster to unfold. However, buying interest was somewhat subdued as traders were also digesting reports that the US Navy has shot down an Iranian drone in the Strait of Hormuz. On the economic front, reflecting weaknesses in new orders for manufacturing, housing permits, and unemployment insurance claims, the Conference Board released a report showing an unexpected decrease by its index of leading US economic indicators in the month of June. The Conference Board said its leading economic index fell by 0.3 percent in June after coming in unchanged in May. The drop surprised market participants, who had expected the index to inch up by 0.1 percent. Besides, a report released by the Labor Department showed first-time claims for US unemployment benefits increased in line with economist estimates in the week ended July 13. The report said initial jobless claims inched up to 216,000, an increase of 8,000 from the previous week's revised level of 208,000. Dow Jones Industrial Average gained 3.12 points or 0.01 percent to 27222.97, Nasdaq rose 22.04 points or 0.27 percent to 8207.24 and S&P 500 was up by 10.69 points or 0.36 percent to 2995.11.


Magnifying their previous session's losses, crude oil future ended lower with cut of over two and half percent on Thursday on expectations of a production rise from the US Gulf of Mexico region, coming back into service after last week's Hurricane Barry disrupted production. Meanwhile, Russian oil minister Alexander Novak said that production has been restored after the nation's oil output dropped to a multi-year low last month due to quality control issues with pipeline exports. Benchmark crude oil futures for August fell $1.48 or 2.6 percent to settle at $55.30 a barrel on the New York Mercantile Exchange. September Brent declined $1.73 or 2.7 percent to settle at $61.93 a barrel on London's Intercontinental Exchange.


Indian rupee ended lower against US dollar on Thursday on account of sustained demand for dollar from banks and importers. Sentiments remained down-beat with Asian Development Bank lowering India's Gross Domestic Product (GDP) growth forecast to 7 per cent for the current year on the back of fiscal shortfall concerns. Besides, subdued sentiments in domestic equity markets weighed on the domestic currency. However, downside remain capped as some support came with International Monetary Fund's (IMF) report that easing business climate and relaxing trade related norms will help India attract foreign investors and improve the current account deficit situation. On the global front, dollar slipped for a second day against its rivals on Thursday on the back of softer U.S. Treasury yields after weak housing data as investors geared up for a policy meeting next week where officials are set to cut interest rates for the first time in a decade. Finally, the rupee ended at 68.97, 14 paise weaker from its previous close of 68.82 on Wednesday.


The FIIs as per Thursday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 3853.20 crore against gross selling of Rs 3939.06 crore, while in the debt segment, the gross purchase was of Rs 2435.32 crore with gross sales of Rs 3043.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.06 crore against gross selling of Rs 1.78 crore.


The US markets settled in green territory on Thursday after a Federal Reserve official said central banks must lower interest rates swiftly on signs of economic weakening. Asian markets are trading higher on Friday following overnight gains on Wall Street. Indian markets snapped three days winning streak and settled in red territory on Thursday dragged by losses in Yes Bank, amid weak cues from global markets and unabated foreign fund outflow. Today, the start of last trading session of week is likely to be positive mirroring firm trade in Asian peers. Traders will be getting some encouragement with NITI Aayog Vice Chairman Rajiv Kumar's statement that the focus of the second term of the Narendra Modi government is accelerated economic growth led by the private sector and private enterprise. He asserted that India will be at the cusp of a major transformation over the next five years. Some support will also come with the Reserve Bank of India's (RBI) latest data showing that bank credit and deposits grew 12.02 percent and 10.32 percent to Rs 96.975 trillion and Rs 126.746 trillion, respectively in the fortnight to July 5. In the previous fortnight to June 21, bank loans had risen 12 percent to Rs 96.485 trillion and deposits 10.02 percent to Rs 124.905 trillion. Traders may take note with ICRA's report that predicted the current account deficit (CAD) will remain largely steady for the first quarter of financial year 2019-20. It stated that the CAD in Q1 FY20 will print at $16-17 billion, from $15.8 billion in Q1 FY2019. Meanwhile, the government has approved an outlay of Rs 206.8 crore for 2019-20 for a central sector scheme titled Implementation of Agriculture Export Policy aimed at doubling farmers' income by 2022. However, there may be some cautiousness with Union finance minister Nirmala Sitharaman's statement that those foreign portfolio investors (FPIs) who wish to be out of the net of the surcharge on high net worth individuals, may consider the option of structuring as companies as the foreign portfolio investors registered as trusts will have to pay the new tax surcharge. There will be some reaction in agriculture related stocks with report that India's June-end foodgrain stocks have reached new peaks on account of high procurement and slow stock liquidation. As on July 1, 2019, grain stocks were almost 81 per cent above the buffer stock and strategic reserve norms.


Support and Resistance: NSE (Nifty) and BSE (Sensex)



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  • L&T's wholly owned subsidiary -- L&T Hydrocarbon Engineering has been awarded another Mega project in the Marjan Field by Saudi Aramco. 
  • Reliance Industries and BP plc will invest $5 billion in bringing to production three sets of natural gas fields in the Krishna Godavari basin block in the Bay of Bengal by 2022. 
  • NTPC has commissioned first unit of 660 MW of Nabinagar Super Thermal Power Project of Nabinagar Power Generating Company. 
  • Wipro is eyeing revenue from its IT Services business to be in the range of $2,039 million to 2,080 million for the quarter ending September 30, 2019.
News Analysis