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NSE Intra-day chart (19 July 2016)
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Market Commentary 20 July 2016
Markets to get a cautious start on mixed global cues


After showing a sluggish trend for most part of the session, Indian benchmarks indices managed to negotiate a close in the green terrain, breaking the two session downtrend, on fresh buying by investors and foreign funds, on hopes of passage of the GST Bill in Rajya Sabha during the monsoon session of Parliament. Sentiments remained buoyant with a report of global financial services major Morgan Stanley, revising upwards its India growth estimate for this year to 7.7 percent from 7.5 percent earlier, because of 'positive surprises' in the macro data. According to it  the growth recovery is becoming more broad-based, driven by public capex, FDI and consumption. Some support also came with Chief economic adviser (CEA) to the finance ministry Arvind Subramanian's statement that the Indian economy can grow at more than 8 per cent in the next decade, if global economic environment remains supportive.  However, markets participants remained cautious  with the RBI Governor Raghuram Rajan's statement that  India has a long way to catch up with China on per capita GDP and will need years of strong growth and cautioned against expanding economy at the cost of environment. He also said that the rupee level currently is pretty reasonable and any attempt to devalue it may lead to a surge in inflationary pressures and offset any benefits. According to the RBI governor, the country has come a long way as far as financial inclusion is concerned, but still has a way to go. On the global front, Asian market ended lower on Tuesday, while European stock markets retreated from a three-week high on Tuesday, as disappointing corporate updates soured the investing mood. Back home, after witnessing a subdued trade throughout the morning trade, the key gauges plunged to lowest point in the day in late afternoon session as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Yet, final hour buying ensured that the key indices do not shut shops below neutral line and snap the two session declining streak. Finally, the BSE Sensex gained 40.96 points or 0.15% to 27787.62, while the CNX Nifty rose 19.85 points or 0.23% to 8,528.55.


The US markets closed mostly lower on Tuesday, while the Dow Jones Industrial Average extended its winning streak to eight sessions and finished at a record high for a sixth straight day. Fears that rally has left stocks stretched left investors reluctant to push equities higher. Meanwhile, Federal Reserve officials are looking more confidently toward an interest-rate increase before the end of the year, possibly as soon as September, as financial markets have stabilized after Britain's vote to leave the European Union and the economy shows signs of picking up. On the economy front, housing starts jumped in June but from downwardly-revised levels earlier in the year, pointing to a market for newly-constructed homes that continues to grind forward slowly and steadily. Starts were up 4.8% to a seasonally adjusted annual pace of 1.19 million. But May figures, originally reported as 1.16 million, were revised down to 1.14 million. The Nasdaq lost 19.41 points or 0.38 percent to 5,036.37, S&P 500 was down by 3.11 points or 0.14 percent to 2,163.78 while, Dow Jones Industrial Average was up by 25.96 points or 0.14 percent to 18,559.01. 


Crude oil futures declined further on Tuesday after a choppy trade, ahead of the release of the American Petroleum Institute's weekly inventory report, as investors awaited for further signals on the glut of crude and refined product on the domestic market. There were signs of robust global supplies through year's end, with OPEC data showing increased production from Nigeria, where militants interrupted supplies during the first half of the year. Benchmark crude oil futures for August delivery was down $0.17 or 0.36 percent to close at $45.59 a barrel after trading in a range of $45.47 and $46.38 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery declined by $0.35 or 0.76 percent to $46.79 a barrel on the ICE.


Indian rupee strengthened on Tuesday due to selling of American currency by banks and exporters, amid mixed cues from Asian currency markets. Besides, some gains in equity market and a weak dollar against other currencies overseas also supported the rupee. Some support also came after the RBI governor Raghuram Rajan said that the prevailing level of rupee is pretty reasonable and any step taken to devalue it further may trigger inflationary pressures. On the global front, euro was little changed on Tuesday as investor turned cautious ahead of the European Central Bank's policy meeting on Thursday. Finally, the rupee ended 67.11, 8 paise stronger from its previous close at 67.19 on Monday


The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4148.57 crore against gross selling of Rs 3571.45 crore. While in the debt segment, the gross purchase was of Rs 1433.39 crore with gross sales of Rs 789.50 crore.


The US markets ended mostly in red, though Dow managed to eke out modest gains, setting its fresh all times high. Trading remained subdued and traders seemed reluctant to make significant moves ahead of the release of quarterly results from a slew of big-name companies, even though housing starts jumped 4.8 percent to an annual rate of 1.189 million in June from the revised May estimate of 1.135 million. The Asian markets have made a mixed start and some indices are trading in red, led by the Japanese market which has snapped its long gaining streak, as yen strengthened and oil fell. The Indian markets recovering from a choppy trade managed a slightly positive close in last session. Today, the start is likely to be in green and traders will be getting some support with Finance Minister Arun Jaitley urging the Rajya Sabha to pass the GST bill expeditiously to enable states get a share of the Service Tax which is not shared under the provisions of 14th Finance Commission. However, there will be some cautiousness too with the global lending agency IMF in its latest World Economic Outlook, slightly trimming India's growth projections to 7.4 percent for 2016 and 2017, a drop of 0.1 percent from its previous forecast, attributing it to a more sluggish investment recovery while declaring Brexit as a "spanner" in the global economic recovery. There will be some buzz in the infra sector, as the highways regulator National Highways Authority of India is planning to bid out 30,000 km of projects over the next 2-3 years, including several greenfield projects. The telecom stocks too will be in action, with department of telecommunications (DoT) starting sending out notices to the country's top six mobile operators, who have been charged by the Comptroller and Auditor General of under-reporting their adjusted gross revenue by Rs 46,045.75 crore for the period 2006-07 to 2009-10, due to which the government suffered a loss of Rs 12,488.93 crore by way of revenue share licence fee and spectrum usage charge.


                             Support and Resistance: CNX Nifty and BSE Sensex


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  • Wipro has reported a 2.68% fall in its net profit at Rs 2007.7 crore for the quarter ended June 30, 2016 as compared to Rs 2063.00 crore for the same quarter in the previous year.
  • NTPC is aiming to generate 248 billion units during the current financial year. In this regard, the company has signed a Memorandum of Understanding with Government of India.
  • Tata Steel, the flagship company of the Tata Group, is planning to raise up to Rs 10,000 crore through various debt securities including redeemable non-convertible debentures. 
  • Bharti Airtel, a leading global telecommunications company with operations in 20 countries across Asia and Africa, has added 14.00 lakh users in June, 2016.
  • Tata Consultancy Services has been recognized as a Leader with Best in Class Delivery Capability in Testing Services for Third Consecutive Year in the Everest Group report, 'Independent Testing Services - Market Trends and PEAK Matrix,' June 2016.
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