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NSE Intra-day chart (20 July 2017)
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Market Commentary 21 July 2017
Markets to make a cautious start; RIL to gain

Indian equity benchmarks undo all the good work done in early part of the session and ended the lackluster day of trade slightly in red, as traders remained on sidelines ahead of Reliance Industries (RIL) Q1FY18 numbers. Though, markets made an optimistic start with Finance Minister Arun Jaitley's statement, describing the Goods and Services Tax (GST) as a ‘win- win' deal for all as it will expand the tax net, end ‘inspector raj' and bring down prices of goods. Jaitley added that prices of goods have come down between four to eight percent since its roll-out on July 1. Traders also took some encouragement with a private report that India will reclaim its position as the fastest growing major global economy this year, partly propelled by benefits from a new tax system and bolstered by an expected central bank interest rate cut.  Market took U-turn in second half of trade where traders opted to book profit ahead of RIL's Q1 numbers slated to be announced after market hours. According to a private poll, the company is expected to post consolidated net sales of Rs 76,326 crore and net profit of Rs 7,764.5 crore for the three months ended 30 June. Though, downside remained capped, as traders get some solace with the Asian Development Bank's report stating that the South Asia will remain the fastest growing of all sub-regions in Asia and the Pacific, while Indian economy is expected to achieve previous growth projections 7.4 percent in 2017 and 7.6 percent in 2018 on the back of strong consumption demand. Finally, the BSE Sensex lost 50.95 points or 0.16% to 31,904.40, while the CNX Nifty was down by 26.30 points or 0.27% to 9,873.30.


The US markets closed mostly lower on Thursday, while the Nasdaq bucked the trend to match its best win streak since February 2015 and closed at a record. Economic news was solid and supportive of stocks, but a few earnings misses offset the positive impact from data. On the economy front, manufacturers reported solid, but slowing, growth in July. The Philadelphia Federal Reserve said its manufacturing survey in July fell to 19.5 from 27.6 in June. The indexes for activity, new orders, shipments, employment and work hours were all positive but fell from June levels. The new-orders index in particular plummeted, to a reading of 2.1 from 25.9 in June. A similar report from the New York Fed released earlier this week also showed a deceleration in July. However, a broad measure of how well the US economy is performing surged in June after a strong gain in May, suggesting growth could speed up in the months ahead. The leading economic index jumped 0.6% last month after a revised 0.4% increase in May. The improvement in the index was spearheaded by strong housing permits after several months of weakness. The Dow Jones Industrial Average lost 28.97 points or 0.13 percent to 21,611.78, S&P 500 edged lower by 0.38 points or 0.02 percent to 2,473.45, while Nasdaq added 4.96 points or 0.08 percent to 6,390.00. 


Crude oil futures settled lower after reversing off multi-week highs amid profit-taking and nagging worries about supply overhang. Market focus shifted to domestic crude production that climbed 32,000 bbl to a fresh two-year high of 9.429 million bbl last week. In addition, US demand was mixed, with data showing gasoline falling 194,000 bpd last week, while distillate demand spiked 476,000 bpd on the week and up 10.6% higher year-over-year. Overseas, supply continues to rise in Libya and Nigeria, while Iraq plans to increase its output by the end of this year despite the fact that Iraq is part of an ongoing OPEC agreement to cut output by 1.2 million bpd through March 2018.


Indian rupee depreciated against the US dollar on Thursday, hurt by fresh demand for the American currency from importers. Investors failed to get solace with the Asian Development Bank's (ADB) report which predicted Asia's economy to expand faster in 2017; South Asia to remain the fastest growing of all sub-regions and India to achieve a 7.4 percent growth due to strong consumption. Besides, the dollar rose to a position of strength overseas along with weak trade in domestic equity market, dragged down the domestic currency. On the global front, US dollar climbed for a second successive day on Thursday after falling to a 10-month low earlier this week as some investors pared bearish bets before a European Central Bank meeting that may signal a policy shift later this year. Finally, the rupee ended at 64.43, 15 paise weaker from its previous close of 64.28 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 6580.42 crore against gross selling of Rs 5563.54 crore, while in the debt segment, the gross purchase was of Rs 1079.61 crore with gross sales of Rs 244.05 crore.


The US markets ended mostly lower in the last session, while the Asian markets have made a mixed start and the Japanese market was in red as yen strengthened, as investors assess an investigation into the U.S. president that may stall his economic agenda. The Indian markets extended their gains in last session. Today, the start is likely to be a bit cautious on muted global cues, however, upbeat earnings from market heavyweight Reliance Industries is likely to support the markets. Also, traders will be getting some advantage with an ADB supplement report stating that India is expected to achieve the projected growth rate of 7.4 percent in 2017 and further up 7.6 percent next year on strong consumption demand, with South Asia leading the growth chart in Asia and the Pacific. Realty stocks may see some upmove on reports that foreign investment in Indian real estate sector jumped more than two-fold at $ 7.6 billion during 2014-16 period compared with the previous three years. US accounted for more than 40 per cent of the foreign investments, followed by Canada (18 per cent) and Singapore (17 per cent). However, the earnings will be keeping the overall markets buzzing for the day.


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  • ICICI Bank will be selling personal loans of up to Rs 15 lakh through its ATMs that can be availed of by select salaried customers even if they haven't previously applied for one.
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