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NSE Intra-day chart (23 June 2016)
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Market Commentary 24 June 2016
Markets to get a gap-down start on looming Brexit worries


After consolidating in the previous two sessions, Indian equity indices managed to pull through a scintillating performance by vivaciously rallying around a percentage points on Thursday, as investors accumulated quality stocks at attractive levels. Though, the session largely remained characterized by choppiness, with sentiment turning better largely in tune with a higher opening in European shares as Britain began voting in a historic referendum on its future in the European Union.  Further, Investors got some relief with the monsoon spreading over many parts of the country, speeding up planting and erasing fears over farm and economic growth after two straight years of drought. The southwest monsoon, after making a delayed entry, has made steady progress and is set to cover the entire country by the end of this month, barring a few pockets in west Rajasthan, west Haryana and Kutch bordering Pakistan.  The June-September rains are crucial for the country's agricultural sector as around half of the agriculture land is fed by rain. Some support also came with Reserve Bank of India's (RBI) Governor Raghuram Rajan's statement that the central bank is watching the situation and will infuse whatever liquidity is needed to keep Indian markets well behaved. On the global front, Asian markets ended mixed on Thursday, while European shares soared in early trade as firmer copper prices boosted mining stocks. Back home, the benchmark got off to a soft start as the indices extended consolidation in early trade, as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices remained choppy through the morning trades but saw a sudden spurt in buying in early afternoon trades post the sanguine European market opening. Late hour of the session saw the key gauges capitalize on the momentum further and spurt to session's highest levels in dying hour. However, a mild profit booking in ensured that the key indices shut shops off the intraday highs. Finally, the BSE Sensex surged 236.57 points or 0.88% to 27002.22, while the CNX Nifty rose 66.75 points or 0.81% to 8,270.45.


The US markets closed higher on Thursday, with all three indexes rallying, as investors wagered that the UK will choose to remain in the European Union in a historic referendum with far-reaching implications. On the domestic economy front, fewer Americans filed for jobless benefits in the week ending June 18, a sign that the labor market is withstanding choppiness in other segments of the economy. There were 259,000 initial claims, a decline of 18,000 from the prior week. It marked the 68th consecutive week in which claims were below 300,000, the longest such streak since 1973. The four-week moving average, which smooths out weekly bumpiness, was 267,000, down 2,250.Continuing claims also decreased, falling to 2.14 million from an upwardly-revised 2.16 million. On the other hand, one measure of national economic activity plunged in May due largely to weaker manufacturing. Moreover, new-home sales declined in May, an expected pullback after an outsize jump in April. Sales ran at a seasonally adjusted annual rate of 551,000. The Dow Jones Industrial Average was up by 230.24 points or 1.29 percent to 18,011.07, Nasdaq added 76.72 points or 1.59 percent to 4,910.04, while S&P 500 gained 27.87 points or 1.34 percent to 2,113.32.


Crude oil futures extended their bull run on Thursday, as investors awaited the close of polls in the historic Brexit referendum. The dollar weakness against the pound on hopes of Britain remaining in the European Union too supported the crude. Traders even overlooked the report that the Organization of Petroleum Exporting Countries (OPEC's) 2015 petroleum export revenues plunged 46 percent, reflecting the collapse in crude prices.  Benchmark crude oil futures for August delivery inched up by $0.99 or 2.02 percent to $50.13 a barrel after trading in a range of $49.12 and $50.14 a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery closed at $50.94, up $1.06 or 2.11 percent on the ICE.


Indian rupee appreciated for second consecutive session on Thursday against dollar, tracking other Asian currencies which advanced against the greenback on the Britain referendum day. Besides, increased selling of the American currency by banks and exporters and massive gains in local equity market too added to the positive milieu. Meanwhile, investors turned optimistic that British voters would opt to remain in the European Union at the referendum. On the global front, euro extended overnight gains in prospects of Britain leaving the EU has helped the common currency. Finally, the rupee ended 67.25, 22 paise stronger from its previous close at 67.47 on Wednesday.


The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity, the gross buying was of Rs 2854.76 crore against gross selling of Rs 2886.62 crore, while in the debt segment, the gross purchase was of Rs 628.88 crore with gross sales of Rs 516.74 crore.             


The US markets ended with good gains in last session, offsetting the modest pullback seen in the previous session on optimism that voters will oppose the so-called Brexit and shrugged off a batch of U.S. economic data, including a Commerce Department report showing a pullback in new home sales in May. The Asian markets have made a weak start and some of the indices are down by over two percent, jolted by early results from Britain's referendum on membership of the European Union that put the "Leave" campaign ahead. The Indian markets rallied in the last session, the second half surge was on hopes that UK will remain in the European Union and traders lapped up stocks sensing a strong upmove. Today, the start is likely to be very week, tailing the slump in the regional markets. If the verdict is of Brexit, markets will take even harder knock, while the results turning other way may give a mega boost to the bourses. Traders will be worried about the rupee as the Brexit will be having greater impact on it. Meanwhile, consumer goods and auto sector will be in action, on some reports that the central government employees and pensioners are likely to get their 6 months of arrears in October. Manufacturing sector will be getting some support with Finance Minister Arun Jaitley's statement that the country wants manufacturing sector to grow, offer jobs. Finance Minister Arun Jaitley is on a five-day visit to China, meeting bankers and wealth fund managers there to pitch for more investments in India. The aviation stocks too may see some upmove, with Civil Aviation Minister Ashok Gajapathi Raju stating that to deal with steep rise in airfares, capping would not be the answer as it would also push the floor prices.


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