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NSE Intra-day chart (22 July 2016)
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Market Commentary 25 July 2016
Markets to get a cautious start of the F&O expiry week


After showing a feeble trade for most part of the morning session, domestic benchmarks managed to negotiate a close in the green terrain on Friday, as investors showed renewed buying interests in frontline blue chip counters. Sentiments got a boost after the reports suggested that the Goods and Services Tax (GST) constitutional amendment bill has been listed for discussion in the Rajya Sabha next week. The GST bill, touted as the single biggest indirect taxation reforms that will simplify and harmonise the indirect tax regime in the country, has been approved by the Lok Sabha and is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. Some support also came with report of a good monsoon season so far, raising hopes of a revival in farm output as well as income. Investors also got some comfort with a private poll stating that India's economy will hum along at a solid pace for the remainder of this fiscal year provided structural reforms are passed, while above-target inflation means the Reserve Bank of India will only cut rates once more this year. However, gains remained capped with the private report stating that India has ranked a low 110 out of 149 nations assessed on where they stand with regard to achieving the Sustainable Development Goals, according to a new index which is topped by Sweden and shows all countries face major challenges in achieving these ambitious goals. On the global front, selling was witnessed across the Asian markets, while European stocks traded mixed in early deals. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained influenced by the daunting sentiments prevailing in Asian markets. After trading with moderate cuts through the morning session, the key indices gradually crawled into the green territory. Short covering intensified in late hours of trade which stoked the bourses to the highest point in the session. Finally, the BSE Sensex surged by 92.72 points or 0.33 % to 27803.24, while the CNX Nifty rose by 31.10 points or 0.37% to 8,541.20.


US markets ended the Friday's trade with decent gains, as traders took some encouragement with activity in the US manufacturing sector registering a larger-than-expected expansion to a 9-month high in July. In a report, market research group Markit said that its flash manufacturing purchasing managers' index (PMI) rose to 52.9 in July from the prior month's final reading of 51.3. Traders may also have been looking ahead to the Federal Reserve's two-day monetary policy meeting scheduled for next week. The Fed is widely expected to leave interest rates unchanged as officials wait to see the fallout from Britain's vote to leave the European Union. The central bank's accompanying statement is still likely to be in focus, as investors attempt to gauge the outlook for the next rate hike. The Dow Jones Industrial Average gained by 53.62 points or 0.29 percent to 18,570.85, Nasdaq added 26.26 points or 0.52 percent to 5,100.16 and S&P 500 was up by 9.86 points or 0.46 percent to 2,175.03.


Crude oil futures continued their decline on Friday, as US rig counts rose for a fourth consecutive week, dampening some optimism that the longstanding supply glut on global energy markets could be on the verge of leveling off. Though, price recovered from the lows and near its two months low on reports of a mass shooting at a shopping mall in Munich, roughly a week after a terrorist attack in Nice. Meanwhile, oil services company Baker Hughes said the number of active oil rigs throughout the US rose by 14 to 371, increasing for the fourth consecutive week and moving higher for the seventh time over the last eight weeks. The total rig count jumped by 15 to 462, as US gas rigs fell by one to 91. Benchmark crude oil futures for September delivery was down $0.52 or 1.16 percent to $44.23, after trading in a range of $43.74 and $44.95 a barrel on the New York Mercantile Exchange. In London, Brent crude for September delivery ended at $45.73, lower by $0.46 or 1.00 percent on the ICE.


Indian rupee ended stronger against dollar on Friday due to selling of American currency by banks and exporters. Sentiment got some support with a private poll stating that India's economy will hum along at a solid pace for the remainder of this fiscal year provided structural reforms are passed, while above-target inflation means the Reserve Bank of India will only cut rates once more this year. Besides, some gains in equity market also supported the domestic currency. On the global front, yen weakened against dollar by expectations that next week's Bank of Japan meeting will unveil further money-printing initiatives, despite a number of reports suggesting the bank's view on the economy had not worsened that dramatically. Finally, the rupee ended 67.07, 11 paise stronger from its previous close at 67.18 on Thursday.


The FIIs as per Friday's data were net buyers in equity segment while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 4317.35 crore against gross selling of Rs 3876.04 crore. While in the debt segment, the gross purchase was of Rs 254.44 crore with gross sales of Rs 557.23 crore.


The US markets ended higher in last session making their fourth straight week of positive gains, trade was supported by some strong earnings from a pair of telecom giants. The Asian markets have made a mixed start, with some of the indices trading modestly in red as investors looked toward central bank meetings this week in the US and Japan, though the Japanese market was up again on a better than expected trade data and a weaker yen. The Indian markets picked up pace in the final hours of last session to make a positive close. Today, the start of the F&O series expiry week is likely to be mildly in green with reports that Finance Minister Arun Jaitley will meet his counterparts in states to discuss proposed amendments to the GST Bill on Tuesday, with the likely listing of GST Bill in Rajya Sabha this week. Meanwhile, the government has asked the states to remove all local taxes on essential food items, like pulses and edible oils, among other steps to ensure supplies at affordable prices. Traders will however be concerned about International Monetary Fund (IMF) listing out as many as six core areas that need further reforms in India. It has warned that headwinds from weaknesses in the country's corporate and bank balance sheets, decelerating pace of reforms and sluggish exports may weigh on its economic growth. Also, a recent study by the UN University in Kuala Lampur suggests India could lose 3.2 per cent of its GDP by 2030 due to reduced working hours and loss in productivity.  The steel stocks will see some action with report that domestic steel companies are well short of meeting their export obligations under the Export Promotion Capital Goods (EPCG) scheme and they have sought relaxation in norms.


                           Support and Resistance: CNX Nifty and BSE Sensex


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  • Tata Steel's JV - mjunction expects 33% growth in revenues and profit, and projects expansion in gross merchandise volume at the same rate to touch Rs 88,000 crore this fiscal.
  • Bharat Heavy Electricals has signed a Memorandum of Understanding on July 21, 2016 with NHPC for undertaking of hydro power projects in overseas markets.
  • Axis Bank, India's third largest private sector bank, has launched 'Happy Holidays Package', a one stop Mobile service that offers multiple travel benefits to globetrotters.
  • Power Grid Corporation has received its board's approval to invest Rs 2,731 crore in various projects, including setting up of a transmission system for solar park at Bhadla in Rajasthan for Rs 1,429.38 crore.
  • Kotak Mahindra Bank has received its board's approval to raise up to Rs 5,000 crore by issuing bonds.
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