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NSE Intra-day chart (25 July 2016)
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Market Commentary 26 July 2016
Markets to get a soft to cautious start on sluggish global cues


Indian stock markets showcased the best performance not only among the Asian peers but also against the markets across the globe, as the frontline indices registered strong gains of over a percent on Monday.  Sentiments got a boost with the 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. Besides, a firming trend overseas as investors pinned their hopes on fresh Bank of Japan stimulus too accelerated buying activity in domestic equities.  Some support also came with the report that Crop planting jumped 23.8 per cent in the past one week helped by heavy rains during the period, with the current overall planting standing at 3.28 per cent higher than last year at 692.98 lakh hectare. The increase was largely seen in acreage of rice, pulses and coarse cereals. Further, Water levels in reservoirs have also risen significantly in the past month, providing more water for irrigation which is good news for farmers. Meanwhile, IT exporters like TCS and Infosys gained amid robust US economic data and a weaker rupee, while state-owned oil companies like Indian Oil Corporation and BPCL touched their fresh lifetime highs on renewed buying interest amid reports of Cabinet Secretariat's proposal to merge 13 oil PSUs into one behemoth. On the global front, most of the Asian markets ended the session on firm note, while the European stocks too rose in early trade. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, with investors turning jittery after the International Monetary Fund (IMF) warned that headwinds from weaknesses in Indian corporate and bank balance sheets, slowing pace of reforms and sluggish exports may weigh on the country's economic growth. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Finally, the BSE Sensex surged by 292.10 points or 1.05% to 28095.34, while the CNX Nifty rose by 94.45 points or 1.11% to 8,635.65.


The US markets closed lower on Monday, as investors turned cautious ahead of a busy week of earnings and central bank meetings. The Federal Reserve kicks off its monetary policy meeting on Tuesday and will announce its decision on Wednesday. The central bank is widely expected to hold interest rates steady and stop short of signaling a possible rate increase in September because of continued uncertainty about the economic outlook. The Fed hiked rates last December but has refrained from moving ever since, unsure about the financial market turmoil at the beginning of the year, the lackluster growth in the first quarter. This caution was compounded by the decision late last month by UK voters to leave the European Union. Fed fund futures, used by investors to bet on the timing of Fed rate hikes, were pricing in only a 19.8% chance of a rate hike in September, according to the CME Group's FedWatch tool. The odds rise to 40% at the December meeting. The Dow Jones Industrial Average was down by 77.79 points or 0.42 percent to 18,493.06, Nasdaq lost 2.53 points or 0.05 percent to 5,097.63 while, S&P 500 dropped 6.55 points or 0.30 percent to 2,168.48. 


Crude oil futures slumped on Monday to a fresh three-month low, weighed down by continuing fears related to global oversupply and a resurgent U.S. Dollar. Economic woes and the prospect of a US interest rate hike too weighed on oil prices. Markets are getting prediction of global crude demand rising modestly by 625,000 barrels per day in 2016, far below forecasts from the International Energy Agency (IEA) of 1.3 million bpd for the year. Benchmark crude oil futures for September delivery was down by $1.02 or 2.31 percent to close at $43.17 a barrel after trading in a range of $42.98 and $44.37 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for September delivery declined by $ 0.92 or 1.93 percent to $45.17 a barrel on the ICE.


Indian rupee concluded substantially weaker against dollar on account of sustained dollar demand from importers and banks. Dollar strengthens against some global currencies also weighed on the rupee sentiment. Investors remained cautious after the International Monetary Fund (IMF) warned that headwinds from weaknesses in Indian corporate and bank balance sheets, slowing pace of reforms and sluggish exports may weigh on the country's economic growth. On the global front, dollar inched up against the euro and yen ahead of meetings of U.S. Federal Reserve and the Bank of Japan that investors on balance expect to be positive for the greenback. Finally the rupee ended at 67.35, weaker by 28 paise from its previous close of 67.07 on Friday.


The FIIs as per Monday'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 3856.97 crore against gross selling of Rs 3338.51 crore. While in the debt segment, the gross purchase was of Rs 294.66 crore with gross sales of Rs 627.62 crore.


The US markets ended modestly lower in last session, partly due to profit taking, with traders cashing in on the strength seen over the past few weeks. However, the trading activity remained light amid a lack of major U.S. economic data. The Asian markets have made a mixed start, with some of the indices trading lower led by the Japanese market, which was down by over one and half a percent as the yen strengthened and crude oil traded near a three-month low. The Indian markets surged in last session, posting gains of over a percent on hopes of GST getting passed in the monsoon session of the parliament. Today, the start is likely to remain cautious as the global markets are not in a good shape and traders will be eyeing further development with Finance Minister Arun Jaitley meeting his counterparts in states to discuss proposed amendments to the GST Bill today. Meanwhile, Minister of State for Finance Arjun Ram Meghwal has said that Government is working overtime to build a consensus on the long-pending Goods and Services Tax bill with the hope of getting it passed during the ongoing Parliament session. Also, Petroleum Minister Dharmendra Pradhan has said that government is exploring ways to bring the petroleum products under the ambit of the proposed GST with the consent of states. The oil and gas sector will also be in action with report that the government is likely to completely exempt upstream oil and gas companies such as Oil and Natural Gas Corporation, Oil India and Gail India from contributing towards fuel subsidies. The telecom stocks too will be in action with the Telecom Commission recommending a weighted average formula for spectrum held by mobile operators with a minimum levy of 3%. The floor decided by the inter-ministerial panel will also be the spectrum fee that will be paid for new airwaves that are due to be auctioned later this year. Banking stock will be reacting to the Reserve Bank of India (RBI) imposing a penalty of Rs.27 crore on 13 banks for violating several norms. There will be lots of important earnings announcements to keep the markets buzzing.


                                Support and Resistance: CNX Nifty and BSE Sensex


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  • Axis Bank has reported a fall of 21.38% in its net profit at Rs 1555.53 crore for the quarter ended June 30, 2016 as compared to Rs 1978.44 crore for the same quarter in the previous year.
  • Reserve Bank of India has imposed a penalty of Rs 5 crore on Bank of Baroda.
  • Hindustan Unilever is reportedly planning to launch a range of baby care products under its Dove brand in the next few months to challenge the dominance of Johnson & Johnson in the Rs 4,000 crore market.
  • Ultratech Cement plans to raise Rs 300 crore through secured redeemable Non-Convertible Debentures on private placement basis.
  • HDFC Bank launches a 10-second paperless instant loan plan for its existing customers.
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