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NSE Intra-day chart (27 June 2018)
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Market Commentary 28 June 2018
Markets to make mildly negative start of F&O expiry session


Indian equity benchmarks ended Wednesday's session near intraday lows, with Sensex and Nifty breaching their crucial 35,300 and 10,700 levels, respectively, following weak global cues. The bourses started the session slightly in green, taking support with NITI Aayog Vice Chairman Rajiv Kumar's statement that the Indian economy will grow at the rate of at least 7.5% in the current fiscal (FY19) and added that the growth may even go as high as 7.8%, even though as most global rating agencies have kept the country's growth forecast between 7.3-7.4%. Traders also got comfort with Finance Secretary Hasmukh Adhia's statement that Goods and Services Tax (GST) has entered a smooth phase within a year of its rollout, with pretty good tax compliance and the efforts will now be to simplify tax return forms. Some support came with a report stating that amidst trade and tariff tension between India and the US, but the fundamentals of the relationship are very strong and the sentiment about India among American companies are positive as it provides a huge market. However, the markets failed to hold their gains and soon slipped into red territory, as investors got cautious with the Ministry of Finance's Quarterly Report on Debt Management showing that the government debt increased 1.7% to over Rs 76.94 lakh crore in the last quarter of financial year 2017-18 over the previous quarter. The debt was Rs 75.66 lakh crore as of December 2017. At this level, the ratio of outstanding liabilities of the central government to GDP worked-out to be 45.9% at end-March 2018. Domestic sentiments weakened further with the Reserve Bank of India (RBI) calling for greater vigilance on the domestic macro-economic front saying conditions, which pushed Gross Domestic Product (GDP) growth to 7.7% in March 2018 quarter, are changing and warned that bad loan situation might worsen.  Investors also remained concerned with rising crude prices that will trigger inflation and accelerate fiscal deficit. Finally, the BSE Sensex slipped 272.93 points or 0.77% to 35,217.11, while the CNX Nifty was down by 97.75 points or 0.91% to 10,671.40.


The US markets ended lower on Wednesday with the losses driven by on renewed uncertainty regarding the US stance on Chinese investments in American technology companies. Markets opened higher, they turned negative in midday trading, with selling accelerating throughout the session and major indexes closing at their lowest levels of the month. Sentiments remained dampened with report of National Association of Realtors (NAR) showing an unexpected decrease in pending home sales in the US in the month of May. NAR said its pending home sales index fell by 0.5 percent to 105.9 in May after slumping by 1.3 percent to 106.4 in April. Street had expected pending home sales to climb by 0.5 percent. With the unexpected decline, pending home sales in May were down by 2.2 percent compared to the same month a year ago, reflecting the fifth straight month pending sales decreased year-over-year. The unexpected drop in pending home sales was on account of a notable decrease in the South, where pending home sales slumped by 3.5 percent. On the other hand, pending home sales in the West rose by 0.6 percent, and pending home sales in the Northeast and Midwest jumped by 2.0 percent and 2.9 percent, respectively. Meanwhile, the Commerce Department released a report showing a smaller than expected decrease in new orders for US manufactured durable goods in the month of May. The Commerce Department said durable goods orders fell by 0.6 percent in May after tumbling by a revised 1.0 percent in April. The Dow Jones Industrial Average dropped 165.52 points or 0.68 percent to 24117.59, the S&P 500 declined 23.43 points or 0.86 percent to 2699.63 and the Nasdaq was down by 116.54 points or 1.54 percent to 7445.08.


Extending previous session's rally, Crude oil futures ended higher on Wednesday, with the benchmark settling at its highest since 2014 as domestic crude supplies notched their biggest weekly drop of the year so far. The US Energy Information Administration reported that crude supplies declined by 9.9 million barrels for the week ended June 22-the largest weekly decline so far this year. Further, traders also showed concerns over US threats to sanction countries that don't stop importing oil from Iran by November 4. Benchmark crude oil futures for August delivery surged $2.23 or 3.2 percent to settle at $72.76 a barrel on the New York Mercantile Exchange. August Brent crude rose $1.31 or 1.7 percent at $77.62 a barrel on London's Intercontinental Exchange.


Extending losses for the third straight session, Indian rupee ended at 19-month low as against the US dollar on Wednesday, on strong month-end dollar demand from importers and banks. This is the rupee's lowest level against the greenback since November 29, 2016. Sentiments remained down-beat with a report stating that government debt rose 1.7% to over Rs 76.94 lakh crore in the January-March period of 2017-18 fiscal over the previous quarter. The debt was Rs 75.66 lakh crore as of December 2017. Moreover, steady capital outflows and a modest rise in crude prices also added some pressure on the local currency. On the global front, dollar slipped lower against a basket of the other major currencies on Wednesday, as concerns over heightened trade tensions continued to weigh on market sentiments. Finally, the rupee ended at 68.62, 37 paise weaker from its previous close of 68.25 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4923.45 crore against gross selling of Rs 5337.07 crore, while in the debt segment, the gross purchase was of Rs 477.02 crore with gross sales of Rs 1026.23 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.22 crore against gross selling of Rs 0.20 crore.


The US markets ended lower on Wednesday, as uncertainty over trade policy weighted down on the sentiments. Investors remained worried with mixed signals from the US and China about the future of their trading relationship, which some worry could hurt the outlook for global growth. Asian markets were trading mostly in red on Thursday, amid lingering trade concerns, following weak cues from Wall Street overnight. Indian equity markets ended the Wednesday's trade with cut of over three fourth of a percent, as signs of escalating trade tensions between the US and other world economies dented risk appetite. Today, the start of the F&O expiry session is likely to be cautious and lots of volatility can be seen with the progress of the trade and as the traders balance their positions to the new series. There will be some cautiousness in the markets with outgoing chief economic adviser Arvind Subramanian's statement that apart from high oil prices, the biggest headwind for India's growth prospects was stigmatised capitalism, or the view that the private sector could not be trusted. There will be some buzz in the IT stocks, on rating agency, ICRA's report that tightening of H-1B work visa norms by the US is likely to put cost pressures on the Indian IT services firms and impact their margins due to increase in compliances and rise in onsite hiring. Meanwhile, the Cabinet Committee on Economic Affairs has approved the capital infusion of Rs 2000 crore for strengthening of Export Credit Guarantee Corporation (ECGC). Besides, the Cabinet Committee on Economic Affairs (CCEA) has approved a mechanism for procurement of ethanol by Oil Marketing Companies (OMCs) and hiked ex-mill price for ethanol derived out of C-heavy molasses.

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  • Indiabulls Housing Finance has raised funds aggregating to Rs 125 crore through allotment of its first tranche of Secured, Redeemable, NCDs of face value Rs 10 lakh each on Private Placement basis. 
  • HCL Technologies has signed a definitive agreement to acquire Wolfsburg-based IT and engineering services provider, H&D International Group.  
  • IndusInd Bank has signed a definitive share purchase agreement with IL&FS and other minority shareholders to acquire 100% of IL&FS Securities Services.  
  • Fitch has retained its ratings on Bharti Airtel at BBB- along with a stable outlook, citing the unlikelihood of a further drop in tariffs coupled with its rising non-telecom revenue streams.
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