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NSE Intra-day chart (27 July 2016)
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Market Commentary 28 July 2016
Markets to start in green on F&O series expiry day


Indian stock markets went through a disappointing day of trade on Wednesday, as what started on a promising note ended as a dismal show, with investors turning cautious ahead of the US Fed meet outcome later today and expiry of July derivative contracts on Thursday. The US Fed is likely to hold the rate, but the comments will have an influential impact on the liquidity standpoint and for any chance of an increase in the interest rate by Dec-2016. Investors got some confidence after media reports indicated that Japan's Prime Minister Shinzo Abe has stated that his government would line-up a stimulus package of $265 to boost the struggling economy. On the domestic front, sentiments got some support from reports that Infrastructure spending has picked up in the country and NHAI is executing 205 projects including 18 worth Rs 13,500 crore on hybrid annuity mode. Also, NHAI is looking to bid out 30,000 km of projects in the next 2-3 years, which include several Greenfield expressway projects.  Some support also came with NITI Aayog Vice Chairman Arvind Panagariya's statement that a good monsoon can help add a percentage point to India's GDP growth in the current fiscal, from 7.6% in 2015-16. In a big boost for the passage of the key GST Bill, a majority of states on Tuesday backed the government on key issues which have been stalling the Bill. This has raised hopes that with greater numbers backing the bill, it could be taken up in the Rajya Sabha or upper house in the current monsoon session of Parliament. The GST is seen as the biggest ever tax reforms in the country since independence. On the global front, most of the Asian markets ended the session on positive note, while the European stocks and US futures moved higher in early trade. interest rates. Finally, the BSE Sensex gained 47.81 points or 0.17% to 28024.33, while the CNX Nifty rose by 25.15 points or 0.29% to 8,615.80.


The US markets closed mostly lower on Wednesday, after the Federal Reserve signaled a willingness to raise benchmark interest rates in the fall. In its policy statement, the Fed stated that near-term risks to the economic outlook have been diminished, suggesting that a rate hike in September may be appropriate. According to CME Group's FedWatch tool, the market sees an 18% probability of a September rate hike, compared with a 30% probability before the statement. The Fed stated that information received since the Fed policy committee met in June indicates that the labor market strengthened and that economic activity has been expanding at a moderate rate. On the economy front, orders for durable or long-lasting goods made in the US sank 4% in June, marking the biggest drop in almost two years and reflecting ongoing struggles by American manufacturers to drum up sales and help boost the US economy. The only standout performer: Auto makers. Orders for new cars and trucks rose 2.6%, reversing a similar decline in the prior month. The Dow Jones Industrial Average was down by 1.58 points or 0.01 percent to 18,472.17, S&P 500 lost 2.60 points or 0.12 percent to 2,166.58, while the Nasdaq added 29.76 points or 0.58 percent to 5,139.81. 


Crude oil futures continued the slump and fell to fresh three months low on Wednesday, as U.S. crude stockpiles unexpectedly moved higher last week. The US Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that US Commercial Crude inventories increased by 1.7 million barrels from the previous week. Gasoline inventories increased by 452,000 barrels, while distillate fuel inventories fell by 780,000 barrels on the week. Benchmark crude oil futures for September delivery dropped $0.97 or 2.26 percent to close at $41.95 a barrel after trading in a range of $41.69 and $43.20 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $1.31 or 2.90 percent to $43.91a barrel on the ICE.



Indian rupee appreciated for second consecutive session on Wednesday on dollar selling by exporters and banks, while gains in local equities also influenced the rupee sentiment. Some support also came with NITI Aayog Vice Chairman Arvind Panagariya's statement that a good monsoon can help add a percentage point to India's GDP growth in the current fiscal, from 7.6% in 2015-16. However, investors remained cautious ahead of the US Fed meet outcome later in the day. The US Fed is likely to hold the rate, but the comments will have an influential impact on the liquidity standpoint and for any chance of an increase in the interest rate by Dec-2016. On the global front, yen jumped against the dollar on a report that Japanese Prime Minister Shinzo Abe will announce details of a $265 billion stimulus package to reflate the Japanese economy. Finally, the rupee ended 67.15, 12 paise stronger from its previous close at 67.27 on Tuesday


The FIIs as per Wednesday's data were net buyers in equity and debt segments both.In equity segment, the gross buying was of Rs 5538.89 crore against gross sell of Rs 4820.45 crore. While in the debt segment, the gross purchase was of Rs 709.45 crore with gross sales of Rs 452.68 crore.


The US markets once again showed a lackluster trade and ended mixed in last session, after the Federal Reserve announced its widely expected decision to maintain the target range for the federal funds rate at quarter to half a percent. Also, a Commerce Department report showed a much bigger than expected drop in durable goods orders in the month of June. The Asian markets have made mostly a lower start with some indices trading lower by over half a percent, even though Federal Reserve reiterated its gradual approach to raising interest rates, despite acknowledging risks to the economy had abated. The Indian markets managed a positive close in last session despite paring most of the early gains. Today, the start of the F&O series expiry session is likely to be in green as the Union Cabinet approved changes in the GST Constitutional Amendment Bill providing for full compensation to states for first five years of roll out of the new indirect tax regime, taking it a step closer to reality. Traders will also be getting some support with global rating agency Crisil's report that India's GDP growth could rise to 7.9 per cent because of good monsoon so far, with agriculture expected to grow by 4 per cent and consumer price inflation likely to be restricted to 5 per cent in 2016-2017. NITI Aayog Vice Chairman Arvind Panagariya too has said that a good monsoon can help add 'a percentage point' to India's GDP growth in the current fiscal, from 7.6 percent in 2015-16. Markets may see some volatility in the latter half of the trade, as the marketwide F&O rollovers till Wednesday were lower compared with average rollovers during the past three series. There will be some buzz in the stocks related with defence, as the government has approved the abolition of existing guidelines for establishing Joint Venture Companies by Defence Public Sector Undertakings (DPSUs). There will be lots of scrip specific actions based on the earnings announcements.



                                Support and Resistance: CNX Nifty and BSE Sensex


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  • Sun Pharmaceutical has signed an agreement with RPG life science to divest seven prescription brands in India, owned by Sun Pharmaceutical Industries and its subsidiary, for a consideration of Rs 41 crore.
  • Lupin's US subsidiary, Lupin Pharmaceuticals Inc. has received tentative approval from the USFDA to market a generic equivalent of ViiV Healthcare's Lexiva Tablets, 700 mg.
  • HDFC has reported 37.45% rise in its net profit after tax at Rs 1870.73 crore for the quarter ended June 30, 2016 as compared to Rs 1360.98 crore for the same quarter in the previous year.
  • SBI has launched an Instant Money Transfer IMT Payment System on its ATMs in India.
  • UltraTech Cement has participated in the auction of coal linkages for cement sector and secured 95,000 tons of coal at a premium of Rs 80 per ton from Junadhi Mines in Chhattisgarh.
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