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NSE Intra-day chart (28 June 2016)
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Market Commentary 29 June 2016
Markets to start the penultimate session of F&O series expiry on positive note


Showing more firmness in aftermath of Britain's decision to exit European Union, the Indian markets posted decent gains on Tuesday. Though, there were rounds of volatility too but they were mainly due to the F&O series expiry slated in two days, and the market participants showing their faith and going for value buying took the bourses higher for the day. Earlier, the start was on a cautious note but the markets soon started gaining traction, with the regional peers showing some upmove on hopes of firm measures in the backdrop of Brexit.  Traders also took some encouragement with the report of good monsoon progress and decline in international crude prices. Also, the World Bank's recently released Global Economic Prospects (GEP) stated that India is seen to grow faster than emerging market peers. It said that India`s push to draw more FDI is also seen to be a positive step. It added that business sentiment is up in India with many startups commencing operations in 2015. More public investment in infrastructure is also seen as a positive which could reduce supply-side restraints. Moreover, markets kept buzzing through the day on reports that the much-anticipated Seventh Pay Commission bonanza for the government employees is likely soon with the Union Cabinet set to consider the panel's recommendations on Wednesday.  On the global front, overcoming the slump in US markets, the Asian markets presented a good show, while the European markets made a positive start. Back home, the markets gained pace in the second half after the European markets made a positive start, getting a halt to the Brexit sell-off. The domestic traders lapped up blue-chip stocks and went for covering shorts. Gradually the rally turned broad based and apart from the bluechips the broader markets too equally participated the rally and by the end outperformed them. Finally, the BSE Sensex ended at 26524.55, up by 121.59 points or 0.46%, while CNX Nifty ended at 8127.85, up by 33.15 points or 0.41%.


The US markets closed higher on Tuesday, after a brutal two-day rout in global equities that resulted in washing away months of gains following Britain's referendum to leave the EU. Rattled investors feared that Brexit would destabilize the European trading bloc. On the domestic economy front, the US economy's annual growth rate in the first quarter was raised again to 1.1%, revised figures show, but it was still one of the weakest performances in the past several years. Exports actually rose slightly instead of falling and business investment was not as dismal as previously reported. Although first-quarter growth was twice as strong as the Commerce Department's original reading, the slow start in 2016 might be enough to prevent the US from reaching 3% annual growth for the 11th straight year. US consumer confidence took a step higher in June - at least, it did before Britain's vote to leave the European Union. Moreover, US house prices rose 1.1% in April. The S&P/Case-Shiller 20-City Index showed a stronger pace of growth in the three months ending in April. March's reading was 0.9% higher. The Dow Jones Industrial Average was up by 269.48 points or 1.57 percent to 17,409.72, Nasdaq added 97.43 points or 2.12 percent to 4,691.87, while S&P 500 gained 35.55 points or 1.78 percent to 2,036.09.


Crude oil futures bounced back on Tuesday, halting their three days declining streak on easing dollar and on reports that in Norway up to 7,500 workers in the oil and gas industry could go on strike on Saturday if a new labor deal is not reached later this week. As per the International Energy Agency (IEA) report, last month Norway pumped nearly 2 million barrels per day, representing 2.1% of the world's total monthly output. Benchmark crude oil futures for August delivery surged by $1.54 or 3.36 percent to $47.86 a barrel after trading in a range of $46.54 and $47.94 a barrel on the New York Mercantile Exchange. In London, Brent crude for September delivery closed at $49.23, up $1.46 or 3.06percent on the ICE.


Indian rupee ended flat against dollar on Tuesday due to month-end dollar demand from banks and importers. However dollar weakness against some other currencies overseas capped rupee losses to large extent. Though, the domestic currency traded strong in the early deals it lost their momentum at the end. Further, it even failed to get any support from massive gains in local equity markets. On the global front, euro climbed on Tuesday, as investors made a rush for Brexit-bashed assets hammered by some of the biggest falls since the 2008 collapse of Lehman Brothers. Finally, the rupee ended 67.95, 1 paise weaker from its previous close at 67.94 on Monday.


The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity, the gross buying was of Rs 3510.13 crore against gross selling of Rs 3579.20 crore, while in the debt segment, the gross purchase was of Rs 834.46 crore with gross sales of Rs 662.11 crore.             


The US markets coming out of the slump, showed remarkable rebound in last session, bargain hunting along with some positive economic reports supported the market upmove. The Commerce Department reported that economic activity increased faster than previously estimated in the first quarter of 2016.  The Asian markets have made a strong start, with all the indices in the region moving higher amid rise in oil prices and hopes that policy makers around the world will come up with stimulus measures to blunt the impact of the UK's decision to leave the European Union. The Indian markets moved higher in last session, putting a brave face on Brexit fears, traders also took encouragement with good progress of monsoon. Today, the penultimate session of the F&O series expiry is likely to be in green on supportive global cues, but there will be bouts of volatility too with traders adjusting their positions ahead of Thursday's F&O expiry. Marketmen will be getting some encouragement with a Reserve Bank of India Financial Stability Report (FSR), stating that despite global uncertainties, banking sector issues, the economy stands out in terms of growth as compared to other emerging markets and the Indian financial system remains stable. Also, the Economic Affairs Secretary Shaktikanta Das has said that India is posed for a "big leap" in growth which could touch 8 percent in the current fiscal on the back of normal monsoon. Regarding volatility in currency and equity markets on account of Britain's exit from the European Union, Das said it would continue for some time, but India is "well placed" to deal with the situation. Traders will also be eyeing cabinet decision on approve higher increase in basic pay than the nearly 15 percent recommended by the 7th Pay Commission for over 1 crore government employees and pensioners. All the consumer stocks will be in action on a favourable decision of the cabinet.


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