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NSE Intra-day chart (04 June 2021)
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Market Commentary 07 June 2021
Benchmarks likely to make positive start tracking gains in global peers


Indian equity benchmarks edged lower on Friday on account of profit booking in banking shares after the Reserve Bank of India (RBI) held key interest rates steady at record lows as widely expected and maintained it accommodative stance to revive the country's economic growth. After making cautious start, markets managed to keep heads in green terrain in morning deals, as traders took some support with union Minister Anurag Singh Thakur's statement that financial inclusion is a top priority for the government and that promoting financial education would help in realising the collective potential. Some optimism also came with Commerce Secretary Anup Wadhawan's statement the time frame to resume negotiations for the stalled free trade agreement with the European Union (EU) and to initiate fresh talks for a pact with the UK will be very early and the talks will start soon after completion of the preparatory work. However, indices traded lower in the second half, extending losses amid selling pressure. Some anxiety also came as the RBI revised its estimate for economic growth to 9.5 per cent for the current fiscal from an earlier projection of 10.5 per cent because of the adverse impact of the second wave of coronavirus infections. On inflation, RBI Governor Shaktikanta Das said that retail inflation based on the consumer price index (CPI) is likely to be 5.1 per cent during the current fiscal, adding the recent drop fall in inflation provides elbow room, policy support from all sides required to regain growth momentum. But, key gauges managed to trim some losses in fag-end of the trading session, taking support from reports that overall hiring activity has shown some improvement with a marginal 1 percent month-on-month contraction recorded in May as against a decline of 14.95 percent in April. The job postings during May stood at 2,047 compared to 2,072 in April on the Naukri.com platform. Traders also took a note of NITI Aayog CEO Amitabh Kant's statement that in order to shape a post-COVID reality, there is no way out for India but growth. He also emphasised that India has an opportunity to usher in change that will see its society transform within a generation. Finally, the BSE Sensex fell 132.38 points or 0.25% to 52,100.05, while the CNX Nifty was down by 20.10 points or 0.13% to 15,670.25.   


The US markets ended higher with notable gains on Friday after the Labor Department report showed job growth in the US reaccelerated in May. Non-farm payroll employment jumped by 559,000 jobs in May after climbing by an upwardly revised 278,000 jobs in April. Street had expected employment to surge by 650,000 jobs compared to the addition of 266,000 jobs originally reported for the previous month. Employment in the leisure and hospitality sector showed another significant increase, spiking by 292,000 jobs during the month. Notable job growth was also seen in public and private education and health care and social assistance. The Labor Department also said the unemployment rate fell to 5.8 percent in May from 6.1 percent in April, while market participants had expected the unemployment rate to dip to 5.9 percent. With the bigger than expected decrease, the unemployment rate dropped to its lowest level since hitting 4.4 percent in March of 2020. Besides, Semiconductor stocks turned in some of the market's best performances on the day, resulting in a 2.4 percent jump by the Philadelphia Semiconductor Index. Chipmaker Broadcom (AVGO) posted a notable gain after reporting better than expected fiscal second quarter results and providing upbeat guidance. Significant strength was also visible among software stocks, with the Dow Jones US Software Index surging up by 2 percent. Networking stocks also saw considerable strength on the day, driving the NYSE Arca Networking Index up by 1.7 percent to a new record closing high.


Crude oil futures ended higher on Friday amid growing optimisms about increased demand for energy coupled with the recent decision by OPEC+ to gradually increase crude output. The Organization of the Petroleum Exporting Countries and its allies have predicted a solid demand in recovery in the United States and China, the world's two biggest oil consumers, but stuck to their plan to ease supply controls gradually. Oil also continued to find support from data released by Energy Information Administration (EIA) that showed crude oil stockpiles in the U.S. fell more than expected in the week ended May 29. According to a report from Baker Hughes, oil and natural gas rigs count in the US fell this week, dropping for the first time in six weeks. The report said the US oil and gas rig count fell by one to 456 in the week to June 4. Crude oil futures for July gained $0.81 or 1.2 percent to settle at $69.62 barrel on the New York Mercantile Exchange. August Brent crude fell $0.65 or 0.9 percent to settle at $71.96 a barrel on London's Intercontinental Exchange.


Indian rupee ended lower against the US dollar on Friday on increased demand for the greenback from importers and banks. Sentiments were impacted after the Reserve Bank kept policy rates unchanged for the sixth time in a row. Reserve Bank of India (RBI) decided to leave benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance amid the second COVID wave. However, losses remain capped as traders found some support with union Minister Anurag Singh Thakur's statement that financial inclusion is a top priority for the government and that promoting financial education would help in realising the collective potential. On the global front, dollar index held near a three-week high on Friday and moves in currency markets were muted as traders waited for closely-watched US non-farm payrolls data later in the session. Finally, the rupee ended 72.99, weaker by 8 paise from its previous close of 72.91 on Thursday.


The FIIs as per Friday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 7334.81 crore against gross selling of Rs 6147.87 crore, while in the debt segment, the gross purchase was of Rs 954.80 crore with gross sales of Rs 475.45 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.99 crore against gross selling of Rs 27.21 crore.


The US markets ended higher on Friday led by technology shares after a tepid U.S. monthly jobs report relieved investor concerns the Federal Reserve might rein in monetary stimulus soon. Asian markets are trading mostly higher on Monday after the anxiously awaited May U.S. payrolls report showed the recovery on track but not so hot that it might bring forward a policy tapering from the Federal Reserve. Indian markets ended lower on Friday dragged mainly by heavyweight banking stocks after the Reserve Bank of India (RBI) maintained the status quo on interest rates as expected. Today, the start of new week is likely to be positive tracking gains in global markets coupled with fall in coronavirus cases in the country. With a little over 100,000 new infections across India in the past 24 hours, daily cases in the country have dropped to the lowest level seen in over two months, marking a decline in the brutal second wave of Covid-19. India reported 101,232 new infections. Among major Indian states, Delhi, Tamil Nadu, Uttar Pradesh, Maharashtra and Gujarat have announced the partial lifting of restrictions from today. Traders will be taking encouragement with report that GST tax collections remained above Rs 1 lakh crore mark for the eighth straight month in May, indicating that the impact of the devastating second wave of Covid infections on the economy may have been limited. Some support will come as Rajiv Kumar, Vice-Chairman, NITI Aayog said he is confident that every organisation will revise their growth projections to 10-10.5 per cent once they witness the growth rate by October. Traders may take note of report that foreign investors have infused close to Rs 8,000 crore into Indian equities in the first four trading sessions of June as risk-on sentiment improved amid rapidly falling new Covid cases and robust corporate earnings. However, there may be some cautiousness as the Reserve Bank of India's (RBI's) May round of survey showed consumer confidence has fallen to an all-time low as consumer perceptions on the general economic and employment situations have lowered further. Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das said banks and non-banking financial companies (NBFCs) need to strengthen their capital position as there could be stress due to the second wave of COVID-19. Banking stocks will be in focus as RBI data showed bank credit grew by 5.98 percent to Rs 108.33 lakh crore while deposits rose by 9.66 percent to Rs 151.67 lakh crore in the fortnight ended May 21, 2021. There will be some reaction in MSME stocks as Union minister Nitin Gadkari stressed on increasing the share of the MSME sector in the country's GDP to 40 per cent from 30 per cent currently. Gadkari said the world is now favouring India instead of China.


Support and Resistance: NSE (Nifty) and BSE (Sensex)



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  • NTPC's JV -- Energy Efficiency Services has signed a MoU with the ISHRAE for implementation of energy efficient and clean energy solutions in the heating, ventilation, air conditioning and refrigeration space. 
  • Tata Motors' wholly-owned arm, TML Holdings has raised $425 million (over Rs 3,100 crore) in unsecured notes. 
  • Reliance Industries' telecom arm -- Jio has successfully completed deployment of additional 20 MHz spectrum acquired in the recent spectrum auctions in Odisha. 
  • Tata Steel has provided 300 oxygen concentrators to the Jharkhand government to help it fight against the second wave of COVID-19.
News Analysis