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NSE Intra-day chart (07 June 2021)
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Market Commentary 08 June 2021
Benchmarks to make flat-to-positive start amid sharp fall in Covid cases


Indian equity benchmarks closed on a positive note with both the indices at record closing highs on Monday, as investor sentiment was lifted after some states eased lockdowns and daily COVID-19 cases in the country hit a two-month low. Markets started the week on an optimistic note and traded with positive bias throughout the day, as traders took encouragement with data showing 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. Sentiments remained positive with NITI Aayog Vice-Chairman -- Rajiv Kumar stating that 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. He said the recovery will start from June itself and will get pace from July. He is hopeful that pandemic will not have much impact on fiscal deficit and disinvestment targets. Equity markets extended gains in late afternoon session, taking support from Labour Minister Santosh Gangwar's statement that India is committed to making all possible efforts to counter the impact of the pandemic and emerge stronger. He also said governments are required to deal with the pandemic and provide an effective response at policy levels, to balance business continuity, income security and above everything, the well-being of all. Traders were positive, amid reports that India is likely to benefit from the global minimum 15 percent corporate tax rate pact inked by the world's richest nations as the effective domestic tax rate is above the threshold, and the country would continue to attract investment. Meanwhile, with an aim to provide taxpayer convenience and a modern, seamless experience to taxpayers, the Income Tax Department is launching its new e-filing portal on June 7, 2021.This is another initiative by CBDT towards providing ease of compliance to its taxpayers and other stakeholders. Finally, the BSE Sensex rose 228.46 points or 0.44% to 52,328.51, while the CNX Nifty was up by 81.40 points or 0.52% to 15,751.65.   


The US markets ended mostly lower on Monday as investors prepared to see a potential kick higher in consumer price inflation. The choppy trading on markets came as traders seemed reluctant to make significant moves after last week's advance lifted the major averages to their best closing levels in a month. Traders remain optimistic about the economic outlook but are still on edge about the possibility of the Federal Reserve scaling back its ultra-easy monetary policy. A lack of major US economic data also kept traders on the sidelines ahead of the release of the Labor Department's report on consumer price inflation on Thursday. Most of the major sectors showed only modest moves on the day, although substantial strength was visible among biotechnology stocks. Reflecting the strength in the sector, the NYSE Arca Biotechnology Index spiked by 3.6 percent to its best closing level in three months. Biogen (BIIB) led the sector higher after the FDA granted accelerated approval to the company's Aduhelm for the treatment of Alzheimer's. Significant strength was also visible among tobacco stocks, as reflected by the 1.4 percent gain posted by the Dow Jones US Tobacco Index. On the other hand, oil service stocks gave back ground after recent strength, dragging the Philadelphia Oil Service Index down by 2.5 percent.


Crude oil futures ended lower on Monday after Chinese data showed the nation's crude oil imports fell to a year's low in May. Further, traders also seemed to be weighing the prospects of Iranian oil coming into the market. Iran and global powers will enter a fifth round of talks on June 10 in Vienna that could include Washington lifting economic sanctions on Iranian oil exports. However, the downside was limited as traders continued to hope demand for energy will see a significant increase in the US and Europe. In India, Delhi and Mumbai have begun to ease coronavirus restrictions. Crude oil futures for July fell $0.39 or 0.6 percent to settle at $69.23 barrel on the New York Mercantile Exchange. August Brent crude dropped $0.40 or 0.6 percent to settle at $71.49 a barrel on London's Intercontinental Exchange.


Indian rupee ended considerably higher against dollar on Monday, on persistent selling of the American currency by exporters. Sentiments were upbeat as 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. Besides, healthy growth in the domestic equity markets added to the rupee gains. On the global front, dollar edged up as European markets opened on Monday, recovering from Friday's drop on US jobs data which was below expectations. Finally, the rupee ended 72.80, stronger by 19 paise from its previous close of 72.99 on Friday.


The FIIs as per Monday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 7723.06 crore against gross selling of Rs 6209.20 crore, while in the debt segment, the gross purchase was of Rs 841.15 crore with gross sales of Rs 1459.86 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.59 crore against gross selling of Rs 25.21 crore.


The US markets ended mostly lower on Monday with investors standing by on news of a global minimum corporate tax rate, lingering inflation fears, and a lack of market-moving economic news. Asian markets are trading mostly in red on Tuesday as investors reacted to the release of Japan's revised first-quarter gross domestic product figures. Indian markets ended at record close on Monday led by gains in energy, IT and banking stocks. The sentiment was also lifted as some states eased lockdowns and daily COVID-19 cases in the country hit a two-month low. Today, the markets are likely to make flat-to-positive start amid a sharp fall in Covid cases in the country and accelerated pace of vaccinations, even as the global market setup remains mixed. India's daily Covid-19 cases have fallen below 100,000 after 68 days. The country reported 87,345 new infections and 2,115 new deaths, taking the total number of confirmed infections in India to 28,996,949 and deaths to 351,344. In view of the waning second wave, several states have decided to ease the lockdown-like curbs that were imposed to curtail the pace of infections. Also, Prime Minister Narendra Modi announced free vaccination for all adults from June 21. However, there will be some cautiousness as domestic credit ratings agency Crisil cut its FY22 growth estimate for India to 9.5 per cent from the earlier 11 per cent due to the hit to private consumption and investments following the second wave of COVID-19. Traders may take note of industry body PHDCCI's report that businesses are struggling with rising cost of raw materials amid the second COVID wave as restrictions in many parts of the country have disrupted supply chains and also impacted the pace of economic recovery. Meanwhile, FPIs remained net sellers in May to the tune of $397 million as against an outflow of $1,297 million seen in April. Banking stocks will be in focus as global rating agency Fitch said the Indian government's bold move to privatise public sector banks (PSBs) faces risks from political opposition and structural challenges, including heightened balance-sheet stress due to Covid-19. There will be some reaction agriculture stocks as Niti Aayog Member (Agriculture) Ramesh Chand said the second COVID-19 wave will not impact the Indian agriculture sector in any way as rural areas saw the spread of infections in May when agriculture activities remained at a bare minimum. Besides, Edible oil trade body SEA has demanded that the government take immediate steps to curb excess import of refined soybean oil from Nepal at zero duty, flouting rules of origins.


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