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Market Commentary 18 June 2024
Benchmarks likely to get firm start on positive global cues

Indian equity benchmarks ended higher for a third straight session on Friday driven by index heavyweights Mahindra & Mahindra, Titan Company and HDFC Bank. Markets made a positive start but soon wiped out their gains and entered into red terrain as traders got anxious with data showing that foreign institutional investors (FIIs) were net sellers of stocks worth Rs 3,033 crore on June 13. However, selling proved short-lived as markets quickly rebounded and remained range-bound until the close as traders found solace with credit rating agency Moody's Ratings' statement that fuelled by domestic demand growth, India is expected to remain the region's fastest-growing economy in the Asia-Pacific region in the second half of the year 2024. The report also noted that India, Indonesia, and the Philippines were the key growth outperformers in the first half of the year 2024. Some support also came as industry body the Confederation of Indian Industry (CII) has made a case for pushing reforms in sectors like land, labour, and agriculture by the Modi 3.0 government to accelerate economic growth, which is estimated to be around 8 per cent in the current financial year. Sentiments remained positive in late afternoon deals, taking support from Economic think tank Global Trade Research Initiative's (GTRI) statement that implementation of key strategic reforms such as simplification of customs duty structure, Goods and Services Tax (GST), and not incentivising low value-added electric vehicles would help India ensure its sustainable development and inclusive growth. It also said that India is standing on the cusp of a transformative era and there is an urgent need for comprehensive economic reforms. However, gains remained capped as some pessimism remained among traders with data showing that inflation based on wholesale price index (WPI) accelerated in the month of May 2024 to 2.61% from 1.26% in April 2024, due to increase in prices of food articles, minerals, basic metals, computer, electronic & optical products and electrical equipments. The Component wise, primary articles index, having weight of 22.62%, increased 0.54% to 187.7 (provisional) in May 2024 from 186.7 (provisional) for the month of April 2024, on the back of rise in prices of food articles and minerals. Finally, the BSE Sensex rose 181.87 points or 0.24% to 76,992.77, and the CNX Nifty was up by 66.70 points or 0.29% points to 23,465.60.

The US markets ended higher on Monday. Markets showed a lack of direction early in the session on Monday but moved notably higher over course of the trading day.  Buying interest emerged over the course of the session, however, with stocks potentially benefiting from the positive sentiment generated last week. Meanwhile, traders continued to look ahead to the release of some key economic data this, with reports on retail sales and industrial production are likely to be in the spotlight. On the economic data front, the Federal Reserve Bank of New York released a report showing New York manufacturing activity contracted at a notably slower rate in the month of June. The New York Fed said its general business conditions index climbed to a negative 6.0 in June from a negative 15.6 in May, although a negative reading still indicates contraction. Street had expected the index to rise to a negative 9.0. On the sectoral front, oil service stocks moved sharply higher along with the price of crude oil, with the Philadelphia Oil Service Index surging by 2.1 percent after ending last Friday's trading at a four-month closing low. Considerable strength also emerged among computer hardware stocks, as reflected by the 2.0 percent jumped by the NYSE Arca Computer Hardware Index. Airline stocks also showed a significant move to the upside on the day, driving the NYSE Arca Airline Index up by 1.7 percent. Semiconductor, banking and software stocks also saw notable strength, while utilities and telecom stocks bucked the uptrend.

Crude oil futures ended sharply higher on Monday as hopes about the outlook for energy demand outweighed disappointing industrial data from China. Traders picked up the commodity on expectations of increased gasoline demand during the summer driving season. On the geopolitical front, investors fretted about a wider Middle East war after the Israeli military warned that intensified cross-border fire from Lebanon's Hezbollah terror group into Israel could trigger serious escalation. Benchmark crude oil futures for July delivery rose by $1.88 or 1.25% to settle at $80.33 a barrel on the New York Mercantile Exchange. Brent crude for August delivery was up $1.63 or about 2% to $84.25 per barrel on London's Intercontinental Exchange.

Indian rupee ended lower against the U.S. dollar on Friday despite positive domestic markets. Sentiments were downbeat after inflation based on wholesale price index (WPI) accelerated in the month of May 2024 to 2.61% from 1.26% in April 2024, due to increase in prices of food articles, minerals, basic metals, computer, electronic & optical products and electrical equipments. The Component wise, primary articles index, having weight of 22.62%, increased 0.54% to 187.7 (provisional) in May 2024 from 186.7 (provisional) for the month of April 2024, on the back of rise in prices of food articles and minerals. On the global front, the Japanese yen weakened sharply against the dollar on Friday to its lowest level in around two and half months after the Bank of Japan decided to keep interest rates unchanged in June as widely expected, after its first rate hike in seven years at the March meeting. Finally, the rupee ended at 83.55 (Provisional), down by 1 paisa from its previous close of 83.54 on Thursday.

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 19670.65 crore against gross selling of Rs 16900.23 crore, while in the debt segment, the gross purchase was of Rs 1185.26 crore with gross sales of Rs 226.43 crore. Besides, in the hybrid segment, the gross buying was of Rs 5904.21 crore against gross selling of Rs 4504.35 crore.

The US markets ended higher on Monday amid the New York Fed said its general business conditions index climbed to a negative 6.0 in June from a negative 15.6 in May. Asian markets were trading higher in early deals on Tuesday following positive cues from the US markets overnight.  Indian equity markets ended higher on Friday as credit rating agency Moody's Ratings' statement that India is expected to remain the region's fastest-growing economy in the Asia-Pacific region in the second half of the year 2024, fuelled by domestic demand growth. Markets were closed on Monday on account of Bakri Id. Today, markets are likely to make positive start amid firm global cues. Traders may get support as President of the Confederation of Indian Industry (CII) stated that within a few years, India will undoubtedly be among the world's top three economies. Some support may come in as India's foreign exchange reserves jumped $4.307 billion to touch a new lifetime high of $655.817 billion during the week that ended June 7, data from the Reserve Bank of India (RBI) showed. The reserves have been rising on and off for a long time now. So far in 2024, they have risen over $30 billion, on a cumulative basis. Besides, foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 2,175.86 crore on June 14. There may be some action in Textile Industry related stocks as the Confederation of Indian Textile Industry (CITI) said that despite unfavourable economic conditions in major markets such as the European Union (EU), the US, and West Asian nations, Indian textile exports grew by 9.59 per cent in May this year compared to same month of the previous year.  There will some buzz in Pharmaceuticals industry related stocks as Union Minister for Health and Family Welfare Jagat Prakash Nadda directed the Department of Pharmaceuticals to upgrade the quality of all drug and medical device manufacturing plants to a world-class standard over the next three years.

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

Index

Previous close

Support

Resistance

NSE Nifty

23,465.60

23,369.76

23,525.91

BSE Sensex

76,992.77

76,667.44

77,199.69

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

285.09

182.90

181.70

183.80

Power Grid

141.60

321.50

318.56

325.21

SBIN

129.03

839.20

832.90

847.70

HDFC Bank

127.70

1595.60

1582.54

1603.84

Tata Motors

115.91

992.00

983.19

999.04

  • Wipro has entered into strategic collaboration with Siemens to transform automotive software development through the integration of the PAVE360 software and digital twin technologies from Siemens with Wipro's automotive engineering and digital transformation capabilities.
  • Tata Consumer Products is making strategic moves to establish itself as a comprehensive FMCG entity.
  • Tata Steel and Australia's Monash University have signed a MoU to set up a Centre for Innovation on Environment and Intelligent Manufacturing to collaborate on contemporary global challenges.
  • Larsen & Toubro and Antaisolar, a leading solar tracker solutions provider, have entered into a partnership for a 294 MW solar tracker project in India.

News Analysis