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NSE Intra-day chart (31 May 2021)
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Market Commentary 01 June 2021
Benchmarks likely to open higher amid positive Asian cues


Indian equity benchmarks continued their uptrend on Monday with the Nifty hitting a fresh record high, due to strength in index heavyweights such as Reliance Industries, ICICI Bank and Bharti Airtel ahead of the gross domestic product (GDP) data for the fourth quarter. A steady decline in daily COVID-19 caseload also strengthened investor sentiment. The Health Ministry said India reported the lowest daily new coronavirus infections in 50 days with 1,52,734 cases, taking the tally to 2,80,47,534 on Monday, while the active caseload declined to 20,26,092. Markets started the week on cautious note, as SBI Research analysis of EPFO payroll data shows that net job creation in the economy fell by 16.9 lakh in FY21 over the previous fiscal. Additionally, India Meteorological Department (IMD) said that the arrival of monsoon over Kerala is likely to delayed by two days and it is now expected to make an onset over the state by June 3. But, key indices soon gained traction in late morning deals, taking support from Revenue Secretary Tarun Bajaj's statement that Indian economy has not suffered as much this year amid the second wave of COVID-19 as compared to last year when there was complete lockdown. Giving two scenarios, he said if Rs 1.10 lakh crore GST is collected per month, the deficit in states' revenue would be Rs 1.50 lakh crore. If Rs 1.15 lakh crore GST is collected monthly, then that deficit would be Rs 1.25 lakh crore. So since Rs 1.58 lakh crore would be borrowed this fiscal towards compensating states, the extra borrowing, over and above what is the shortfall this year, would be utilised to make good the shortfall in states' revenue of previous years. Domestic sentiments also remained positive, as the finance ministry expanded the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which will now offer concessional loans to hospitals for setting up on-site oxygen generation plants. Adding more comfort among traders, the Ministry of Labour and Employment announced additional benefits for workers through social securities schemes run by the EPFO and the ESIC amid the COVID-19 pandemic. Finally, the BSE Sensex rose 514.56 points or 1.00% to 51,937.44, while the CNX Nifty was up by 147.15 points or 0.95% to 15,582.80.


The US markets were closed on Monday for Memorial Day.


Erasing prevision session gains, Indian Rupee ended considerably lower against dollar on Monday, on account of sustained dollar demand from importers and banks. Sentiments were impacted as foreign portfolio investors (FPI) turned out to be net sellers for second month in a row by taking out nearly Rs 1,730 crore from Indian markets in May as second wave of the coronavirus pandemic spooked investors' sentiment. In April, the total net outflow from the Indian capital markets (both equity and debt) stood at Rs 9,435 crore. On the other hand, it said aggregate deposits growth accelerated to 12.3 per cent in March 2021 from 9.5 per cent in the same month of the previous year. On the global front; dollar remained under pressure on Monday, falling to a three-year low versus the yuan as economic activity data showed that China's recovery had slowed but remained on a strong footing. Finally, the rupee ended 72.62, weaker by 17 paise from its previous close of 72.45 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 5693.05 crore against gross selling of Rs 5272.19 crore, while in the debt segment, the gross purchase was of Rs 174.65 crore with gross sales of Rs 1533.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.57 crore against gross selling of Rs 33.29 crore.


The US markets were shut on Monday for a holiday. Asian markets are trading mostly in green on Tuesday as traders await gauges of manufacturing activity and key American jobs data later in the week to help assess the economic outlook. Indian markets ended a percent higher on Monday led by strong gains in metals, FMCG and financial stocks. Today, the markets are likely to begin the month of June on a firm note following mostly positive cues from global peers. Investors are eyeing manufacturing PMI data to be released later today. Better-than-expected GDP numbers likely to support the market sentiments. Amid the coronavirus pandemic, India's GDP grew at 1.6 per cent in the January-March quarter of the fiscal year 2020-21, higher than the street forecast, but witnessed a contraction of 7.3 per cent for the entire fiscal year. Even then, the figure beat the CSO's estimate of 8 per cent contraction. Traders will be taking encouragement as Chief Economic Adviser K V Subramanian said the overall impact of the second wave of Covid-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. Some support will come as Fitch Ratings says the impact of the second Covid-19 wave on rated Indian firms is expected to be manageable, as most companies' credit profiles are supported by their strong market positions, adequate balance sheets, liquidity and diversified operations. Additionally, the output of eight core sectors jumped by 56.1 per cent in April mainly due to low base effect and uptick in production of natural gas, refinery products, steel, cement and electricity. However, traders may be concerned as the Organisation for Economic Co-operation and Development (OECD) cut its growth projection for India for FY22 to 9.9 per cent from 12.6 per cent estimated in March, as the second wave of coronavirus infections has paused economic recovery in Asia's third largest economy. Traders may take note of report that the Centre's fiscal deficit for the financial year 2020-21 settled at 9.2 per cent of the gross domestic product, marginally below the government's revised target of 9.5 per cent. This was on the back of better-than-expected revenue receipts with expenditure staying broadly at the level targeted in the revised estimates of the Budget. Meanwhile, India reported 126,698 fresh Covid-19 infections, taking the caseload to 28,173,655. This is the lowest spike in daily infections since April 8. Auto stocks will be in focus reacting to their monthly sales figures. Defence stocks will be on investors radar after the Defence Ministry notified the second negative import list of 108 items that can now be only purchased from indigenous sources.


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



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  • Kotak Mahindra Bank's board has approved the proposal for issuance of unsecured, redeemable, non-convertible debentures/bonds/other debt securities, on private placement basis for an amount up to Rs 5,000 crore. 
  • Wipro has sold its entire stake in Ensono Holdings, LLC for a consideration of $ 76.24 million. 
  • HDFC Bank, under Parivartan, has unveiled a slew of measures to set up and enhance medical infrastructure across the country to assist the fight against the pandemic. 
  • Coal India has maintained its output and dispatch momentum in May, the second month of the current fiscal despite COVID-19 restrictions in several states.
News Analysis