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NSE Intra-day chart (08 June 2021)
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Market Commentary 09 June 2021
Markets likely to get cautious start amid mixed global cues


In a volatile trading session, Indian equity benchmarks ended marginally lower on Tuesday, dragged by losses in Metal, Banking and Energy stocks amid weak cues from global markets. Markets made slightly positive start but soon turned negative, 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 took note of report that FPIs stood as net sellers in May to the tune of $397 million as against an outflow of $1,297 million seen in April. Selling further crept in as PHD Chamber of Commerce and Industry (PHDCCI) in its latest survey pointed out 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. In a survey, the industry body said that going ahead, a substantial stimulus to push the growth of the Indian economy impacted by the second wave of the pandemic would be crucial. Benchmarks trimmed most of their losses in late afternoon session, as some support came with Fitch Solutions held an optimistic outlook for the Indian consumer over 2021 with real growth in household spending forecast at 9.1 per cent year-on-year. This marks the start of a recovery from the negative 9.3 per cent year-on-year contraction over 2020. Besides, the government pledged to provide free COVID-19 vaccines to all adults, in an effort to rein in a pandemic that has killed hundreds of thousands. Also, daily COVID-19 cases in India have been on a downward trend since early May, with data from the health ministry on Tuesday showing 86,498 infections in the last 24 hours. Finally, the BSE Sensex fell 52.94 points or 0.10% to 52,275.57, while the CNX Nifty was down by 11.55 points or 0.07% to 15,740.10.   


The US markets ended mostly higher on Tuesday on rising optimism about strong economic growth amid the acceleration in vaccine rollout and gradual reopening of businesses in several parts of the US. However, upside remained capped as investors were reluctant to build up positions due to concerns about rising inflation and possibility of the Federal Reserve starting discussions on tapering its asset buying program. On the economic data front, data released by the Commerce Department showed US trade deficit narrowed in the month of April, falling to $68.9 billion from a revised $75 billion in the previous month. Street had expected the deficit to narrow to $69.0 billion from the $74.4 billion originally reported for the previous month. Exports were up 1% at $205.0 billion, while the value of imports slumped by 1.4% to $273.9 billion in April. A report from the National Federation of Independent Business said the NFIB Small Business Optimism Index in the United States stood at 99.6 in May 2021, slightly down from the previous month's five-month high and well below pre-pandemic levels. It was the first decline in morale this year. Meanwhile, job openings in April soared to a new record high, with 9.3 million vacancies coming amid the economic recovery. The standard set in April was well above the 8.3 million in March that itself was a new series high going back to 2000 for the Labor Department's Job Openings and Labor Turnover Survey. On the sector front, Airline stocks turned higher after the Centers for Disease Control and Prevention eased travel recommendations for 61 countries, including Japan, France, South Africa, Canada, Spain and Italy.


Crude oil futures ended higher with gains of over one percent on Tuesday after positive reports on the coronavirus vaccine front raised hopes that the demand for oil will see a steady increase in the coming months. According to reports, Dr. Anthony Fauci, the US' top infectious disease expert, has said both the Pfizer and AstraZeneca Covid vaccines are effective against the Delta variant post two doses. Further, Many countries including the US are looking to gradually ease travel restrictions. However, a report from the US Energy Information Administration (EIA) showed that the agency has cut its 2021 world oil demand growth forecast by 10,000 barrels per day to 5.41 million bpd, limited oil's uptick. Crude oil futures for July rose $0.82 or 1.2 percent to settle at $70.05 barrel on the New York Mercantile Exchange. August Brent crude surged $0.82 or 1.16 percent to settle at $72.31 a barrel on London's Intercontinental Exchange.


Erasing previous sessions gaining momentum; Indian rupee ended considerably lower against dollar on Tuesday as investors were worried about rising global inflation ahead of central bank meetings. Traders were also concerned as Crisil has cut India's gross domestic product (GDP) growth forecast to 9.5 per cent for the current fiscal (FY22) as compared to 11 percent projected earlier due to the hit to private consumption and investments following the second wave of COVID-19. On the global front; dollar found support on Tuesday as investors prepared for U.S. inflation data due later in the week following weaker-than-expected jobs data, which has eased concerns about early tapering of the Federal Reserve's monetary stimulus. Finally, the rupee ended 72.89, weaker by 9 paise from its previous close of 72.80 on Monday.


The FIIs as per Tuesday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 7066.79 crore against gross selling of Rs 6906.29 crore, while in the debt segment, the gross purchase was of Rs 78.75 crore against gross selling of Rs 525.05 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.45 crore against gross selling of Rs 50.48 crore.


The US markets ended mostly higher on Tuesday as a lack of clear market catalysts kept institutional investors on the sidelines, while retail traders fueled the ongoing meme stocks rally. Asian markets are trading mixed on Wednesday ahead of Chinese inflation data expected later in the day. Indian markets ended marginally lower on Tuesday dragged mainly by banking, financials and metal stocks. Today, the markets are likely to make cautious start amid mixed global cues coupled with concerns over economic growth. There will be some cautiousness as the World Bank slashed India's GDP forecast to 8.3 per cent for FY22, the fiscal year starting April 2021, as against its earlier estimate of 10.1 per cent. It has further projected India's growth to be 7.5 per cent in 2022, even as its recovery is being hampered by an unprecedented second wave of the Covid-19, the largest outbreak in the world since the beginning of the deadly pandemic. Meanwhile, India Ratings and Research stated that the burden of taxation, particularly indirect taxes, on households has worsened lately and is preventing them from spending more on consumption. However, continues fall in Covid-19 cases likely to aid the sentiments in the markets. India's daily Covid-19 cases remained below the 100,000 again. The country reported 91,227 new infections today and 2,213 new deaths, taking the total number of confirmed infections in India to 29,088,176 and deaths to 353,557. Besides, Union Finance Minister Nirmala Sitharaman is all set to chair a key meeting on June 11 to review infrastructure projects. There will be some reaction in textile industry stocks with CRIF-SIDBI's report that after witnessing a continuous improvement for eight quarters, the textile sector's asset quality slipped as gross non-performing assets (NPAs) rose to 16.92 per cent in December 2020 from 15.92 per cent in September 2020, triggered by the Covid-induced lockdown. Metal stocks will be in focus with Crisil's report that large steel makers took huge strides in terms of both operations and financial performance last fiscal, increasing their market share by 500 basis points (bps) on-year to 58 per cent despite their share of industry capacity remaining unchanged. There will be some reaction in sugar stocks with a private report that Indians will likely consume 5% less sugar in the 2020-22 period as a direct result of demand loss due to the pandemic.


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