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NSE Intra-day chart (11 May 2021)
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Market Commentary 12 May 2021
Markets to get negative start amid weakness in global peers


Snapping four day winning streak, Indian equity benchmarks ended Tuesday's trade in red terrain with frontline gauges ending below their crucial 49,200 (Sensex) and 14,900 (Nifty) levels. Markets started the day on pessimistic note amid concerns that the second wave of the coronavirus pandemic could bring down India's GDP growth. Sentiments also remained down beat after domestic rating agency Crisil warned India's economic growth may slip to 8.2 per cent in FY22 if the second wave peaks in end of June, maintaining its baseline estimate of 11 per cent uptick in activity. Adding more pessimism, State Bank of India's economic research arm warned that a huge buildup of carry positions could negatively impact the exchange rate and lead to inflation. Besides, Regulator Sebi came out with disclosure requirements under business responsibility and sustainability reporting, covering environmental, social and governance perspectives, which will be applicable on the top 1,000 listed entities by market capitalisation. However, markets pared some of their initial losses in noon deals but recovery proved short lives as sentiments turned fragile as World Health Organziation states that the coronavirus variant first identified in India last year was being classified as a variant of global concern, with some preliminary studies showing that it spreads more easily. The WHO has said the predominant lineage of B.1.617 was first identified in India in December, although an earlier version was spotted in October 2020. Traders were also remained anxious as Fitch Ratings said that there are growing indications that India's latest wave of Covid-19 infections will add to risks among financial institutions (FIs) by sapping near-term momentum from the economic recovery. Measures announced by the Reserve Bank of India (RBI) on May 5 will provide some relief to FIs in the next 12 to 24 months, but largely at the expense of postponing the recognition and resolution of underlying asset-quality problems. Finally, the BSE Sensex declined 340.60 points or 0.69% to 49,161.81, while the CNX Nifty was down by 91.60 points or 0.61% to 14,850.75.


The US markets ended lower on Tuesday on concerns about acceleration in the rate of inflation and potential monetary policy tightening by the Federal Reserve. The Fed has attributed the increase in inflation to transitory factors, although street has suggested the central bank will still begin considering tapering its asset purchases in the coming months. Adding to the inflation concerns, the Labor Department released a report showing the number of job openings reached a series high of 8.1 million on the last business day of March. The data led to worries that employers will have to raise wages to entice workers, which could carry over into higher inflation. Besides, Housing stocks turned in some of the worst performances on the day, with the Philadelphia Housing Sector Index plunging by 3.2 percent after ending the previous session at its best closing level since a two-for-one split in early 2006. Substantial weakness was also visible among oil stocks, as reflected by the 2.4 percent slump by the NYSE Arca Oil Index. The index extended the pullback seen after it reached a one-year intraday high in early trading on Monday. The weakness among oil stocks came even though the price of crude oil turned higher over the course of the session after an early drop.


Crude oil futures ended higher on Tuesday as lingering fears of gasoline shortages due to the outage at the largest US fuel pipeline system after a cyber-attack brought futures back from an early drop of more than 1%. Besides, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India. Crude oil futures for June rose 36 cents or 0.6 percent to settle at $65.28 barrel on the New York Mercantile Exchange. July Brent crude gained 23 cents or 0.3 percent to settle at $68.55 a barrel on London's Intercontinental Exchange.


Indian rupee ended almost flat against dollar on Tuesday, amid worries that accelerating U.S. inflation could lead to interest rate hikes sooner than expected. Traders were also worried as Crisil said that India's gross domestic product (GDP) growth can drop to 8.2 per cent in the current financial year (2021-22) if second wave of coronavirus pandemic peaks by June-end. Adding more pessimism, World Health Organziation stated that the coronavirus variant first identified in India last year was being classified as a variant of global concern, with some preliminary studies showing that it spreads more easily. On the global front, greenback held near multi-month lows on growing concerns about price pressures. Finally, the rupee ended 73.34, stronger by 1 paise from its previous close of 73.35 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 6805.82 crore against gross selling of Rs 5637.09 crore, while in the debt segment, the gross purchase was of Rs 571.14 crore against gross selling of Rs 588.56 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.59 crore against gross selling of Rs 19.12 crore.


The US markets ended lower on Tuesday as rising commodity prices and labor shortages fed fears that despite reassurances from the US Federal Reserve, near-term price spikes could translate into longer-term inflation. Asian markets are trading mostly in red on Wednesday as investors speculated surging commodity prices and growing inflationary pressure in the United States could lead to earlier rate hikes and higher bond yields globally. Indian markets snapped four-day gaining streak and ended lower on Tuesday dragged by selling in metals, pharma and IT stocks. Today, the markets are likely to continue sluggish momentum with negative start amid weakness in global peers coupled with worries over economic growth. Investors will be eyeing the key economic data on industrial output and inflation to be released later in the day. Traders will be concerned as rating agency Moody's cut India's gross domestic product (GDP) forecast for FY22 to 9.3 per cent from the earlier projection of 13.7 per cent and has ruled out a sovereign rating upgrade - at least for now. The downward revision in GDP estimates comes on the back of a second wave of Covid infections across the country, which triggered localised lockdowns and mobility curbs, except for essential services. There will be some cautiousness as the United Nations said India is forecast to grow at 10.1 per cent in 2022, becoming the fastest-growing major economy in the world, but cautioned that the growth outlook of 2021 was highly fragile as the country was the new hotbed of the pandemic. However, some respite may come later in the day as active Covid cases declined for the third straight day and the fresh Covid cases remained below the 3.5 lakh mark for the second day in a row at 3,48,371. Some support may come as Commerce and Industry Minister Piyush Goyal said a sharp rise in exports in April is giving a hope that the ambitious target of USD 400 billion merchandise shipments can be achieved this year. He also said that the Department of Commerce has taken up several issues of exporters with the Ministry of Finance for their early resolution, like RoDTEP (remission of duties and taxes on export products), MEIS (merchandise export from India scheme), and inverted duty structure. There will be some buzz in aviation stocks as Moody's Investors Service revised its outlook for the global airlines industry to positive from negative, reflecting that industry fundamentals will materially improve over the next 12 to 18 months. Mining and construction equipment industry stocks will be in focus as ICRA said the mining and construction equipment industry is likely to grow by 15-20 per cent in the calendar year 2021 but stressed that the economy, in the grip of a pandemic, could throw up sudden negative surprises. There will be some reaction in metal stocks with report that the government has proposed to slash import duties on steel items further bringing it to zero or near zero levels to provide relief to MSMEs, which have been hit hard by the high cost of raw materials amidst the raging pandemic. Telecom stocks will be in limelight as TRAI data showed Reliance Jio added 4.2 million mobile subscribers, Bharti Airtel added 3.7 million users, while Vodafone Idea added 6.5 lakh users in February.


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



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Nifty Top volumes





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  • IOC is converting 14 LNG tankers into medical grade oxygen carriers as the nation's largest oil firm steps in to augment oxygen-carrying capacity in the country to aid COVID patients. 
  • Coal India's Singrauli-based flagship arm -- Northern Coalfields is installing two oxygen generating plants. 
  • UPL's subsidiary has entered into a license agreement with Japanese company, Meiji Seika Pharma for exclusive access to Flupyrimin for rice in Southeast Asia. 
  • JSW Steel has reported 13.71 lakh tonnes crude steel production in April 2021, registering a fall of 5% as compared to 14.46 lakh tonnes in March 2021.
News Analysis