Indian equity markets ended lower
for the third consecutive session, falling over 2 per cent on Wednesday after
the Reserve Bank of India (RBI) announced a surprise repo rate hike in an
unscheduled meeting. The markets, were, already on tenterhooks awaiting the US
Federal Reserve meeting outcome later tonight, wherein a 50 bps rate hike is
anticipated. After making slightly positive start, markets soon turned negative
and stayed in red for whole day as some cautiousness came in with the
International Monetary Fund (IMF) said India may only become a $5-trillion
economy in FY29. According to data from the IMF's World Economic Outlook
Database, updated last month, India's nominal GDP is seen rising to $4.92
trillion in FY28. As such, it will only be in the following year, or FY29, that
the GDP will cross the $5-trillion mark. Traders also took a note of rating
agency ICRA's statement that the state government borrowings through the bond
market could be lower by Rs 50,000 crore in Q1FY23 at Rs 1.4 trillion. Markets
traded deep in red in late afternoon session after Reserve Bank of India (RBI)
has increased the policy repo rate under the liquidity adjustment facility
(LAF) by 40 basis points to 4.40 per cent with immediate effect. RBI said core
inflation is likely to remain elevated in the coming months, reflecting high
domestic pump prices and pressures from prices of essential medicines. It also
said renewed lockdowns and supply chain disruptions due to resurgence of
COVID-19 infections in major economies could sustain higher logistics costs for
longer. Adding more concerns among traders, a paper by the National Council of
Applied Economic Research (NCAER) said that India should take a cautious
approach towards launching a central bank digital currency (CBDC) as it could
be hazardous to institutions, retail-end users, and to the reputation of the
central bank. Traders overlooked data indicated that India's merchandise
exports rose by 24.22 percent to $38.19 billion in April 2022 as compared to
$30.75 billion in April 2021 on account of healthy performance by sectors like
petroleum products, electronic goods, and chemicals. Finally, the BSE Sensex
fell 1306.96 points or 2.29% to 55,669.03 and the CNX Nifty was down by 391.50
points or 2.29% to 16,677.60.
The US markets ended sharply
higher on Wednesday after the Federal Reserve raised rates by a widely
anticipated half percentage point and Chairman Jerome Powell ruled out getting
even more aggressive in the central bank's inflation-fighting campaign. The
central bank announced that it was hiking its benchmark interest rate
50-basis-points, or 0.5 percentage point, and would start reducing its balance
sheet in June. That is the biggest rate increase since 2000 for the Fed, but
the move was widely expected by investors. Stocks moved sharply higher when
Powell said the central bank was not considering an even more aggressive hike
in future meetings. Powell said a 75 basis point increase is not something that
committee is actively considering. He added I think expectations are that we will
start to see inflation, you know, flattening out. On the economic data front, a
report from the Institute for Supply Management (ISM) showed an unexpected
slowdown in the pace of growth in US service sector activity. The ISM said its
Services PMI fell to 57.1 in April from 58.3 in March, although a reading above
50 still indicates growth in the sector. The decrease surprised participants,
who had expected the index to inch up to 58.5. Anthony Nieves, Chair of the ISM
Services Business Survey Committee, said the pullback by the index was mostly
due to the restricted labor pool and the slowing of new orders growth. A
separate report released by payroll processor ADP showed US private sector job
growth slowed by more than expected in the month of April. ADP said private
sector employment increased by 247,000 jobs in April after jumping by an
upwardly revised 479,000 jobs in March. Street had expected private sector
employment to surge by 395,000 jobs compared to the addition of 455,000 jobs
originally reported for the previous month.
Crude oil futures ended sharply
higher on Wednesday as the European Union, the world's largest trading bloc,
spelled out plans to phase out imports of Russian oil, raising concerns about
further market tightness as those nations hunt for adequate supply. Further,
oil prices rose despite data showing an unexpected increase in US oil
stockpiles in the week ended April 29. Data from Energy Information
Administration showed US crude inventories rose by 1.302 million barrels last
week, as against expectations for a draw of around 0.830 million barrels. Benchmark
crude oil futures for June delivery rose $5.58 or 5.5% percent to settle at
$107.79 a barrel on the New York Mercantile Exchange. Brent crude for July
delivery gained $5.50 or 5.23 percent to settle at $110.47 a barrel on London's
Intercontinental Exchange.
Indian rupee ended higher against
dollar on Wednesday due to fresh selling of the American currency by banks and
exporters following RBI's surprise rate hike ahead of the US Federal Reserve's
policy decision. The RBI on Wednesday after an unscheduled MPC meeting hiked
the benchmark lending rate by 40 bps to 4.40 per cent to contain inflation that
has remained stubbornly above the target of 6 per cent for the last three
months. Some support also came as India's merchandise exports in April grew
24.2 per cent year-on-year to their third-highest level ever of $38.2 billion
on the back of higher commodity prices amid the ongoing Russia-Ukraine war. On
the global front, dollar index pulled further away from 20-year highs on
Wednesday, having already priced the U.S. Federal Reserve to raise interest
rates by a half-point later in the day and by some 250 basis points (bps) by
year-end. Finally, the rupee ended at 76.42 (Provisional), stronger by 6 paise
from its previous close of 76.48 on Monday.
The FIIs as per Wednesday's data
were net buyers in equity segment, while net sellers in debt segment. In equity
segment, the gross buying was of Rs 8437.25 crore against gross selling of Rs
7102.68 crore, while in the debt segment, the gross purchase was of Rs 978.80
crore against gross selling of Rs 2404.43 crore. Besides, in the hybrid
segment, the gross buying was of Rs 13.69 crore against gross selling of Rs
20.97 crore.
The US markets ended higher on
Wednesday after the US Federal Reserve hiked interest rates by 50 bps and
announced its plan to trim the $9 trn asset portfolio from June onwards. Asian
markets are trading mostly in green on Thursday amid thin trade following
overnight gains on Wall Street. Indian markets ended significantly lower on
Wednesday, after the RBI's out-of-cycle policy action, amid an across-the-board
sell-off. Today, the start of session is likely to be strong tracking upbeat
cues from global peers. Traders will be
getting encouragement with the commerce ministry's statement that India's
services exports set a new record of $254.4 billion (about Rs 19 lakh crore) in
2021-2022. It said the exports also hit an all-time monthly high of $26.9
billion in March. It added that telecommunications, computer, and information services,
other business services and transport are the top contributors to the exports.
Some support will come as Reserve Bank Governor Shaktikanta Das said recent
trade agreements and geopolitical conditions open up potential market
opportunities for India. Observing that India's external sector has remained
resilient amidst formidable global headwinds, he said provisional data suggest
that merchandise exports remained strong in April 2022 and services exports
reached a new high in March 2022. Traders may take note of Chief Economic
Adviser V Anantha Nageswaran's statement that India's growth is expected to be
in the range of 7-8.5 per cent given the global uncertainties. However, there
may be some cautiousness as a report by ratings agency CRISIL, based on an
analysis of 11 states accounting for three-quarters of GSDP, warned that this
will impact the badly-needed capital expansion measures by the states as
resources will be ploughed to service debt. Besides, as per provisional data
available on the NSE, foreign institutional investors (FIIs) have net offloaded
shares worth Rs 3,288.18 crore. Agriculture industry stocks will be in focus as
food secretary Sudhanshu Pandey said the Centre's wheat procurement is set to
decline by more than half to 19.5 million tonnes in the current rabi marketing
year amid higher exports and likely fall in output, and asserted there won't be
any concern for meeting the domestic demand under the Public Distribution
System. There will be some reaction in Apparel industry related stocks as
Apparel exporters' body AEPC urged the government to take immediate measures to
contain rising prices of raw materials as the continuous surge has impacted the
entire value chain of the industry. There will be lots of earnings reaction
based on the performance of the companies.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
16,677.60
|
16,490.09
|
16,998.99
|
BSE
Sensex
|
55,669.03
|
55,052.35
|
56,734.96
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
ITC
|
259.51
|
260.30
|
257.25
|
264.70
|
NTPC
|
245.11
|
158.65
|
156.66
|
161.26
|
Oil & Natural Gas Corporation
|
236.61
|
162.35
|
159.26
|
164.11
|
Coal India
|
182.39
|
187.40
|
185.70
|
189.90
|
Power Grid Corporation of India
|
173.43
|
237.50
|
233.79
|
240.34
|
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UPL Group has acquired OptiCHOS, a naturally derived fungicide for its Natural Plant Protection business unit.
M&M's subsidiary company -- Mahindra Electric Mobility has tied up with the city-based startup Terrago Logistics.
Kotak Mahindra Bank has reported 50.30% rise in its consolidated net profit at Rs 3,891.82 crore for Q4FY22 as compared to Rs 2,589.32 crore for the same quarter in the previous year.