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NSE Intra-day chart (04 May 2022)
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Market Commentary 05 May 2022
Benchmarks likely to get strong opening amid positive global cues


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.


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  • ITC has entered into a partnership with IIT Delhi to support research in identified STEM areas. 
  • 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.
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