Friday turned out to be a horrendous day of trade for Indian equity benchmarks with frontline gauges shaved off over one and a half percent each as traders were worried that aggressive interest rate hikes to tame surging inflation may dent global economic growth in the coming time. Markets started the day on pessimistic note as India Ratings said inflation, supply chain disruptions and a weak consumption demand could upset the revival in credit growth in the medium term. It said the reversal of the interest rate cycle--marked by the Reserve Bank of India's 40 basis points increase in policy repo rate -- would weigh down credit growth as borrowings become costlier. Sentiments also remained dampened as consequent to the 40 basis point hike in the repo rate announced by the Reserve Bank of India (RBI), large banks such as ICICI Bank and Bank of Baroda have raised their lending rates by an equal amount on loans linked to the external benchmark. Market participants overlooked commerce and industry minister Piyush Goyal's statement that all the key indicators such as jump in exports and high GST collection in April reflect that the country's economy is on the growth path. Sentiments continued to remain dampened throughout the day as traders remain concerned amid a private report stating that India's central bank hiked its key lending rate in a surprise move fearing shocker inflation numbers for April, adding the ultimate aim is to reverse its pandemic-era ultra-loose rate regime. Adding some more worries, India has raised concerns at the World Trade Organization (WTO) over a host of trade barriers built in by Indonesia, including export restrictions on palm oil and import curbs on bovine meat and automotive (auto) parts, holding that such measures have adversely impacted India. Continuous foreign fund outflows and mixed corporate earnings results also impacted traders' sentiments. So far this week, foreign investors have net sold Indian equities worth $635 million, compared with $881 million offloaded in the same period last week. Finally, the BSE Sensex fell 866.65 points or 1.56% to 54,835.58 and the CNX Nifty was down by 271.40 points or 1.63% to 16,411.25.

The US markets extended their previous session's losses and ended lower on Friday. The lower close on Wall Street came following the release of a closely watched Labor Department report showing stronger than expected job growth in the month of April. The report showed non-farm payroll employment surged by 428,000 jobs in April, matching the revised jump seen in March. Street had expected employment to climb by 391,000 jobs compared to the addition of 431,000 jobs originally reported for the previous month. Meanwhile, the Labor Department said the unemployment rate came in unchanged at 3.6 percent versus expectations the rate would edge down to 3.5 percent. With the report showing continued strength in the labor market, the Federal Reserve will continue with its plans to raise interest rates relatively sharply over the coming months. Worries about the outlook for interest rates may have weighed on Wall Street along with a continued increase in treasury yields. On the sectoral front, airline stocks moved sharply lower on the day, with the NYSE Arca Airline Index plummeting by 3.1 percent to a nearly two-month closing low. Substantial weakness was also visible among biotechnology stocks, as reflected by the 2.8 percent plunged by NYSE Arca Biotechnology Index. The index ended the session at its lowest closing level in over two years. Brokerage, networking and retail stocks also saw considerable weakness on the day, adding to the steep losses posted in the previous session. On the other hand, energy stocks moved sharply higher over the course of the session, benefiting from a notable increase by the price of crude oil.

Crude oil futures settled notably higher on Friday amid worries about supply following the European Union's decision proposing some of its toughest measures yet against Russia, including a total ban on oil imports. According to reports, the EU is willing to exempt some central European member states from its proposed embargo on Russian oil. Meanwhile, the OPEC countries are against replacing Russian oil amid concerns about slower demand in China. According to a report from Baker Hughes, the number of total active drilling rigs in the United States rose by 7 this week, after an increase of 3 rigs in the week prior. The total rig count increased to 705 this week, 257 rigs higher than the rig count this time in 2021, the report said. Oil rigs in the United States rose this week by 5 rigs to 557, while gas rigs rose by 2 to 146. Benchmark crude oil futures for June delivery added $1.51 or 1.4% percent to settle at $109.77 a barrel on the New York Mercantile Exchange. Brent crude for July delivery gained $2.04 or 1.84 percent to settle at $112.94 (Provisional) a barrel on London's Intercontinental Exchange.

Indian rupee ended considerably lower against dollar on Friday, on account of sustained dollar demand from importers and banks on worries that the Federal Reserve's interest rate hike this week may not be enough to help fight surging inflation. Continuous foreign fund outflows and mixed corporate earnings results also impacted traders' sentiments. So far this week, foreign investors have net sold Indian equities worth $635 million, compared with $881 million offloaded in the same period last week. Investors were worried as India Ratings said inflation, supply chain disruptions and a weak consumption demand could upset the revival in credit growth in the medium term. Massive sell off in Indian equity market also hit the rupee sentiment. On the global front, dollar index hovered near 20-year highs against major peers on Friday, as market sell-offs in the face of global recession fears propped up the safe-haven currency. Finally, the rupee ended at 76.92 (Provisional), weaker by 57 paise from its previous close of 76.35 on Thursday. The currency touched a high and low of 76.33 and 75.99 respectively.

The FIIs as per Friday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 5634.45 crore against gross selling of Rs 7194.69 crore, while in the debt segment, the gross purchase was of Rs 705.74 crore with gross sales of Rs 586.24 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.66 crore against gross selling of Rs 3.06 crore.

The US markets ended lower on Friday as investors assessed whether the Fed will need to be more aggressive than expected in raising interest rates to tackle inflation. Asian markets are trading mostly in red on Monday amid concerns about higher interest rates and a tightening lockdown in Shanghai that stoked fears about global economic growth. Indian markets slumped to two-month closing lows on Friday amid weak global cues as investors fretted over worsening inflation and its repercussions on global growth. Today, domestic markets are likely to continue their weak trend with gap-down opening as global sentiment continues to weigh on equities. Crucial macro-economic data such as industrial output and retail inflation reading will be on investors' radar this week. Traders will be concerned with a private report that foreign funds' ownership in domestic equities fell to pre-COVID lows and hit a multi-year low of 19.5 per cent in March this year in NSE500 companies valued at $619 billion. However, some respite may come later in the day as a private report stated that with the e-way bills generated for inter-state trade in goods under the Goods and Services Tax (GST) regime in April turning out to be the second highest so far, the monthly GST collections may hit Rs 1.5 trillion benchmark again in May (April transactions). Some support may come with a periodic labour force survey by the National Statistical Office (NSO) showing that the unemployment rate for persons of 15 years and above in urban areas slipped to 8.7 per cent in October-December 2021 from 10.3 per cent in the year-ago quarter. There will be some buzz in the sugar industry stocks as the Centre has allowed an additional 2,051 metric tonnes of raw sugar to be exported to the US under the Tariff Rate Quota (TRQ) for the US fiscal year 2022. Power stocks will be in focus as total outstanding dues of electricity distribution companies to power producers rose by 4.04 per cent year-on-year to Rs 1,21,765 crore (Rs 1.21 trillion) in May 2022. There will be some reaction in insurance industry stocks with report that the government may infuse Rs 3,000-5,000 crore additional capital in the three public sector general insurance companies based on their performance and requirement during the year. Paper industry stocks will be in limelight as industry body IPMA said that paper consumption in India is likely to witness 6 to 7 per cent annual growth and will reach 30 million tonnes by FY 2026-27, largely driven by emphasis on education and literacy coupled with growth in organised retail. There will be lots of earnings reaction based on the performance of the companies.

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

Nifty Top volumes

• M&M's Farm Equipment Sector has signed a MoU with the Jammu & Kashmir Bank to finance Mahindra's range of tractors and farm machinery. 
• ICICI Bank has hiked its external benchmark lending rate by 40 basis points or bps to 8.10 per cent. 
• HDFC Bank has added over 1,000 branches to its network over the past two years. 
• Kotak Mahindra Bank has increased interest rates on fixed deposit across multiple tenor baskets for its retail customers by up to 0.35 per cent.