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NSE Intra-day chart (08 June 2022)
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Market Commentary 09 June 2022
Markets likely to get negative start amid weak global cues


Extending their losing streak for the fourth straight day, Indian equity benchmarks ended the Wednesday's trade in red terrain with frontline gauges ending below their crucial 54,900 (Sensex) and 16,400 (Nifty) levels. Soon after making a flat-to-positive start markets entered into red terrain and extended losses as traders turned cautious with report that the World Bank cut India's economic growth forecast for the current fiscal to 7.5 per cent as rising inflation, supply chain disruptions and geopolitical tensions taper recovery. This is the second time that the World Bank has revised its GDP growth forecast for India in the current fiscal 2022-23 (April 2022 to March 2023). In April, it had trimmed the forecast from 8.7 per cent to 8 per cent. However, markets wipe out all of their losses and turned green after Reserve Bank of India's (RBI) Monetary Policy Committee has raised Repo Rate by 50 basis points (bps) to 4.90 per cent in its June bi-monthly meeting. Real GDP growth for FY 2022-23 is retained at 7.2%. Adding more relief among traders, the Reserve Bank of India (RBI) in its latest data has showed that Bank credit grew by 11.04 per cent to Rs 120.27 lakh crore and deposits up by 9.27 per cent to Rs 165.74 lakh crore in the fortnight ended May 20, 2022. But, traders failed to hold gains and ended the day in red as market participants booked profit in later part of the day as India's central bank said that it would withdraw pandemic-era monetary stimulus and hinted at further rate hikes, in the upcoming months. Moreover, RBI Governor Shaktikanta Das said the Ukraine-Russia war has led to globalisation of inflation and is posing new challenges, as the central bank upped the inflation projection to 6.7 per cent for current fiscal year. In April, RBI had projected retail inflation at 5.7 per cent for 2022-23. Finally, the BSE Sensex fell 214.85 points or 0.39% to 54,892.49 and the CNX Nifty was down by 60.10 points or 0.37% to 16,356.25. 

The US markets settled in red on Wednesday as investors monitored signs of a potential economic slowdown and kept an eye on the bond market. Action in the bond market has hurt investors' sentiment, as the 10-year Treasury yield jumped back above 3%. The price of oil also rose, with US benchmark West Texas Intermediate crude pushing well above $120 per barrel. Sentiments were weak after the Organisation for Economic Co-operation and Development (OECD) said the global growth is set to slow sharply this year than previously forecast as the war in Ukraine triggered a cost-of-living crisis and the zero-COVID policy of China added to supply chain disruptions. The global economy will expand 3.0 percent in 2022, which is sharply slower than the 4.5 percent projected in December, OECD said in its latest economic outlook. The growth rate is seen at 2.75 percent in 2023. The hardest-hit economies are in Europe, which is highly exposed to the war through energy imports as well as refugee flows. Russia's invasion of Ukraine has also damped hopes of a quick end to rising inflation from Covid19-related supply bottlenecks seen across the global economies. As Russia and Ukraine are major suppliers in many commodity markets, the war has lifted commodity prices sharply. The OECD cautioned that without action, there is high risk of a food crisis. In the United States, GDP growth is forecast to weaken from 5.7 percent last year to 2.5 percent this year, and to 1.2 percent in 2023. The OECD observed that supply shortages, higher oil prices and a faster pace of monetary policy normalization will hold back growth to a greater extent than previously foreseen. 

Crude oil futures ended higher on Wednesday, magnifying their previous session's gains, buoyed by data showing a notable drop in gasoline inventories in the US last week. Data from Energy Information Administration (EIA) showed crude in the Strategic Petroleum Reserve fell as refiners' inputs rose to their highest level since January 2020. The EIA data said US gasoline stocks dropped by 0.812 million barrels last week, as against expectations for an increase of about 1.1 million barrels. Further, oil prices also rose as investors cheered prospects of increased demand from China as Beijing and Shanghai gradually open up following almost two months of COVID-related lockdowns. Benchmark crude oil futures for July delivery surged $2.70 or 2.3 percent to settle at $122.11 a barrel on the New York Mercantile Exchange. Brent crude for August delivery rose $2.77 or 2.3 percent to settle at $123.34 (Provisional) a barrel on London's Intercontinental Exchange. 

Indian rupee ended higher against dollar on Wednesday after RBI raised the interest rate by 50 basis points to 4.9 per cent. The move is expected to tackle inflation that has gone beyond the tolerance level. RBI retained its real GDP growth projection at 7.2 percent for the current fiscal year on the back of improvement in urban demand and gradual recovery in rural India. However, gains remained capped as World Bank slashed its global growth forecast by 1.2 percentage points to 2.9% for 2022, warning that Russia's invasion of Ukraine has compounded the damage from the COVID-19 pandemic, with many countries likely to face recession. Also, weak domestic markets, rising oil prices and persistent foreign capital outflows restricted the rupee's gain. On the global front, euro hit a seven-year peak against the yen on Wednesday, getting a lift after an upward revision to first quarter growth and ahead of a European Central Bank meeting on Thursday that is likely to pave the way for rate hikes later in the year. Finally, the rupee ended at 77.68 (Provisional), stronger by 10 paise from its previous close of 77.78 on Tuesday.   

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 5646.18 crore against gross selling of Rs 7888.12 crore, while in the debt segment, the gross purchase was of Rs 275.77 crore against gross selling of Rs 346.47 crore. Besides, in the hybrid segment, the gross buying was of Rs 51.92 crore against gross selling of Rs 4.36 crore. 

The US markets ended lower on Wednesday as Treasury yields rose above the psychologically important 3% level and oil prices jumped. Asian markets are trading mostly in red on Thursday amid rising US bond yields and the greenback, as investors worried about the outlook for more rate hikes ahead of a key ECB meeting later in the day. Indian markets declined for the fourth consecutive session on Wednesday as the Reserve Bank of India (RBI) hiked the policy rate by 50 basis points. Today, Markets are likely to get negative start tracking weakness in the global markets amid higher crude oil prices. Traders will be concerned as the Organization for Economic Cooperation and Development (OECD) pegged India's FY23 economic growth at 6.9 per cent, the lowest by a major bank or institution, saying the country had been adversely affected by Russia's invasion of Ukraine. Besides, foreign institutional investors (FIIs) have net sold Rs 2,484.25 crore worth of shares on June 8, as per provisional data available on the NSE. However, some support may come later in the day as chief economic advisor V Anantha Nageswaran said India's economy could expand to $20 trillion in a couple of decades if the gross domestic product doubles every seven years after hitting the $5 trillion mark in five years. Some optimism may come with Finance Minister Nirmala Sitharaman's statement that enabling policies and proactive steps taken by the government -including corporate tax cuts and digitisation of the economy -helped the country deal with the unprecedented situation arising due to the pandemic. Traders may take note of Department of Economic Affairs Secretary Ajay Seth's statement that monetary and fiscal authorities are taking steps to moderate inflation and push growth. There will be some buzz in the agriculture industry stocks as the government raised the minimum support price (MSP) of kharif crops for the 2022-23 crop year (July-June) by around 5-9 per cent. The biggest hikes were reserved for pulses and oilseeds, notably moong, soybean, and sunflower seed, as has been the norm in the past several years. Sugar industry stocks will be in focus as ISMA said Sugar exports from India, the world's largest producer and second biggest exporter of the sweetener, touched a record 8.6 million tonne till May of the ongoing 2021-22 marketing year ending September. Also, the government has issued export release orders for 10 lakh tonnes of sugar on pro-rata basis, out of the total applications of 23 lakh tonnes, till June 3. There will be some reaction in real estate stocks with a private report that the real estate sector, which is highly dependent on bank financing for both builders and customers, is worried that rising rates will impact post-pandemic recovery and slow down sales. Rate-sensitive sectors will be under investors' radar as they adjust to a rising rate scenario. Paint stocks will be in focus too after Brent Crude oil hit $124 per barrel, touching its 13-week high. 

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


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  • State Bank of India, Ather Energy have partnered for vehicle financing for its customers. 
  • Tata Motors has delivered 17 Nexon EVs to Kolkata Police. Kolkata Police has inducted 17 Tata Nexon EVs into its official fleet on the occasion of World Environment Day.   
  • The income tax department has directed vendor Infosys to address fresh technical glitches on the tax department's e-filing portal.

News Analysis