Indian equity benchmarks extended their fall for the fifth straight session and ended lower with losses of over two percent on Thursday, as investors remained worried ahead of Index of Industrial Production (IIP) data for March and crucial retail inflation (CPI) reading for April, which will be released later today. A broader decline in global stocks following U.S. consumer price data also dented investor sentiment. The markets made a gap down opening, as traders were concerned with private report that tightening of policy rates by major central banks, including the RBI, would adversely impact demand in the next 6-8 months and slow down the recovery process. Some anxiety was also among the local traders with private report has lowered its forecasts for India's economic growth in the next two fiscal years, saying a global slowdown, surging oil prices and weak domestic demand would take a toll on Asia's third-largest economy. It said gross domestic product growth will be 7.6% for fiscal 2023 and 6.7% for fiscal 2024, 30 basis points lower than the previous estimates. Benchmarks enlarged their losses in late afternoon session, amid a private report stating that India Inc stares at a further decline in operating margins and profitability in the coming quarters owing to the twin blows of a depreciation in the value of the rupee against major currencies and a rise in interest rates after a surprise intervention by the Reserve Bank of India (RBI) last week. Adding to the pessimism, FPIs have continued their selling spree for seven straight months now. According to NSE data, FPIs sold Rs 3,609.35 crore on May 11, 2022 whereas domestic investors bought Rs 4,181.2 crore worth of equities. Further, a weaker rupee erodes FPI returns for Indian equities. Meanwhile, to strengthen the regulatory framework for collective investment schemes, markets regulator SEBI has enhanced the net worth criteria and track record requirements for entities managing such schemes. Finally, the BSE Sensex fell 1158.08 points or 2.14% to 52,930.31 and the CNX Nifty was down by 359.10 points or 2.22% to 15,808.00.

The US markets ended volatile trade mostly lower on Thursday as traders failed once again to find their footing in an increasingly volatile market. The volatility on markets came as traders continued to debate whether the markets have hit their bottom, with the major averages falling to their worst levels in over a year. Traders have recently expressed concerns more aggressive moves by the Fed and other central banks could lead to a period of stagflation or an outright recession. On the economic data front, the Labor Department released a report showing the annual rate of producer price growth slowed by less than expected in the month of April. The report showed the annual rate of growth in producer prices slowed to 11.0 percent in April from a record high 11.5 percent in March, although street had expected a bigger slowdown to 10.7 percent. Core producer prices, which exclude prices for food, energy and trade services, were up by 6.9 percent compared to a year ago, reflecting a modest slowdown from the 7.1 percent spike seen in the previous month. A separate report released by the Labor Department unexpectedly showed a slight increase in first-time claims for US unemployment benefits in the week ended May 7th. The Labor Department said initial jobless claims crept up to 203,000, an increase of 1,000 from the previous week's revised level of 202,000. The uptick surprised participants, who had expected jobless claims to dip to 195,000 from the 200,000 originally reported for the previous week.

Crude oil futures ended higher on Thursday, reversing earlier losses, as supply concerns and geopolitical tension in Europe got the upper hand over the economic fears dogging financial markets as inflation soars. Meanwhile, a pending European Union (EU) ban on oil from Russia, a key supplier of crude and fuels to the bloc, is anticipated to further tighten global supplies. The EU is still haggling over details of the Russian embargo, which needs unanimous support. However, a vote has been delayed as Hungary opposes the ban because it would be too disruptive to its economy. Benchmark crude oil futures for June delivery surged $0.42 or 0.4% percent to settle at $106.13 a barrel on the New York Mercantile Exchange. Brent crude for July delivery rose $0.23 or 0.2 percent to settle at $107.74 (Provisional) a barrel on London's Intercontinental Exchange.

Indian rupee ended significantly weaker against the US dollar due to weak domestic equities, persistent foreign fund outflows, surging crude oil prices and general dollar strength. US inflation data hinted at more aggressive tightening by the Federal Reserves to tackle slowdown in economies over world weighed traders' sentiments. Traders took note of report that the Reserve Bank is likely to raise inflation projections in the Monetary Policy Committee (MPC) meeting next month and would also consider a rate hike to tame inflation, which is above its comfort level. The MPC, headed by the RBI Governor, is scheduled to meet between June 6 and June 8. It has been mandated to keep retail inflation in the range of 2-6 per cent. On the global front, dollar hit its highest in two decades, as fears grew that fast-rising inflation will drive a sharp rise in interest rates that brings the global economy to a standstill. Finally, the rupee ended at 77.47 (Provisional), stronger by 22 paise from its previous close of 77.25 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 6025.89 crore against gross selling of Rs 9029.47 crore, while in the debt segment, the gross purchase was of Rs 515.09 crore with gross sales of Rs 491.88 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.56 crore against gross selling of Rs 10.42 crore.

The US markets ended mostly lower on Thursday as investors juggled signs of peaking inflation with the prospect of more aggressive rate hikes. Asian markets are trading mostly in green on Friday with MSCI's broadest index outside Japan rising 1.3 percent despite a mixed session on Wall Street overnight. Indian markets plummeted on Thursday amid a global sell-off as lingering worries surrounding inflation and rising interest rates spooked investors. Today, markets are likely to get optimistic start tracking firm trade in Asian markets. Some support will come as India's industrial production rose 1.9 per cent in March 2022. As per the Index of Industrial Production (IIP) data released by the National Statistical Office (NSO), the manufacturing sector's output grew 0.9 per cent in March 2022. However, some cautiousness may come as India's headline inflation galloped for a seventh straight month to touch an 8-year high of 7.79 per cent in April on rising food and fuel prices, raising the odds of an interest rate hike by the RBI early next month to tame prices. Meanwhile, ratings agency Crisil said price rise is getting broad-based, and the Reserve Bank is likely to respond with rate hikes of up to 1 percentage point in FY23. Traders will be concerned as Finance Secretary TV Somanathan said India's economic growth rate is likely to slow if the central bank hikes interest rates. As per a private report, India's central bank is likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes. Also, the country's foreign exchange reserves declined by $28.05 billion to $607.31 billion at the end of March this year from $635.36 billion at the end of September 2021. Infrastructure industry stocks will be in focus as Union minister Nitin Gadkari said the government is committed to expanding the national highway network across the country with the aim of constructing 18,000 km of highways in 2022-23 at a record speed of 50 km per day. There will be some reaction in consumer durable industry stocks with a private report that prices of home appliances and consumer electronics, including TV, washing machines, and refrigerators, are expected to go up by 3 to 5 per cent from May end or the first week of June as manufacturers pass on the impact of rising input costs to buyers. Traders will also be eyeing some important earnings announcement including that of SBI, Bank of Baroda, Tech Mahindra, Eicher Motors.

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

Nifty Top volumes

• Axis Bank has partnered with SpiceJet to launch the most rewarding co-branded credit card, powered by Visa that will offer a host of privileges and benefits to customers. 
• NTPC has invited bids for raising term-loan of up to Rs 5,000 crore. 
• Hindalco Industries' wholly owned subsidiary company -- Novelis Inc is planning to invest $2.5 billion to build a new low-carbon recycling and rolling plant in Bay Minette, Alabama, USA. 
• Power Grid Corporation of India has acquired Khetri-Narela Transmission from the Bid Process Coordinator - PFC Consulting.