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NSE Intra-day chart (17 May 2022)
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Market Commentary 18 May 2022
Benchmarks likely to get flat-to-negative start


Tuesday turned out to be a wonderful day of trade for the Dalal Street, with both Sensex and Nifty closing with gains of over two and half percent each and recapturing their crucial 54,300 (Sensex) and 16,250 (Nifty) levels. The markets' mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength, as sentiments got a boost with Sanjiv Bajaj, the newly-elected president of industry body CII, stating that the Reserve Bank's decision to raise benchmark interest rates and the likelihood of a good monsoon will help in containing inflation. CII estimates India's GDP growth to be in the band of 7.4-8.2 percent, depending upon the global oil prices. Traders took a note of report that the commerce ministry's investigation arm DGTR has recommended for continuation of anti-dumping duty on Chinese solar glass for two years with a view to guard domestic players from cheap imports. Markets extended rally in second half of trade even as data showing that India's inflation based on wholesale price index (WPI) surged further to 15.08% for the month of April as against 14.55% in March. The annual rate of inflation was 15.08% in April 2022 as compared to 10.74% in April 2021, due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, food articles, non-food articles, food products and chemicals & chemical products etc. as compared to the corresponding month of the previous year. Market participants overlooked SBI Research's report stated that amidst the continued rise in inflation, it is now almost certain that the Reserve Bank of India (RBI) will raise key policy rates in the June and August policy review meetings, thereby taking it to the pre-pandemic level of 5.15 per cent by August 2022, and added that even after the rate hikes, inflation will take time to moderate in India. Traders also paid no heed towards private report stated that the value of foreign portfolio investors (FPI) holdings in domestic equities reached $612 billion in the March quarter, down 6 percent from the preceding quarter. This was largely on the back of a massive sell-off by foreign investors and a correction in the Indian equity markets. Finally, the BSE Sensex rose 1344.63 points or 2.54% to 54,318.47 and the CNX Nifty was up by 417.00 points or 2.63% to 16,259.30.


The US markets ended sharply higher on Tuesday as the market's rebound from the year's sharp declines gained steam. Strong retail sales and industrial production data, some upbeat earnings updates and Fed Chair Jerome Powell's positive comments about the strength of the economy helped lift sentiment. Powell said he is confident that the central bank can raise rates and deal with inflation without sending the economy into recession, although he noted that it will be a challenging task. Powell said the economy is strong. We think it is well positioned to withstand less accommodative monetary policy. On the economic data front, retail sales in the US increased by more than expected in the month of April, according to a report released by the Commerce Department on Tuesday. The report said retail sales climbed by 0.9 percent in April after jumping by an upwardly revised 1.4 percent in March. Street had expected retail sales to rise by 0.7 percent compared to the 0.5 percent increase originally reported for the previous month. Excluding a rebound in sales by motor vehicle and parts dealers, retail sales rose by 0.6 percent in April after surging by 2.1 percent in March. Ex-auto sales were expected to edge up by 0.3 percent.


Crude oil futures ended lower on Tuesday reacting to reports that the Biden administration is set to ease some of the sanctions imposed on Venezuela. The US government is reportedly moving to ease a few economic sanctions on Venezuela in a gesture meant to encourage resumed negotiations between the US-backed opposition and the government of President Nicolás Maduro. The Treasury Department has issued a narrow license authorizing Chevron to negotiate on potential future activity in Venezuela. Benchmark crude oil futures for June delivery fell $1.80 or 1.6% percent to settle at $112.40 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $1.83 or 1.61 percent to settle at $111.99 (Provisional) a barrel on London's Intercontinental Exchange.


Indian rupee ended higher against dollar on persistent selling of the American currency by exporters. Traders got support as Sanjiv Bajaj, the newly-elected president of industry body CII, said the Reserve Bank's decision to raise benchmark interest rates and the likelihood of a good monsoon will help in containing inflation. Traders shrugged off report where wholesale price-based inflation soared to a record high of 15.08 per cent in April mainly on account of spiralling prices of food, fuel and other commodities, which may prompt the Reserve Bank to hike interest rates in upcoming monetary policy review next month. On the global front, dollar eased for a third straight day on Tuesday as a jump in sentiment across global markets encouraged investors to trim bets on the safe haven currency, which hit a two-decade high last week. Finally, the rupee ended at 77.47 (Provisional), stronger by 8 paise from its previous close of 77.55 on Friday.


The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 13022.55 crore against gross selling of Rs 16537.57 crore, while in the debt segment, the gross purchase was of Rs 503.48 crore against gross selling of Rs 2613.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 16.47 crore against gross selling of Rs 14.94 crore.


The US markets ended higher on Tuesday lifted by Apple, Tesla and other mega-cap growth stocks after strong retail sales in April eased worries about a slowing economic growth. Asian markets are trading mostly in green on Wednesday amid optimism on easing crackdown on tech firms and COVID in China. Indian markets surged on Tuesday amid gains across sectors - a second straight day of higher closing following a sell-off that stretched to six days in a row. Today, markets are likely to get flat-to-negative start despite positive cues from global peers. Traders will be concerned with Niti Aayog CEO Amitabh Kant's statement that India has done extremely well on the vaccination front and the challenge for the country is to grow 8-9 per cent over the next three decades. Kant further said that rise in per capita income of India is critical for removing poverty in the country. There will be some cautiousness as an article published in the RBI Bulletin stated that improving infrastructure, ensuring low and stable inflation, and maintaining macroeconomic stability are critical for reviving animal spirits and spurring growth. Besides, Reserve Bank of India turned net seller of the US currency in March after it sold $20.101 billion on a net basis in the spot market. However, some support may come later in the day as rating agency Icra forecast the economy to grow 12-13 per cent in the first quarter of the current fiscal, citing the second highest business activity index reading in 13 months in April. Traders may take note of report that the Directorate General of Foreign Trade (DGFT) has allowed 1,67,211 tonnes of wheat to be loaded on four partially loaded vessels at Kandla port after the department of commerce partially relaxed the ban on exports earlier in the day. Meanwhile, as taxpayers face technical glitch on the GST portal, the government has said it is considering extending the April tax payment deadline and has directed Infosys for early resolution of the problem. There will be some reaction in telecom stocks as Digital Communication Commission cleared auction of 5G spectrum with a validity of 20 years, but decided not to auction part of the millimetre band between 27.5 GHz to 28.5 GHz for the time being. Further, Luxury and premium watch retailer Ethos' IPO will open today for subscription. It raised around Rs 142 crore from anchor investors ahead of the share sale. There will be some earnings announcements too to keep the markets buzzing.


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