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NSE Intra-day chart (18 May 2022)
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Market Commentary 19 May 2022
Markets likely to make gap-down opening amid global sell-off


After trading higher for better part of the day, Indian equity benchmarks turned volatile during the afternoon session, and ultimately ended marginally lower on Wednesday. Initially, supportive global cues led to a positive start of the markets. Sentiments remained upbeat as rating agency ICRA has forecasted 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. Some support also came as the Directorate General of Trade Remedies (DGTR) has initiated several systemic and procedural changes for improving the ease of doing business and reducing the compliance burden on stakeholders. Traders also took a note of RBI article stating that improving infrastructure, ensuring low and stable inflation, and maintaining macroeconomic stability is critical for reviving animal spirits and spurring growth. It said the Indian economy consolidated its recovery, with most constituents surpassing pre-pandemic levels of activity. However, volatility struck the bourses in second half of the session as key gauges erased all the gains to end lower, as traders turned cautious 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. Some concern also came as credit rating agency, S&P Global Ratings in its Global Macro Update to Growth Forecasts report has cut India's growth projection for the current fiscal to 7.3 percent from 7.8 percent earlier pegged in December last year amid rising inflation and the longer-than-expected Russia-Ukraine conflict. Meanwhile, RBI's monthly bulletin for May 2022 said 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. Finally, the BSE Sensex fell 109.94 points or 0.20% to 54,208.53 and the CNX Nifty was down by 19.00 points or 0.12% to 16,240.30.


The US markets ended deeply in red with Target losing around a quarter of its stock market value and highlighting worries about the US economy after the retailer became the latest victim of surging prices. Retail stocks helped lead the markets lower on the day, with the Dow Jones US Retail Index plunging by 7.7 percent to its lowest closing level in almost two years. Target (TGT) posted a particularly steep loss after the discount retailer reported quarterly earnings that missed street estimates. Meanwhile, Substantial weakness was also visible among transportation stocks, as reflected by the 7.4 percent nosedive by the Dow Jones Transportation Average. Housing stocks also saw significant weakness on the day, dragging the Philadelphia Housing Sector Index down by 4.6 percent. On the economic data front, a report released by the Commerce Department showed a modest decrease in new residential construction in the month of April. The Commerce Department said housing starts edged down by 0.2 percent to an annual rate of 1.724 million from a revised rate of 1.728 million in March. The slight drop in housing starts came as single-family housing starts plunged by 7.3 percent to an annual rate of 1.100 million. Meanwhile, the report showed building permits, an indicator of future housing demand, tumbled by 3.2 percent to an annual rate of 1.819 million from a revised rate of 1.879 million in March.


Crude oil futures ended lower on Wednesday despite data showing a drop in crude inventories in the week ended May 13. Data released by the Energy Information Administration (EIA) said crude inventories dropped by 3.4 million barrels last week (May 13), as against expectations for a rise of 2.1 million barrels. Further, a stronger dollar amid rising prospects of sharper interest rate hikes by the Federal Reserve too contributed to the drop in crude oil prices. Benchmark crude oil futures for June delivery fell $2.81 or 2.5% percent to settle at $109.59 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $2.41 or 2.4 percent to settle at $109.52 (Provisional) a barrel on London's Intercontinental Exchange.


Erasing previous session gains, Indian rupee settled substantially weaker amid unabated foreign fund outflows and stronger greenback in overseas markets. Sentiments were fragile as S&P Global Ratings cut India's growth projection for the current fiscal to 7.3 percent from 7.8 percent earlier on rising inflation and the longer-than-expected Russia-Ukraine conflict. In its Global Macro Update to Growth Forecasts, S&P said inflation remaining higher for a long is a worry, which requires central banks to raise rates more than what is currently priced in, risking a harder landing, including a larger hit to output and employment. On the global front, dollar edged higher on Wednesday, a day after posting its biggest single-day drop in more than two months after U.S. Federal Reserve chief Jerome Powell struck a more hawkish tone as the central bank battles to rein in surging inflation. Finally, the rupee ended at 77.61 (Provisional), weaker by 17 paise from its previous close of 77.44 on Tuesday.


The FIIs as per Wednesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6301.04 crore against gross selling of Rs 7963.46 crore, while in the debt segment, the gross purchase was of Rs 242.74 crore against gross selling of Rs 154.88 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.47 crore against gross selling of Rs 7.98 crore.


The US markets ended lower on Wednesday as concerns about rising inflation on economic growth soured sentiment. Asian markets are trading in red on Thursday as fears resurface about worsening inflation and its impact on world economic growth. Indian markets failed to hold early gains and ended lower on Wednesday. Today, benchmark indices are likely to make gap-down opening amid a global sell-off. Traders will be concerned as the United Nations said India is expected to grow 6.4% in 2022, well below the 8.8% growth in 2021, as higher inflationary pressures and uneven recovery of the labour market are likely to curb private consumption and investment. There will be some cautiousness as India Ratings and Research said the average headline inflation is set to accelerate to a nine-year high at 6.9 per cent in FY23, and the Reserve Bank may go for more rate hikes during the fiscal. It added that the RBI will hike rates by another 75 basis points and possibly up to 125 basis points (1.25 percentage point) as well if the turn of events and data are very adverse. However, some respite may come with report that global rating agency Moody's Investor Service does not see the Russia-Ukraine war to derail India's economic recovery as the country has come back on track following a gruelling COVID-19 pandemic. Some support may come with a private report that foreign direct investment (FDI) has been rising annually in contrast with the heavy selling by foreign portfolio investors (FPIs) in recent times. Gross FDI inflows were at $83.6 billion in FY22, surpassing $82 billion a year earlier. Meanwhile, the Union Cabinet has approved advancing the target of blending 20 per cent ethanol in petrol by 5 years to 2025-26 as well as allowing more feedstocks for the production of biofuels in a bid to cut reliance on imported oil for meeting the country's energy needs. There will be some buzz in the banking industry stocks as global rating agency Moody's said that India's economy is back on track after the pandemic and the military conflict will not derail the country's recovery, creating favorable operating conditions for the country's banks. Edible oil industry stocks will be in focus as Solvent Extractors' Association of India (SEA) said oilmeals export increased by 10 per cent in April to nearly 3.34 lakh tonnes on higher shipments of rapeseed meal. There will be some reaction in textile industry stocks as the textiles ministry has asked the revenue department to remove duty on cotton imports that reach Indian shores by September 30. Telecom industry stocks will be in limelight with a private report that telecom gear makers say that if all goes well, they are ready to roll out the first phase of 5G services from October this year and cover the country's top 30-50 cities (in limited areas) by March 2023. Investors also awaited the last leg of corporate earnings from India Inc for cues.


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



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  • Reliance Industries is reportedly planning to submit a bid for Boots UK, a British medical retail chain, by month-end in a transaction which would cost as much as $10 billion. 
  • M&M has sold entire stake in Meru Travel Solutions to Mahindra Logistics and following the sale, the shareholding of the company in MTSPL has become Nil. 
  • HDFC and HDFC Life Insurance Company have made strategic investment in Xanadu Realty. 
  • Sun Pharmaceutical Industries' one of wholly-owned subsidiaries is planning to launch a first-in-class oral drug, Bempedoic Acid, in India for reducing LDL cholesterol.
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