Snapping 3-day losing run, Indian equity benchmarks made a sharp recovery and ended with gains of around a percent on Thursday led by buying in Metal, Banking and Basic Materials stocks. Benchmarks made positive start, as traders took support with a private report that India's economy is expected to have grown at 9.2 per cent in the fiscal ended March 2022, after having contracted by 7.3 per cent in the previous financial year, aided by resilience in the rural economy, uptick in bank credit and rising GST collections. However, key gauges erased initial gains and soon slipped into red terrain in morning deals, as traders turned cautious with continued selling by foreign investors. Provisional data available on the NSE showed that foreign institutional investors (FIIs) have net sold shares worth Rs 1,803.06 crore on May 25. Some concern also came as research and ratings agency CRISIL in its latest study has said increased cost of solar modules and steel combined with higher logistics cost will impact 5 giga watt (GW) solar capacity under implementation in the private sector. Adding to the pessimism, a private report stated that the current price situation leaves hardly any scope for rationalisation of GST rates on goods and services. But, markets witnessed healthy short covering towards the closing hours that helped key indices to end higher. Some support came as real estate developers in the national capital region said the central government's move to ease prices of iron, steel and cement will provide a significant relief to builders as well as homebuyers. Traders overlooked report that Moody's Investors Service slashed India's economic growth projection to 8.8 percent for 2022 from 9.1 percent earlier, citing high inflation. It stated the rise in crude oil, food, and fertilizer prices will weigh on household finances and spending in the months ahead. Rate hike to prevent energy and food inflation from becoming more generalized will slow the demand recovery's momentum. Finally, the BSE Sensex rose 503.27 points or 0.94% to 54,252.53 and the CNX Nifty was up by 144.35 points or 0.90% to 16,170.15.  

The US markets ended higher on Thursday, extending their previous session's gains. The strength on markets came as traders continued to pick up stocks at relatively reduced levels following recent weakness. The major averages have recently fallen to their lowest levels in over a year, but traders seemed to be expressing some optimism that the markets have finally found a bottom. Adding to the positive sentiment, the Labor Department released a report showing first-time claims for US unemployment benefits pulled back by more than expected in the week ended May 21st. The report showed initial jobless claims dipped to 210,000, a decrease of 8,000 from the previous week's unrevised level of 218,000. Street had expected jobless claims to edge down to 215,000. However, a separate report from the Commerce Department showed economic activity in the US slumped by slightly more than previously estimated in the first quarter of 2022. The Commerce Department said real domestic product slid by 1.5 percent in the first quarter compared to the previously reported 1.4 percent drop. Street had expected the decrease in GDP to be revised to 1.3 percent. Meanwhile, the National Association of Realtors (NAR) also released a report showing pending home sales plummeted by much more than expected in the month of April. NAR said its pending home sales plunged by 3.9 percent to 99.3 in April after tumbling by 1.6 percent to a revised 103.3 in March. Street had expected pending home sales to descend by 2.0 percent compared to the 1.2 percent slump originally reported for the previous month.

Crude oil futures ended higher with rally of over three percent on Thursday on increasing signs of tight supply in the market ahead of the peak U.S. driving season that kicks off on Memorial Day (May 30). Meanwhile, European Council President Charles Michel said that he is confident that an agreement can be reached before the council's next meeting on May 30. Further, a weak dollar and the possibility of EU sanctions on Russian oil sales also contributed to the jump in oil prices. Benchmark crude oil futures for July delivery rose $3.76 or 3.4% percent to settle at $114.09 a barrel on the New York Mercantile Exchange. Brent crude for July delivery gained $3.37 or about 3.40 percent to settle at $117.40 a barrel on London's Intercontinental Exchange.

Indian rupee ended marginally lower against dollar on Thursday on increased demand for the greenback from importers and banks. Traders remain concerned as Moody's Investors Service slashed India's economic growth projection to 8.8 percent for 2022 from 9.1 percent earlier, citing high inflation. However, losses remain capped as some support came with a private report that India's economy is expected to have grown at 9.2 per cent in the fiscal ended March 2022, after having contracted by 7.3 per cent in the previous financial year, aided by resilience in the rural economy, uptick in bank credit and rising GST collections. On the global front, U.S. dollar was little changed on Thursday, hovering above a one-month low, as minutes from the Federal Reserve's May meeting contained few surprises, with most participants favoring additional 50 basis point rate hikes at the June and July meetings. Finally, the rupee ended at 77.61 (Provisional), weaker by 6 paise from its previous close of 77.55 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6538.26 crore against gross selling of Rs 8155.32 crore, while in the debt segment, the gross purchase was of Rs 514.82 crore with gross sales of Rs 252.65 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.41 crore against gross selling of Rs 14.94 crore.

The US markets ended higher on Thursday after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Federal Reserve put investors in a buying mood. Asian markets are trading in green on Friday thanks to strong results from regional tech firms and US retailers. Indian markets finished a volatile session higher on Thursday - the last day of the May series of derivatives. Gains across most sectors pushed the headline indices higher, helping them halt a three-day-long losing streak. Today, benchmark indices are likely to make optimistic start tracking strength across global markets. Some support will come as economic research think-tank Centre for Monitoring Indian Economy (CMIE) has estimated that labour participation rate (LPR) was higher in rural India during the period January to April 2022. LPR, defined as the number of persons of the labour force employed as a percentage of working age population, is 40.9 in rural India as compared to 37.4 in urban India during the period January to April 2022. Besides, in a bid to push public expenditure, the government has relaxed norms for ministries and department to utilise unspent amounts in the subsequent quarter in the same financial year. However, there may be some cautiousness with SBI's statement that upcoming release of official data for economic performance is likely to register a 2.7 per cent growth for the January-March period, and the FY22 growth is expected to be 8.5 per cent. Traders may take note of a private report that the Reserve Bank will opt for a larger, 0.50 per cent, hike in key rates at its next monetary policy review in June to protect medium term economic stability in face of the uncomfortable inflation situation. Meanwhile, the government has waived late fees for two months till June for delayed filing of GST returns for financial year 2021-22 by small taxpayers registered under the composition scheme. Sugar industry stocks will be in focus with a private report that India sugar prices are likely to remain firm despite New Delhi's move to cap exports as stockpiles are set to fall to the lowest level in five years amid record shipments and robust local demand. There will be some reaction in auto and insurance industry stocks as the ministry of road transport and highways revised base premium rates for third-party insurance of vehicles for the first time since the onset of Covid-19. As per a statement by the ministry, the new rates, which are applicable from 1 June, will see discounted prices for third party insurance in electric vehicles, hybrid vehicles, and educational institute buses. Further, the country's second largest manufacturer of non-urea fertilisers and DAP (diammonium phosphate) Paradeep Phosphates will make its debut on the bourses today. Its issue price is fixed at Rs 42. Investors awaited the last leg of corporate earnings from India Inc for cues.

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

Nifty Top volumes

• Coal India has reported 46.33% rise in its consolidated net profit at Rs 6715.00 crore for Q4FY22 as compared to Rs 4588.96 crore for Q4FY21. 
• UPL has entered into new supply agreement for Spirotetramat, an insecticide created and developed by Bayer for integrated pest control. 
• HCL Technologies has signed an end-to-end IT services transformation agreement with the VELUX Group, the leading manufacturer of roof windows. 
• State Bank of India has unveiled personal loan product Xpress Credit for salaried customers on its YONO digital banking platform.