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Market Commentary 03 June 2024
Benchmarks likely to get gap-up start as exit polls indicate NDA win

Indian equity benchmarks snapped their losing run and ended marginally higher in the volatile session on Friday, on value-buying in Utilities, Realty and Power stocks.  Markets made a gap-up opening and stayed in green for most part of the trade, as traders took support with report stating that the southwest monsoon set in over the Kerala coast and parts of the Northeast earlier than the forecast, marking the start of its four-month journey over India. An early and timely onset of monsoon is also a good sign for 2024 kharif crop production. Some support also came as the Reserve Bank of India (RBI), in its annual report, projected Indian economy to grow at 7 percent in the current financial year with risks evenly balanced. Further, the report said India' GDP has expanded at a robust pace in 2023-24, with real GDP growth accelerating to 7.6 percent from 7 percent in the previous year - the third successive year of 7 percent or above growth. However, markets trimmed some of their initial gains in late morning trade as market participants remained cautious ahead of India's gross domestic product (GDP) data for Q4FY24 and the results of the Lok Sabha polls. Traders remained cautious with a private report stating that India's economy is expected to have grown at a slower pace in the January-March quarter than the previous three months, dampened by a moderation in manufacturing and urban spending, but the street see economic momentum remaining strong in Asia's third-largest economy. Some concern also came as the Reserve Bank's annual report showed that the number of frauds in the banking sector went up to 36,075 in 2023-24 year-on-year, but the amount involved reduced by 46.7 per cent to Rs 13,930 crore. However, markets extended gains in late afternoon deals but failed to hold momentum and settled marginally higher. Finally, the BSE Sensex rose 75.71 points or 0.10% to 73,961.31, and the CNX Nifty was up by 42.05 points or 0.19% points to 22,530.70.

The US markets ended mostly in green on Friday, with the Dow showing a substantial move to the upside, bouncing off its lowest closing level in almost a month. The mostly higher close on Wall Street came following the release of a highly anticipated Commerce Department report showing consumer prices in the U.S. increased in line with economist estimates in the month of April, while core consumer prices edged up by slightly less than expected. The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.3 percent for the third straight month in April, matching street estimates. Meanwhile, the report said the core PCE price index, which excludes food and energy prices, crept up by 0.2 percent in April after rising by 0.3 percent in March. Street had expected another 0.3 percent increase. The annual rates of growth by the PCE price index and the core PCE price index were both unchanged from the previous month at 2.7 percent and 2.8 percent, respectively. The readings matched expectations. The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending. The Commerce Department said real personal spending, which excludes price changes, edged down by 0.1 percent in April after climbing by 0.4 percent in March.

Crude oil futures magnify their losses and ended lower on Friday, amid concerns about the outlook for demand. Expectations of interest rate cuts by central banks, and hopes that the OPEC+ will extend production cuts into the third quarter helped limit oil's losses. Data showing a contraction in China's manufacturing sector has added to concerns about the outlook for oil demand. The latest survey from the National Bureau of Statistics showed China slipped into contraction territory in May, with a manufacturing PMI score of 49.5. Meanwhile, a report from Baker Hughes said the oil rig count in the U.S. dropped by one this week to 496, which is less than 59 rigs a year ago. Benchmark crude oil futures for July delivery fell $0.92 or about 1.88% to settle at $76.99 a barrel on the New York Mercantile Exchange. Brent crude for July delivery was down $0.71 or 0.85% to $81.17 per barrel on London's Intercontinental Exchange.

Indian rupee ended lower against the U.S. dollar on Friday amid volatile domestic equity markets and unabated outflow of foreign funds. Traders overlooked Reserve Bank of India's (RBI) annual report, projected Indian economy to grow at 7 percent in the current financial year with risks evenly balanced. Further, the report said India' GDP has expanded at a robust pace in 2023-24, with real GDP growth accelerating to 7.6 percent from 7 percent in the previous year - the third successive year of 7 percent or above growth. On the global front, the dollar headed on Friday for its first monthly decline this year, ahead of key inflation data, after a downward revision to first-quarter U.S. economic growth suggested the Federal Reserve may still have room to cut interest rates this year. Finally, the rupee ended at 83.44 (Provisional), weaker by 14 paise from its previous close of 83.30 on Thursday.

The FIIs as per Friday'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 21863.57 crore against gross selling of Rs 22985.62 crore, while in the debt segment, the gross purchase was of Rs 2111.54 crore with gross sales of Rs 700.23 crore. Besides, in the hybrid segment, the gross buying was of Rs 20.10 crore against gross selling of Rs 21.42 crore.

The US markets ended mostly higher on Friday after the PCE price index data came in in-line with expectation, the PCE is Fed's preferred inflation gauge. Asian markets are trading in green on Monday after a private survey showed China's manufacturing activity expanded at its fastest pace in nearly two years. Indian markets ended with modest gains on Friday as a downward revision to U.S. first-quarter GDP data revived hopes for Fed rate cuts this year. Today, markets are likely to make huge gap-up start following the release of exit polls, which predict a strong victory for the NDA coalition, coupled with robust Q4FY24 GDP data. India's Q4 GDP grew 7.8 per cent, beating estimates. Now, all eyes are on the Lok Sabha election results, which will be announced on June 04. Foreign fund inflows likely to aid sentiments. Foreign institutional investors (FIIs) bought shares worth Rs 1,613.24 crore on May 31. Traders will be taking encouragement as Moody's Ratings projected India to grow 6.8 per cent in the current year, followed by 6.5 per cent in 2025, on the back of strong economic expansion, along with post-election policy continuity. It said strong, broad-based growth will likely be sustained with post-election policy continuity. Some support will as the government data showed that India's goods and services tax (GST) collection in May rose 10 per cent year-on-year (Y-o-Y) to Rs 1.73 trillion, taking overall collection to Rs 3.83 trillion so far in the current financial year (FY25). Some optimism will come as the growth of eight core industries rose to 6.2% in April from 6% in March, mainly due to higher growth achieved in natural gas, refinery products, coal, steel and electricity sectors. Besides, aided by higher than expected tax receipts, the Union government contained the fiscal deficit - the gap between expenditure and revenue - at 5.6 per cent of the gross domestic product (GDP) in 2023-24 (FY24), compared with the Revised Estimates of 5.8 per cent. Meanwhile, market participants will be looking ahead to the manufacturing PMI data to be out later in the day for more directional cues. There will be some buzz in the auto stocks reacting to their sales numbers. Banking stocks will be in focus as Union Finance Minister Nirmala Sitharaman said the government is dedicated to expanding formal banking access and will continue to take decisive measures to strengthen and stabilise the banking system. There will be some reaction in aviation industry stocks as jet fuel or ATF price was reduced by a steep 6.5 per cent and that of commercial LPG used by hotels and restaurants by Rs 69 per 19-kg cylinder on declining international oil prices. Aviation turbine fuel (ATF) price was cut by Rs 6,673.87 per kilolitre, or 6.5 per cent, to Rs 94,969.01 per kl in the national capital, according to a price notification of state-owned fuel retailers. In the primary market, Kronox Lab Sciences' Rs 130 crore IPO to open for subscription on Monday. The company is offering 66.99 lakh shares in the price band of Rs 129 - Rs 136. The offer closes on June 05, 2024.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,530.70

22,445.95

22,634.60

BSE Sensex

73,961.31

73,658.01

74,371.75

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

837.14

167.45

164.99

168.94

Infosys

371.14

1407.00

1392.41

1429.16

HDFC Bank

370.40

1525.95

1514.64

1536.64

Power Grid

369.29

309.00

305.96

311.76

NTPC

305.16

359.65

354.55

365.70

  • Hero MotoCorp has launched the latest generation of the iconic Splendor -- the Splendor+ XTEC 2.0 -- to celebrating the 30th anniversary of the world's highest-selling motorcycle.
  • HDFC Bank's subsidiary -- HDFC Capital Advisors has entered into a Share Subscription Agreement for acquisition of 1,043 Equity Shares of Truboard Technologies.
  • Sun Pharmaceutical Industries' subsidiary -- Sun Pharmaceutical Industries Inc. is recalling 35,069 bottles of medication used to treat high pressure inside the eye due to glaucoma or other eye diseases.
  • Maruti Suzuki India has reduced prices of its AGS (Auto Gear Shift) variants across its models.

News Analysis