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Market Commentary 09 May 2024
Benchmarks likely to get cautious start amid weak global cues

Indian equity benchmarks exhibited a neutral performance with high volatility throughout the day and finally ended on a flat note due to lack of fresh positive triggers. Markets made negative start amid foreign fund outflows. According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,668.84 crore on May 7. Some cautiousness also came as an industry wise analysis of the National Accounts Statistics 2024 data showed gross capital formation (GCF) - or investment - in manufacturing, construction, and mining sectors contracted in FY23 primarily due to a fall in export demand and low private consumption during the year.  Besides, the Ministry of Statistics and Programme Implementation (MoSPI) it its National Account Statistics 2024 stated that net household savings declined sharply by Rs 9 lakh crore to Rs 14.16 lakh crore in three years to 2022-23. The net household savings peaked at Rs 23.29 lakh crore in 2020-21. These have been on the decline since then. However, markets erased initial losses and managed to keep their heads above water in afternoon deals, as traders took some support with Chief Economic Adviser in the Ministry of Rural Development Kuntal Sensarma's statement that robust capital expenditure by the government and improvement in business confidence will push the country's economic growth in 2024-25. He said that the focus areas in 2024-25 should be infrastructure growth, inclusive development and harnessing demographic dividend, among others. Market participants also got support with government's chief economic adviser -- V. Anantha Nageswaran's statement that India does not see any nasty upside to inflation at the moment, and expects its economy to expand by more than 7 per cent in the current fiscal year. However, markets failed to hold gains and ended flat as uncertainty around election outcome and subdued corporate earnings also kept investors on the sidelines. Finally, the BSE Sensex fell 45.46 points or 0.06% to 73,466.39, while the CNX Nifty remained unchanged at 22,302.50.

The US markets ended mostly lower on Wednesday amid lingering uncertainty about the outlook for interest rates following Tuesday's remarks by Minneapolis Federal Reserve President Neel Kashkari. Kashkari suggested interest rates may need to remain at current levels for an extended period and said he couldn't rule out another rate increase. Traders were reluctant to make more significant moves amid quiet day on the U.S. economic front. A report on weekly jobless claims may attract attention on Thursday, while the University of Michigan is due to release its preliminary reading on consumer sentiment in May on Friday. On the sectoral front, reflecting the lackluster performance by the broader markets, most of the major sectors showed only modest moves on the day. Networking stocks showed a strong move to the upside, however, with the NYSE Arca Networking Index climbing by 1.1 percent. Arista Networks (ANET) helped lead the sector higher, surging by 6.5 percent after reporting better than expected first quarter results. Tobacco and telecom stocks also saw notable strength on the day, while biotechnology and commercial real estate stocks moved to the downside. Among individual stocks, shares of Uber Technologies (UBER) moved sharply lower after the ride-hailing giant reported an unexpected first quarter loss on weaker than expected booking revenue. Cloud communications company Twilio (TWLO) also came under pressure after reporting first quarter results that exceeded estimates but providing disappointing second quarter revenue guidance.

Crude oil futures ended higher on Wednesday after official data from the Energy Information Administration (EIA) showed crude inventories fell in the week ended May 3rd. Data from the Energy Information Administration (EIA) showed crude oil inventories fell by 1.4 million barrels last week after surging by 7.3 million barrels a week earlier. However, oil prices fell earlier in the session after a border crossing in southern Gaza reopened for humanitarian aid deliveries. Benchmark crude oil futures for June delivery higher $0.61 or about 0.78% to settle at $78.99 a barrel on the New York Mercantile Exchange. Brent crude for July delivery rose $0.42 or 0.51% to $83.58 per barrel on London's Intercontinental Exchange.

Indian rupee traded in a very narrow range and ended almost unchanged against the US dollar on Wednesday, as the support from easing crude oil prices was negated by strong dollar demand. A muted trend in domestic equities and significant foreign fund outflows dented investors' sentiments. However, traders took some support with government's chief economic adviser V. Anantha Nageswaran's statement that India does not see any nasty upside to inflation at the moment, and expects its economy to expand by more than 7 per cent in the current fiscal year. On the global front, the dollar edged up on Wednesday, recouping some of the losses stemming from renewed bets on Federal Reserve rate cuts this year, while the yen weakened for a third day, keeping investors wary of the risk of intervention from Tokyo. Finally, the rupee ended at 83.52 (Provisional), weaker by 1 paisa from its previous close of 83.51 on Tuesday.

The FIIs as per Wednesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 14222.30 crore against gross selling of Rs 17165.28 crore, while in the debt segment, the gross purchase was of Rs 1887.44 crore with gross sales of Rs 2615.89 crore. Besides, in the hybrid segment, the gross buying was of Rs 11.16 crore against gross selling of Rs 44.45 crore.

The US markets ended mostly in red on Wednesday as investors now awaiting Producer Price Index (PPI) and Consumer Price Index (CPI) for fresh update on the inflation trajectory as bets for a rate cut in September rose post last week's jobs data. Asian markets are trading mostly lower on Thursday ahead of China's April trade figures and Japan's pay statistics. Indian markets ended flat in a volatile trading session on Wednesday as investors turned cautious amid the ongoing Lok Sabha elections showcasing declining voter turnout. Today, markets are likely to get cautious start amid weakness in global markets. Foreign fund outflows likely to dent sentiments. Foreign Institutional Investors have net sold Rs 6,669.10 crore worth of Indian shares on May 08. There will be some cautiousness amid a private report that India's consumer price inflation is likely to have eased to 4.80% in April, just shy of March's rate as food inflation remains sticky. As per the report, with parts of the country experiencing a heatwave, food prices continue to pose an additional risk to India's inflation trajectory. However, some support may come as Chief Economic Adviser V Anantha Nageswaran said there was a high possibility of GDP growth touching 8 per cent in FY24 on the back of robust growth registered during the three quarters of the financial year ended March 2024. India's gross domestic product (GDP) grew by 8.4 per cent in the third quarter ended December 2023. In the second quarter, the GDP growth was 7.6 per cent while 7.8 per cent in the first quarter. Meanwhile, Capital markets regulator Sebi has extended the settlement scheme period till June 10 for entities involved in reversal trades in the stock options segment on BSE in 2014 and 2015. The settlement scheme commenced on March 11 and was scheduled to conclude on May 10. Shares of NBFCs, mainly those involved in the business of Gold loans, may be in focus after the RBI directed these firms not to lend in cash of more than Rs 20,000 for gold loans, citing the Income Tax act. Sugar stocks will be in limelight amid a private report that India's government is not ready to take a decision about whether or not to allow sugar exports this year, and will need several months to assess the issue. Moreover, investors will await key earnings reports, including those of State Bank of India (SBI), Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL), and Asian Paints among others.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,302.50

22,202.25

22,385.70

BSE Sensex

73,466.39

73,131.89

73,742.90

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

301.29

166.40

164.24

167.84

SBIN

279.08

811.40

799.94

822.44

HDFC Bank

208.44

1483.50

1476.91

1493.51

ICICI Bank

199.13

1126.50

1117.70

1133.65

Power Grid

187.54

301.25

294.55

305.40

  • Infosys has collaborated with Yunex Traffic to help accelerate their SAP S/4HANA-led digital transformation journey across 16 countries, including the United States, United Kingdom, and Germany.
  • Hero MotoCorp has reported 16.36% rise in its consolidated net profit at Rs 943.46 crore for Q4FY24 as compared to Rs 810.80 crore for same quarter in the previous year.
  • L&T has won multiple orders in India and abroad for its power transmission & distribution business.
  • Bajaj Finance has raised Rs 7,673.61 crore through the allotment of 7,59,500 NCDs, at face value of Rs 1 lakh each on private placement basis.

News Analysis