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Market Commentary 10 May 2024
Benchmarks likely to get optimistic start on Wall Street gains

Indian equity benchmarks ended with heavy losses of around one and half percent on Thursday, with Sensex and Nifty closing below their crucial psychological levels of 72,450 and 22,000, respectively. Selling pressure from foreign investors, coupled with uncertainty around the country's ongoing elections have kept investors jittery. According to the provisional data available on the NSE, Foreign institutional investors (FII) offloaded shares worth net Rs 6,669.10 crore on Wednesday. Markets made cautious start and stayed under pressure throughout the day, as traders remain concerned with a private report stating 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. Markets saw further fall in the second half of the trade and ended near their intraday low points, as domestic sentiments got hit after the Reserve Bank of India (RBI) in its latest data report showed that India's outward foreign direct investment (OFDI) commitments declined 18.29% to $2943.98 million in April 2024 as compared to $3602.95 million in April 2023. In March 2024, it stood at $3,963.94 million. Traders also failed to draw any sense of relief from Chief Economic Adviser V Anantha Nageswaran's statement that 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. Finally, the BSE Sensex fell 1062.22 points or 1.45% to 72,404.17, and the CNX Nifty was down by 345.00 points or 1.55% points to 21,957.50.

The US markets ended in green on Thursday following the release of a Labor Department report showing a much bigger than expected increase by first-time claims for U.S. unemployment benefits in the week ended May 4th. The report said initial jobless claims climbed to 231,000, an increase of 22,000 from the previous week's revised level of 209,000. Street had expected jobless claims to inch up to 210,000 from the 208,000 originally reported for the previous week. With the much bigger than expected increase, jobless claims reached their highest level since hitting 234,000 in week ended August 26th. The data may add to recently renewed optimism that the Federal Reserve will lower interest rates in the coming months. On the sectoral front, Telecom stocks moved sharply higher over the course of the trading session, resulting in a 4.2 percent spike by the NYSE Arca North American Telecom Index. Significant strength was also visible among gold stocks, as reflected by the 2.5 percent jump by the NYSE Arca Gold Bugs Index. The strength in the sector came amid an increase by the price of gold. Commercial real estate stocks also showed a strong move to the upside on the day, driving the Dow Jones U.S. Real Estate Index up by 2.1 percent. Among individual stocks, shares of AppLovin skyrocketed after the mobile technology company reported first quarter results that beat expectations on both the top and bottom lines. Glasses retailer Warby Parkeralso showed a substantial move to the upside after reporting a narrower than expected first quarter loss on revenues that exceeded estimates.

Crude oil futures ended higher on Thursday lifted by optimism about the outlook for demand after data showed an increase in Chinese imports, and on recent data showing a bigger than expected drop in U.S. crude inventories last week. Renewed concerns about geopolitical tensions contributed as well to the rise in oil prices. A stalemate in ceasefire talks between Israel and Hamas following Israel's continued aggression, and Russia's ongoing war against Ukraine has raised concerns about potential supply disruptions. Benchmark crude oil futures for June delivery higher $0.27 or about 0.34% to settle at $79.26 a barrel on the New York Mercantile Exchange. Brent crude for July delivery rose $0.30 or 0.35% to $83.88 per barrel on London's Intercontinental Exchange.

Indian rupee gave up on some of the gains towards the end but ended marginally in green against dollar on Thursday, tracking the weakness of the American currency in the overseas market. Traders took some support with Chief Economic Adviser V Anantha Nageswaran's statement that 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. However, a negative trend in domestic equities and foreign fund outflows weighed on the local unit and restricted the up move. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday, as they offloaded shares worth Rs 6,669.10 crore, according to exchange data. On the global front, the dollar held tight ranges against most peers on Thursday as traders awaited key US inflation data for cues on Federal Reserve policy, while the focus on the massive interest rate gap between Japan and the US helped it make some gains on the yen. Finally, the rupee ended at 83.50 (Provisional), stronger by 2 paise from its previous close of 83.52 on Wednesday.  

The FIIs as per Thursday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 13068.22 crore against gross selling of Rs 18405.02 crore, while in the debt segment, the gross purchase was of Rs 1778.31 crore with gross sales of Rs 2310.82 crore. Besides, in the hybrid segment, the gross buying was of Rs 29.68 crore against gross selling of Rs 36.13 crore.

The US markets ended in green on Thursday, with the S&P 500 hitting a one-month high, as US jobless claims rose, fueling speculation of Fed rate cuts. Asian markets are trading mostly higher on Friday led by Japan after Japan's consumer spending data, which surpassed expectations, provided support to market sentiment in the region. Indian markets ended significantly lower on Thursday on persistent FII selling, coupled with nervousness around the Lok Sabha election results amid selling in heavyweights like L&T, HDFC Bank, Reliance Industries. Today, markets are likely to get optimistic start on the back of Wall Street gains and positive sentiment across global markets. Sentiments will get a boost as the Export-Import Bank of India forecast India's merchandise exports to grow 12.3% on-year at $116.7 billion in the April-June quarter of FY25, on strong economic fundamentals and sustained manufacturing and services activity. Besides, a recent report by the Ministry of Commerce said India's exports have surged to as many as 115 countries out of the total 238 destinations during 2023-24 despite the global economic uncertainties. Some support will come with a private report that India's retail market is poised to surpass $2.2 trillion by 2030, with approximately 90 per cent of sales expected to occur offline. The report also finds that a substantial portion of all purchases will be influenced by what consumers see online. However, some cautiousness may come amid foreign fund outflows. Foreign institutional investors (FIIs) offloaded shares worth Rs 6,994.86 crore on May 9. Traders may be concerned with report that as India's general election reaches halfway, declining voter turnout sparks concerns about disengagement in the world's largest poll. The decrease raises questions about the ruling Bharatiya Janata Party's support, causing uncertainty in financial markets. Tyre industry stocks will be in focus as ratings agency Icra said domestic tyre sale volumes are expected to see a moderate growth of 4-6 per cent this fiscal after witnessing an estimated pace of 6-8 per cent in the previous financial year. It added this growth in the last fiscal was driven by factors such as elevated base and subdued growth in the commercial vehicle (CV) segment. There will be some reaction in cement industry stocks with a private report that the cement sector in the current financial year (2024-25/FY25) could see stable prices and lower costs. It said going forward, there might be some moderation in FY25 in terms of demand. Moreover, Investors will await key earnings reports, including those of Cipla, Eicher Motors, Tata Motors, and Bank of Baroda among others.

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

Index

Previous close

Support

Resistance

NSE Nifty

21,957.50

21,824.01

22,199.36

BSE Sensex

72,404.17

71,992.41

73,157.72

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

SBIN

492.90

820.00

802.49

838.59

Tata Steel

302.23

162.00

160.10

165.30

ITC

234.13

427.10

419.80

437.95

HDFC Bank

231.41

1450.80

1435.15

1476.60

Tata Motors

191.90

1030.00

1010.46

1046.36

  • State Bank of India has reported 18.50% rise in its consolidated net profit at Rs 21,736.47 crore for Q4FY24 as compared to Rs 18,343.45 crore for the same quarter in the previous year.
  • Tata Motors has strengthened its e-cargo mobility solutions with the launch of the all-new Ace EV 1000.
  • Infosys has entered into strategic three-year partnership with the ABB FIA Formula E World Championship as its official Digital Innovation Partner.
  • NTPC's wholly owned subsidiary-- NTPC Green Energy has signed MoU with Mahatma Phule Renewable Energy and Infrastructure Technology for development of Renewable Energy Power Parks and Projects.

News Analysis