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NSE Intra-day chart (10 June 2022)
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Market Commentary 13 June 2022
Markets likely to get gap-down opening on global sell-off; CPI data eyed

 

Indian equity benchmarks ended Friday's session near intraday lows, with Sensex and Nifty breaching their crucial 54,350 and 16,250 levels, respectively, following weakness in global counterparts and fear of faster policy tightening to combat inflation. The bourses started the session in red and remained under pressure for whole day, as investors got cautious with External Affairs Minister S Jaishankar stating that the Russia-Ukraine war has thrown up a crisis of fuel, food and fertiliser that will lead to hunger situations and have a very significant inflationary impact. Some anxiety spread among investors with India Ratings stated that the country's current account deficit is likely to hit a three-year high of 1.8 per cent or $43.81 billion in FY22, as against a surplus of 0.9 per cent or $23.91 billion in FY21. Besides, persistent capital outflows also weighted down on the domestic sentiments. Foreign Institutional Investors (FII) continued to be net sellers of domestic equities, pulling out Rs 1,512 crore from stocks on Thursday. Further, in the last hours of the trade, selling got intensified on the counters, as domestic sentiments weakened further as the United Nations said Foreign Direct Investment inflows to India declined $19 billion to $45 billion in 2021 but the country still remained among the top 10 global economies for FDI last year. Traders also remained cautious as basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen. The Indian basket on June 9, 2022 touched $121.28, matching levels seen in February/March 2012. Market participants overlooked Assocham's statement that the Reserve Bank's decision to raise the benchmark lending rate by 50 basis points to 4.9 per cent will help the Indian economy in the medium term. Finally, the BSE Sensex fell 1016.84 points or 1.84% to 54,303.44 and the CNX Nifty was down by 276.30 points or 1.68% to 16,201.80.

 

Extending their previous session's losses, the US markets settled lower on Friday with sharp cut amid concerns over consumer price inflation. The Labor Department released a report showing consumer prices in the U.S. shot up by more than expected in the month of May, raising concerns about the outlook for interest rates. The Labor Department said its consumer price index jumped by 1.0 percent in May after rising by 0.3 percent in April. Street had expected consumer prices to increase by 0.7 percent. With the bigger than expected monthly increase, the annual rate of consumer price growth accelerated to 8.6 percent in May from 8.3 percent in April, showing the biggest surge since December 1981. The annual growth was expected to be unchanged. Excluding food and energy prices, core consumer prices climbed by 0.6 percent in May, matching the growth seen in the previous month. Core prices were expected to rise by 0.5 percent. Meanwhile, the annual rate of core consumer price growth slowed to 6.0 percent in May from 6.2 percent in April. Street had expected the pace of growth to decelerate to 5.9 percent. The bigger than expected increase in consumer prices is likely to convince the Federal Reserve to follow through on its plans to aggressively raise interest rates in an effort to combat inflation. The Fed is scheduled to announce its latest monetary policy decision next Wednesday, with the central bank widely expected to raise interest rates by another 50 basis points. Adding more pessimism on the Street, a separate report released by the University of Michigan showed consumer sentiment in the U.S. has tumbled to its lowest level on record in the month of June. The preliminary data showed the consumer sentiment index plunged to 50.2 in June from 58.4 in May. Street had expected the index to edge down to 58.0.

 

Crude oil futures ended lower for second straight session on Friday on concerns about outlook for oil demand amid reports that Shanghai has imposed fresh Covid-related restrictions in several parts due to a surge in new cases. China said it will reimpose Covid-19 lockdowns in eight out of 16 of Shanghai's districts after the country's largest economic hub recorded a cluster outbreak of COVID-19. Also, stronger dollar after data showing a steep acceleration in U.S. inflation raised fears of more aggressive rate hikes by the Federal Reserve weighted on pol prices. Benchmark crude oil futures for July delivery fell 84 cents or 0.7 percent to settle at $120.67 a barrel on the New York Mercantile Exchange. Brent crude for August delivery declined $1.06 or 0.9 percent to settle at $122.01 (Provisional) a barrel on London's Intercontinental Exchange.

 

Indian rupee ended substantially lower against the US dollar on Friday amid sell-off in domestic equities and stronger greenback overseas weighed on investor sentiment. Persistent foreign capital outflows, elevated global crude oil prices, and risk-averse sentiments also impacted the domestic unit. Sentiments were fragile as India Ratings stated that the country's current account deficit is likely to hit a three-year high of 1.8 per cent or $43.81 billion in FY22, as against a surplus of 0.9 per cent or $23.91 billion in FY21. Additional pressure came as United Nations said Foreign Direct Investment inflows to India declined $19 billion to $45 billion in 2021 but the country still remained among the top 10 global economies for FDI last year. On the global front, yen jumped on Friday after the government and the central bank in a rare joint statement expressed concern about the yen's recent slide to hit two-decade lows. Finally, the rupee ended at 77.88 (Provisional), weaker by 14 paise from its previous close of 77.74 on Wednesday.

 

The FIIs as per Friday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 6003.90 crore against gross selling of Rs 7404.89 crore, while in the debt segment, the gross purchase was of Rs 600.18 crore with gross sales of Rs 604.87 crore. Besides, in the hybrid segment, the gross buying was of Rs 118.82 crore against gross selling of Rs 7.42 crore.

 

The US markets ended sharply lower on Friday as a steeper-than-expected rise in US consumer prices in May fueled fears of more aggressive interest rate hikes by the Fed. Asian markets are trading deeply in red on Monday as tracking sell-off on the Wall Street. Indian markets fell on Friday amid weakness across sectors, suffering their worst single-day fall in three weeks, as investors globally feared aggressive hikes in COVID-era interest rates will hamper economic growth. Today, start of new week is likely to be gap-down tracking losses across global markets. Investors will be eyeing India's retail inflation figures for May to be out later in the day. Some cautiousness will come as RBI data showed that after rising for two consecutive weeks, the country's foreign exchange reserves declined by $306 million to $601.057 billion in the week ended June 3. However, some respite may come later in the day as the National Statistical Office said India's factory output growth accelerated to an eight-month high at 7.1 per cent in April on the back of a lower base. Some support may come as Fitch Ratings revised up its outlook for India's long-term foreign currency Issuer Default Rating (IDR) to stable from negative after a gap of two years. Traders may take note of Chief Economic Advisor (CEA) Anantha Nageswaran's statement that India has shown an exemplary resilience in recovering from a crisis due to the COVID-19 pandemic. He added all major activities and parameters of the economy have crossed their pre-COVID levels, and it is now enjoying macroeconomic tailwinds. There will be some buzz in the power stocks as, Power Minister RK Singh said India's power demand this year has jumped by a record 40,000-45,000 MW per day as an intense heat wave sweeps through northern parts of the country, the economy expands, and electricity reaches millions of unelectrified homes. Defence stocks will be in focus with a private report that the Indian Air Force plans to acquire 114 fighter jets of which 96 would be built in India and rest 18 would be imported from a foreign vendor chosen for the project, giving impetus to India's Make in India initiative. There will be some reaction in media stocks ahead of Indian Premier League's media rights auction. The final day of bidding process will declare the winner from shortlisted candidates - Sony, Zee, Disney Star, and Viacom18. Day 1 of the media bidding process saw bids hike up to Rs 43,000 crore for digital and television.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,201.80

16,141.36

16,293.46

BSE Sensex

54,303.44

54,079.36

54,654.15

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil & Natural Gas corporation of India

178.12

164.65

163.11

166.41

Hindalco Industries

145.41

385.75

381.74

390.79

Tata Motors

119.14

427.40

423.31

430.16

Tata Steel

95.22

1,023.00

1,011.96

1,032.71

Wipro

87.26

461.20

455.94

466.84

 

  • Dr. Reddy's Laboratories' wholly owned subsidiary -- Aurigene and Olema have entered into exclusive global license agreement to research, develop and commercialize novel small molecule inhibitors of an undisclosed oncology target. 
  • UltraTech Cement has signed a MoU with Coolbrook, a transformational technology and engineering company, to explore possibilities on reduction of CO2 emissions from its cement manufacturing operations. 
  • HDFC Bank has launched full value outward remittance service in US Dollar Euro and the Pound Sterling for trade and retail customers. 
  • Grasim Industries has raised Rs 1,000 crore and allotted 10,000-7.50% Rated, Listed, Unsecured, Redeemable NCDs of Rs 10 lakh each (Series 22-23 I, 7.50% GIL 2027) on private placement basis.
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