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Market Commentary 13 June 2024
Benchmarks likely to get positive start amid easing retail inflation

Indian equity benchmarks erased most of their initial gains but managed to end in green on Wednesday, led by gains in Industrials, Power and Capital Goods stocks. Markets made an optimistic start and extended gains as the day progressed as traders took encouragement with a World Bank report stating that India will remain the fastest-growing major economy recording a steady growth of 6.7 per cent in the next three years including the current financial year. Sentiments remained up-beat as data of the commerce ministry showed exports from special economic zones (SEZs) rose by over 4 per cent to $163.69 billion in 2023-24 even though the country's total shipments dipped by more than 3 per cent in the last fiscal. Exports from these zones stood at $157.24 billion in 2022-23 and $133 billion in 2021-22. Markets remained firm in afternoon deals, taking support from Union Minister Piyush Goyal's statement that India is positioned in a sweet spot and it is the right time to convert challenges into opportunities. He also noted that the timely sharing of data and transparency in exports and imports will encourage investors to invest more confidently. Some comfort also came as a private survey report stated that India stands sixth globally for its employment outlook for the third quarter of 2024, with 30% of businesses planning to hire more staff over the next three months. However, markets trimmed most of their gains in final hour of trade as investors remained on sidelines ahead of the Index of Industrial Protection (IIP) and Consumer Price Index (CPI) data to be out later in the day for more directional cues. Besides, foreign institutional investors (FIIs) were net sellers of stocks worth Rs 111 crore on June 11. Finally, the BSE Sensex rose 149.98 points or 0.20% to 76,606.57, and the CNX Nifty was up by 58.10 points or 0.25% points to 23,322.95.

The US markets ended mostly higher on Wednesday following the release of a Labor Department report showing U.S. consumer prices were unexpectedly flat in the month of May. The Labor Department said its consumer price index came in unchanged in May after rising by 0.3 percent in April. Street had expected consumer prices to inch up by 0.1 percent. The unchanged reading came as a 3.5 percent nosedive by gasoline prices helped offset a continued increase in prices for shelter. Excluding food and energy prices, core consumer prices rose by 0.2 percent in May after climbing by 0.3 percent in April. Core prices were expected to increase by another 0.3 percent. The report also said the annual rate of consumer price growth slowed to 3.3 percent in May from 3.4 percent in April. Economists had expected the pace of growth to remain unchanged. However, while announcing its widely expected decision to leave interest rates unchanged, the Fed also revealed officials now expect only one interest rate cut this year. In support of its goals of maximum employment and inflation at the rate of 2 percent over the longer run, the Fed said it decided to maintain the target range for the federal funds rate at 5.25 to 5.50 percent. The Fed acknowledged modest further progress toward its inflation objective in recent months but said officials still need greater confidence inflation is moving sustainably towards the target before they will consider lowering rates. On the sectoral front, Interest rate-sensitive housing stocks turned in some of the market's best performances on the day, resulting in a 2.9 percent spike by the Philadelphia Housing Sector Index.

Crude oil futures ended higher on Wednesday on hopes of increased demand. Oil prices rose despite data showing an unexpected jump in crude oil inventories in the U.S. in the week ended June 7. Data from the Energy Information Administration (EIA) showed crude oil inventories jumped by 3.7 million barrels last week, after rising by 1.2 million barrels a week earlier. Street had expected crude oil inventories to decrease by 1.6 million barrels. Meanwhile, the EIA data also showed gasoline inventories shot up by 2.6 million barrels last week and are just slightly below the five-year average for this time of year. Benchmark crude oil futures for July delivery higher $0.60 or 0.8% to settle at $78.50 a barrel on the New York Mercantile Exchange. Brent crude for August delivery was up $0.68 or about 0. 0.8% to $82.60 per barrel on London's Intercontinental Exchange.

Indian rupee settled higher on Wednesday amid positive domestic market. Traders got support after World Bank report stated that India will remain the fastest-growing major economy recording a steady growth of 6.7 per cent in the next three years including the current financial year. Traders took note of report that exports from special economic zones (SEZs) rose by over 4 per cent to $163.69 billion in 2023-24 even though the country's total shipments dipped by more than 3 per cent in the last fiscal. On the global front, the dollar steadied on Wednesday after hitting a four-week high against peer currencies overnight as market players awaited key U.S. inflation data and the Federal Reserve's updated interest rate projections due later in the day. Finally, the rupee ended at 83.58 (Provisional), up by 1 paisa from its previous close of 83.59 on Tuesday.

The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 15549.72 crore against gross selling of Rs 15492.70 crore, while in the debt segment, the gross purchase was of Rs 930.30 crore with gross sales of Rs 3428.45 crore. Besides, in the hybrid segment, the gross buying was of Rs 35.52 crore against gross selling of Rs 16.71 crore.

The US markets ended mostly higher on Wednesday following the Federal Reserve's decision to hold interest rate steady and a May consumer inflation data that came in cooler than expected. Asian markets are trading mostly in green on Thursday after the U.S. Federal Reserve held the Federal Funds rate at 5.25% to 5.5% and shifted its dot plot to project only one rate cut this year. Indian markets ended volatile session in green terrain on Wednesday ahead of macro-economic data. Today, markets are likely to get positive start tracking gains in global markets and mixed macro-economic data on the domestic front. Consumer Price Index (CPI)-based headline retail inflation eased to a 12-month low of 4.75 per cent in May on the back of a softening core and fuel inflation. Separately, the Index of Industrial Production (IIP) also moderated to 5 per cent in April from an upwardly revised figure of 5.4 per cent in the preceding month. Foreign find inflows likely to aid domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 427 crore on June 12. Traders may take note of ICRA Executive Vice President and Chief Ratings Officer K Ravichandran' statement that the PLI scheme is expected to attract investments of Rs 3-4 trillion in the next four years and generate 200,000 jobs as large projects in sectors, including semiconductor, solar module and pharmaceutical intermediaries, are expected to take off. He said that going ahead private sector capex is expected to pick up in oil and gas, metals and mining, hospitals, healthcare and cement sectors. However, there may be some volatility in the markets ahead of weekly options related expiry later in the day. There may be some cautiousness with a report that the country's outward foreign direct investment (FDI) commitments were almost flat at $2 billion in May 2024, compared to $1.98 billion in May 2023. According to the Reserve Bank of India (RBI) data, sequentially, FDI commitments were down from $2.78 billion in April 2024. There will be some buzz in the banking sector stocks as global rating agency Moody's said the pace of credit growth of commercial banks in India is expected to moderate in the current financial year (FY25) to 12-14 per cent due to challenges in raising resources and regulatory concerns on unsecured credit. It added that the moderation of credit growth will be faced by the non-banking finance companies also. Insurance industry stocks will be in focus as regulator Insurance Regulatory and Development Authority of India (Irdai) mandated insurance companies to provide loans on policies across all life insurance savings products, enabling policyholders to meet liquidity requirements. There will be some reaction in metal industry stocks as provisional government data reportedly showed that India's finished steel imports touched a five-year high in the first two months of the fiscal year that began in April, with the country continuing to be a net importer. Steel demand has been buoyant in India, the world's second-biggest crude steel producer, as the country remained a bright spot globally with robust demand from its construction and automotive sectors.

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

Index

Previous close

Support

Resistance

NSE Nifty

23,322.95

23,265.29

23,411.29

BSE Sensex

76,606.57

76,410.05

76,926.80

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

333.05

182.47

181.35

183.72

ONGC

205.61

275.80

273.90

278.40

Power Grid

203.46

324.25

318.40

328.60

HDFC Bank

196.40

1569.00

1560.84

1582.74

Tata Motors

175.28

989.20

980.71

1003.96

  • HCL Technologies has expanded strategic partnership with Olympus Corporation, a global MedTech company, to enable advanced and affordable healthcare for patients through cutting-edge engineering technologies.
  • Wipro has launched Lab45 AI Platform, which leverages Generative AI machine learning, and deep learning technologies to enable companies to realize enhanced efficiencies, transform business functions, and enable industry-specific solutions.
  • Tata Motors and Magenta Mobility have solidified partnership with the deployment of over 100 units of Tata Ace EV which include over 60 units of Ace EV and over 40 units of the recently launched Ace EV 1000.
  • LTIMindtree in collaboration with SNP has launched its latest platform MELD for accelerated and reliable realisation of mergers, acquisitions and divestitures that accelerates data integrations and process harmonizations for customers.

News Analysis