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Market Commentary 14 May 2024
Benchmarks to open in green amid easing inflation; WPI data eyed

Indian equity benchmarks bounced back from early lows and managed to eke out marginal gains on Monday on the back of fag-end buying in Capital Goods, Realty and Healthcare shares. Markets started the day on a negative note and stayed under pressure in the first half amid uncertainty among investors due to the ongoing parliamentary elections in India. Traders remained cautious amid sustained foreign fund outflows. Indian markets have witnessed aggressive selling by Foreign Portfolio Investors (FPIs) in May, with a staggering amount of Rs 17,082 crore as per data by National Securities Depository. Some pessimism also came as the government data showed that India's industrial production growth slowed marginally to 4.9 per cent month-on-month in March 2024, mainly due to poor show by the mining sector. The factory output growth, measured in terms of the Index of Industrial Production (IIP), was 5.6 per cent in February 2024. Markets trimmed most of their losses in afternoon deals but continued to trade in red, as traders remained on sidelines ahead of India's Consumer Price Index (CPI) data to be out later in the day. Some concern also came with Ministry of Statistics and Programme Implementation (MoSPI) in its latest report stating that as many as 449 infrastructure projects, each entailing an investment of Rs 150 crore or above, were hit by cost overrun of more than Rs 5.01 lakh crore in March 2024. Out of 1,873 projects, 449 reported cost overrun and 779 projects were delayed. However, by the end, key gauges staged a full recovery from the day's lows and ended up with a marginal gain. Traders found support with think tank GTRI stating that India's exports to the UAE increased by 18.25 per cent to $35.63 billion in 2023-24 as against $30.13 billion in 2018-19, while imports surged 61.21 per cent, from $29.79 billion in FY2019 to $48.02 billion in the last fiscal. Overall, India ranked 17th globally in exports, with a 1.8 per cent share in world trade. On the import front, the country is ranked 8th, holding a 2.8 per cent share in global trade. Finally, the BSE Sensex rose 111.66 points or 0.15% to 72,776.13, and the CNX Nifty was up by 48.85 points or 0.22% points to 22,104.05.

The US markets ended mostly in red on Monday as key inflation data due this week could have a significant impact on the outlook for rates. The Labor Department is scheduled to release its reports on producer and consumer price inflation on Tuesday and Wednesday, respectively. Street expect producer prices to rise by 0.3 percent in April after edging up by 0.2 percent in March, while the annual rate of growth is expected to tick up to 2.2 percent from 2.1 percent. Consumer prices are expected to climb by 0.4 percent in April, matching the increase seen in March. Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in April after climbing by 0.4 percent in March. The annual rate of consumer price growth is expected to dip to 3.4 percent in April from 3.4 percent in March, while the annual rate of core consumer price growth is expected to slow to 3.6 percent from 3.8 percent. However, the major averages moved to the upside early in the session amid renewed optimism about an interest rate cut by Federal Reserve in the coming months contributed to the recent strength. On the sectoral front, most of the major sectors showed only modest moves on the day, contributing to the lackluster close by the broader markets. Airline stocks showed a substantial move to the upside, however, with the NYSE Arca Airline Index surging by 2.5 percent.

Crude oil futures ended higher on Monday as the dollar drifted lower ahead of key U.S. inflation data and Fed Chair Jerome Powell's speech due this week. Meanwhile, traders looked ahead to an OPEC+ meeting on supply policy, with Iraq giving out mixed messages about its stance. Besides, in the Middle East, the U.S. escalated its concern over Israel's conduct of its Gaza offensive, warning the Jewish state risks fueling a Hamas insurgency. Benchmark crude oil futures for June delivery rose $0.92 or about 1.17% to settle at $79.12 a barrel on the New York Mercantile Exchange. Brent crude for July delivery gained $0.57 or 0.68% to $83.36 per barrel on London's Intercontinental Exchange.

Indian rupee depreciated against the US dollar on Monday amid continuous foreign fund outflows. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,117.50 crore on Friday, according to exchange data. Traders were cautious as India's factory output growth, measured in terms of the Index of Industrial Production (IIP), slowed marginally to 4.9 per cent month-on-month in March 2024, as compared to 5.6 per cent in February 2024. However, it was 1.9 per cent in March 2023. For the month of March 2024, the Quick Estimates of IIP with base 2011-12 stood at 159.2. For the fiscal 2023-24, IIP growth touched 5.8 per cent against 5.2 per cent in the preceding financial year. On the global front, the dollar consolidated against major peers on Monday as market participants awaited U.S. inflation data to assess the prospects of interest rate cuts this year. Finally, the rupee ended at 83.52 (Provisional), weaker by 1 paisa from its previous close of 83.51 on Friday.  

The FIIs as per Monday'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 12192.16 crore against gross selling of Rs 13484.31 crore, while in the debt segment, the gross purchase was of Rs 1823.14 crore with gross sales of Rs 1241.73 crore. Besides, in the hybrid segment, the gross buying was of Rs 14.47 crore against gross selling of Rs 19.54 crore.

The US markets ended mostly in red on Monday ahead of crucial inflation readings and earnings reports this week, as a survey revealed consumer concerns about rising prices. Asian markets are trading mixed on Tuesday amid report that Japan saw steady corporate inflation but a 6.4% jump in import prices. Indian markets rebounded after opening in red and staged a smart recovery in the intraday trade to end higher on Monday amid bargain buying in Asian Paints, HDFC Bank, ICICI Bank, TCS, and Axis Bank. Today, markets are likely to open in green amid mixed global cues. Market participants likely to get some encouragement with easing inflation. The government data showed that retail inflation eased to an 11-month low of 4.83 per cent in April as prices of some kitchen items declined though overall food basket firmed up marginally. The Consumer Price Index (CPI)-based retail inflation was 4.85 per cent in March. Now, investor will be eyeing India's wholesale inflation data for April to be out later in the day. Traders may take note of report that the government is working on a verification system to help exporters deal with countervailing duty cases on domestic products over the RODTEP scheme. The exercise is important as countervailing or anti-subsidy duties were imposed on certain domestic units by the US and European Union (EU). Meanwhile, India and Iran have signed a 10-year contract for the operation of a terminal at the strategically important Chabahar port in Iran, a move that will boost regional connectivity as well as trade ties. This is the first time India will take over the management of an overseas port that will also have a multiplier effect on trade among India, Iran and Afghanistan as efforts continue to directly tap the potential in Central Asia, bypassing neighbouring Pakistan. However, there may be some cautiousness amid foreign fund outflows. On May 13, Foreign Institutional Investors (FII) offloaded equities valued at Rs 4,498.92 crore. Also, a private report indicated that more than a dozen states have logged a higher rate of inflation compared to the national average in April. The cost of living rose faster in 13 states last month compared to the national print of 4.83 per cent. Banking stocks will be in focus as Fitch Ratings said asset quality of Indian banks' consumer loans has held up well so far, but an accumulation of untested risks due to rapid growth may challenge lenders' underwriting standards and risk controls. There will be some reaction in e-commerce industry stocks with report that the government is considering to make it mandatory for e-commerce companies to comply with quality norms for consumer reviews after a voluntary push failed to effectively curb fake reviews. The government issued the new quality norms for e-tailers a year ago, prohibiting them from publishing paid reviews and demanding disclosure of such promotional content.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,104.05

21,906.19

22,216.79

BSE Sensex

72,776.13

72,140.24

73,137.79

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Motors

589.75

959.40

934.84

996.34

Tata Steel

365.61

164.00

159.86

166.31

SBIN

153.99

808.95

798.41

819.66

HDFC Bank

135.24

1456.50

1437.94

1467.44

Power Grid

117.11

306.50

300.19

310.24

  • SBI has become the first bank to become a Trading cum Clearing Member at India International Bullion Exchange.
  • Bharti Airtel and Google Cloud have entered into a long-term collaboration to deliver cloud solutions to Indian businesses.
  • Adani Enterprises is planning to spend Rs 80,000 crore across businesses in the current financial year (FY25).
  • JSW Steel has reported consolidated crude steel production for the month of April 2024 at 21.21 lakh tonnes, 0.4% higher as compared to 21.13 lakh tonnes in April 2023.

News Analysis