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NSE Intra-day chart (13 June 2022)
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Market Commentary 14 June 2022
Benchmarks likely to make weak start tracking global peers

 

Extending their losing streak for second straight session, Indian benchmark indices ended the Monday's session on disappointing note, with Sensex and Nifty breaching their crucial psychological 52,900 and 15,800 levels, respectively. Markets started the week with a sharp cut and remained under pressure throughout the session, as investors awaited inflation data later in the day, while global markets plunged over fears of aggressive policy tightening by the US Federal Reserve later this week. The market participants remained worried 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. Besides, persistent selling by foreign portfolio investors (FPIs) dampened investors' sentiment. FPIs have been net sellers for eight consecutive month, offloading Rs 13,888 crore worth of equities so far in June. With this, the FPIs have sold Rs 1,81,043 worth of equities so far this year. Markets were trading in deep sea of red in late afternoon session amid reports that with Chief Economic Advisor V Anantha Nageswaran citing the IMF forecast that the Indian economy would cross $5 trillion by 2026-27, leader P Chidambaram said the goal of a USD 5 trillion GDP appears to be a case of 'shifting goalposts' as the original target year was 2023-24. Market participants overlooked Chief Economic Advisor (CEA) Anantha Nageswaran's statement that India has shown exemplary resilience in recovery from the COVID-19 pandemic crisis. He added all major activities and parameters of the economy have crossed their pre-COVID levels, and it is now enjoying macroeconomic tailwinds. Traders also paid no heed towards NITI Aayog Vice Chairman Suman Bery's statement that India's macroeconomic position relative to emerging economies appears good, and the coming decade appears promising for sustained economic growth for the country. Finally, the BSE Sensex fell 1456.74 points or 2.68% to 52,846.70 and the CNX Nifty was down by 427.40 points or 2.64% to 15,774.40.

 

The US markets settled deeply in red on Monday, magnifying their previous session's losses, with the S&P 500 tumbling to a fresh low for the year and closing in bear market territory as recession fears grew. Weakness on the markets reflected lingering concerns about inflation and the outlook for interest rates after last Friday's report showing a jump in consumer prices. The Federal Reserve is scheduled to announce its latest monetary policy decision on Wednesday, with the central bank expected to continuing raising interest rates in an effort to combat inflation. A private report stated that the Fed would consider raising rates by 0.75% on Wednesday, more than the half-point increase currently expected. Meanwhile, the 10-year Treasury rose more than 20 basis points higher to top 3.3%, as investors continued to bet the Fed may have to get more aggressive to squash inflation. Prices move inversely to yields and 1 basis point equals 0.01%. The 2-year Treasury yield was last up roughly 30 basis points to about 3.3%.  Besides, shares of Boeing, Salesforce and American Express fell 8.7%, 6.9% and 5.2%, respectively, dragging down the Dow as recession fears picked up. Beaten-up tech shares also took a hit with Netflix, Tesla and Nvidia down more than 7% as the Nasdaq touched a fresh 52-week low and its lowest level since November 2020. Travel stocks also slipped on Monday as Carnival Corporation and Norwegian Cruise Line plummeted about 10% and 12%, respectively. Delta Air Lines dropped more than 8% while United tumbled about 10%.

 

Crude oil futures rebounded from early losses and ended marginally higher on Monday as concerns about global supplies outweighed demand worries. However, oil prices dropped earlier in the day as a surge in coronavirus cases in China raised concerns about the outlook for energy demand.  Besides, a soaring dollar amid rising prospects of the Federal Reserve announcing a sharper rate hike weighed as well on oil prices. Benchmark crude oil futures for July delivery rose $0.26 or 0.2 percent to settle at $120.93 a barrel on the New York Mercantile Exchange. Brent crude for August delivery added $0.26 or 0.21 percent to settle at $122.27 a barrel on London's Intercontinental Exchange.

 

Indian rupee concluded weaker on Monday and breached 78 mark against the US dollar for the first time amid fears of aggressive interest rate hike by U.S. Federal Reserve later this week. May consumer inflation hit a fresh 40-year high of 8.6 per cent in the US. The partially convertible rupee fell to a record low of 78.14 against the US dollar on stronger demand. Traders were worried 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. Also, recent upsurge in crude oil prices have put pressure on the domestic currency. Brent crude oil price has hovering near $120 per barrel. High oil price is expected widen trade deficit. On the global front, dollar gained to fresh two-decade highs versus major rival currencies on Monday, supported by fears over a global economic slowdown and bets on steep interest rate hikes by the U.S. Federal Reserve. Finally, the rupee ended at 78.04 (Provisional), weaker by 11 paise from its previous close of 77.93 on Friday.

 

The FIIs as per Monday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 4381.92 crore against gross selling of Rs 7563.46 crore, while in the debt segment, the gross purchase was of Rs 690.92 crore with gross sales of Rs 2371.36 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.76 crore against gross selling of Rs 4.48 crore.

 

The US markets ended lower on Monday as fears grow that the expected aggressive interest rate hikes by the Fed would push the economy into a recession. Asian markets are trading mostly in red on Tuesday after Wall Street hits a confirmed bear market and bond yields strike a two-decade high. Indian markets closed at 11-month lows on Monday amid a global sell-off. Today, markets are likely to continue their bearish trend with negative start tracking weakness in global peers. Investors will be eyeing wholesale inflation numbers to be out later in the day for further cues. Besides that, the trade balance data will also be watched out by investors. Traders will be concerned with continued selling by foreign investors. Foreign institutional investors (FIIs) have net sold Rs 4,164.01 crore worth of shares on June 13, as per provisional data available on the NSE. There will be some cautiousness as retail inflation stayed above the Reserve Bank's upper tolerance level of 6 per cent for the fifth month in a row, though it eased to 7.04 per cent in May from April's near-eight-year high of 7.79 percent, mainly on account of softening food and fuel prices as the government as well as the RBI stepped in to control spiralling price rise by way of duty cuts and repo rate hike. However, some support may come later in the day as India Exim Bank said the country's total merchandise exports are likely to be at $117.2 billion in the first quarter of FY23, as compared to the total merchandise exports of $95.5 billion in the corresponding quarter of the previous year. Traders may take note of SBI research report stating that the Reserve Bank is much ahead of the curve in containing inflation, which appeared to have peaked, though it may go for an interest rate hike in August and October. Meanwhile, markets regulator Sebi said investment managers of an AIF (alternative investment fund) can provide investment management services to the offshore fund only by getting registered as portfolio managers. There will be some buzz in the NBFCs, HFCs stocks as Icra Ratings in a report said non-banking financial companies (NBFCs) and housing finance firms witnessed an improvement in their asset quality in the fourth quarter of FY22, helped by minimal impact of Omicron variant of COVID-19 and lower slippages from restructured book. Coal industry stocks will be in focus with report that India's coal import is likely to decline by 11.4 per cent to 186 million tonnes (MT) in the current financial year, even as the state-owned firm has issued import tenders to source the dry fuel from overseas.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

15,774.40

15,676.89

15,879.04

BSE Sensex

52,846.70

52,513.34

53,193.80

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

NTPC

192.08

149.75

146.70

153.85

Tata Motors

174.42

406.50

402.01

414.56

ICICI Bank

166.22

688.00

679.30

699.50

State Bank of India

134.26

446.10

440.79

452.74

Hindalco Industries

122.69

367.00

359.06

376.36

 

  • Tata Motors has rolled out GenVoltz generators in Nepal. 
  • NTPC has awarded Amara Raja Power Systems a project to set up India's first green hydrogen fueling station in Leh, Ladakh. 
  • Bharti Airtel's video streaming service -- Airtel Xstream has achieved a 2 million paid subscriber mark, demonstrating a strong pace of growth as an OTT aggregator platform. 
  • Tata Steel has unveiled a 7-million pound investment plan for its Hartlepool Tube Mill in northeast England.
News Analysis