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Market Commentary 15 May 2024
Markets to get positive start tracking overnight gains on Wall Street

Indian equity benchmarks concluded Tuesday's session in green, with Sensex and Nifty managed to close above their crucial psychological levels of 73,100 and 22,200, respectively, primarily fueled by buying activity across sectors. Markets made a cautious start but soon turned volatile due to uncertainty surrounding the general election results. Some concern also came as exchange data showed that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,498.92 crore on Monday. However, markets soon gained traction and traded higher throughout the day, as market participants took encouragement with the government data showing 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. Traders took a 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). Sentiments remained firm during late afternoon deals amid a private report stating that over 514 million employments were generated between 2014 and 2024 out of which 197.9 million was as a result of governance-led interventions and 316.1 million due to credit-led interventions. Traders overlooked data showing that inflation based on wholesale price index (WPI) accelerated in the month of April 2024 to 1.26% from 0.53% in March 2024, due to increase in prices of food articles, crude petroleum & natural gas, manufacture of food products, other manufacturing etc. The Component wise, primary articles index, having weight of 22.62%, increased 1.97% to 186.7 (provisional) in April 2024 from 183.1 (provisional) for the month of March 2024, on the back of rise in prices of crude petroleum & natural gas and food articles. Finally, the BSE Sensex rose 328.48 points or 0.45% to 73,104.61, and the CNX Nifty was up by 113.80 points or 0.51% points to 22,217.85.

The US markets ended in green on Tuesday as treasury yields moved to the downside after an early advance, with the yield on the benchmark ten-year note falling to its lowest closing level in over a month. Traders kept an eye on remarks by Federal Reserve Chair Jerome Powell at the annual general meeting of the Foreign Bankers' Association. Powell said the central bank needs to be patient and let restrictive policy do its work, noting a lack of further progress on inflation during the first quarter. The Fed chief also said his confidence inflation will slow towards the 2 percent target is not as high as it was but reiterated he does not expect the next move to be a rate hike. On the sectoral front, Networking stocks moved sharply higher over the course of the session, driving the NYSE Arca Airline Index up by 3.0 percent to its best closing level in over a month. On the economic data front, producer prices in the U.S. increased by more than expected in the month of April, according to a report released by the Labor Department. The Labor Department said its producer price index for final demand climbed by 0.5 percent in April after a revised 0.1 percent dip in March. Street had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month. The report also said the annual rate of producer price growth accelerated to 2.2 percent in April from a downwardly revised 1.8 percent in March. The year-over-year producer price growth was expected to inch up to 2.2 percent from the 2.1 percent originally reported for the previous month. The report also showed a significant rebound by energy prices, which shot up by 2.0 percent in April after tumbling by 1.3 percent in March.

Crude oil futures ended lower on Tuesday as data showing a bigger than expected increase in U.S. producer prices raised concerns that Federal Reserve will keep interest rates higher for a longer period. The Labor Department said its producer price index for final demand climbed by 0.5% in April after a revised 0.1% dip in March. Street had expected producer prices to rise by 0.3% compared to the 0.2% uptick originally reported for the previous month. The report also said the annual rate of producer price growth accelerated to 2.2% in April from a downwardly revised 1.8% in March. Benchmark crude oil futures for June delivery fell $1.10 or about 1.4% to settle at $78.02 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $0.94 or 1.12% to $82.42 per barrel on London's Intercontinental Exchange.

Indian rupee settled flat against the US dollar on Tuesday. Traders were worried as inflation based on wholesale price index (WPI) accelerated in the month of April 2024 to 1.26% from 0.53% in March 2024, due to increase in prices of food articles, crude petroleum & natural gas, manufacture of food products, other manufacturing etc. Traders overlooked report that the Consumer Price Index (CPI)-based retail inflation eased to an 11-month low of 4.83 per cent in April 2024 as prices of some kitchen items declined though overall food basket firmed up marginally. On the global front, dollar edged higher on Tuesday as traders awaited U.S. inflation data, while the yen hovered near a two-week low, stoking intervention worries. Finally, the rupee ended flat with its previous close of 83.51 on Monday.

The FIIs as per Tuesday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 10423.23 crore against gross selling of Rs 14815.76 crore, while in the debt segment, the gross purchase was of Rs 959.62 crore with gross sales of Rs 1904.07 crore. Besides, in the hybrid segment, the gross buying was of Rs 14.54 crore against gross selling of Rs 22.06 crore.

The US markets ended higher on Tuesday with Nasdaq scaling fresh life-time high a day ahead of the crucial CPI inflation data. Asian markets are trading mixed on Wednesday as traders weighed mixed U.S. producer price data and braced for the crucial consumer price report later in the day that is likely to influence the Federal Reserve's near-term policy path. Indian markets ended higher with decent gains for a third straight session on Tuesday, driven by auto, metal, and banking shares. Today, markets are likely to get positive start tracking overnight gains on Wall Street. Sentiments will get a boost as Moody's Ratings said the Indian economy is projected to expand 6.6 per cent in the current fiscal year and said strong credit demand fuelled by robust economic growth will support the NBFC sector's profitability. It added that the Indian economy is estimated to have expanded 8 per cent in the 2023-24 fiscal year. Traders may take note of report that noting that a majority government with a visionary leader are prerequisite for a stable, vibrant and deep Indian financial market, Finance Minister Nirmala Sitharaman said that BJP-led coalition fulfils these parameters. However, there may be some cautiousness with a private report that even as stocks have bounced back, foreign investors continue to remain aggressive sellers this month. On Tuesday, FIIs net sold stocks worth Rs 4,065 crore, taking the May month's tally to Rs 33,540 crore. Traders may be concerned as ICRA Chief Economist Aditi Nayar said the wholesale food inflation, which is at a four-month high, will continue to be a cause for concern in May and June as heatwave is likely to jack up prices of perishable commodities. Although the impact of high base of last year will play out in July and August, the impact of monsoon will determine the price conditions in the subsequent months. There will be some buzz in the healthcare industry stocks with a private report that traditional sectors like healthcare and advance manufacturing will continue to attract big investments during 2024. Auto stocks will be in focus after data released by the Society of Indian Automobile Manufacturers showed that exports of passenger vehicles and two-wheelers (24) have increased by more than 20 per cent in April year-on-year (Y-o-Y). There will be some reaction in edible oil industry stocks as the Solvent Extractors' Association of India (SEA) said India's palm oil imports registered a 34.11 per cent jump on-year in April to 6,84,000 tonnes, buoyed by a fall in global prices. Meanwhile, companies like PFC, Mankind Pharma, Jindal Stainless, Dixon Technologies, Honeywell Auto, Titagarh Rail Systems, IEX, Granules India, CMS Info Systems, Transport Corporation of India, MOIL, NLC India and Trident, among few others, are set to announce their Q4FY24 results today. Moreover, Aadhar Housing Finance and TBO Tek to debut on the bourses today.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,217.85

22,109.39

22,298.19

BSE Sensex

73,104.61

72,763.64

73,365.91

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

462.61

164.85

163.39

166.44

Tata Motors

163.26

964.75

956.00

970.75

HDFC Bank

128.33

1461.60

1452.76

1467.96

ITC

110.00

429.60

427.66

432.41

SBIN

109.12

817.90

809.74

824.24

  • Infosys has entered into multi-year strategic collaboration with First Abu Dhabi Bank, the largest bank in the UAE, to optimize and modernize FAB's IT infrastructure services.
  • Shriram Finance has received approval for the sale of its housing finance subsidiary Shriram Housing Finance to Warburg Pincus, a leading global growth investor.
  • Tata Consultancy Services is planning to set up Global Artificial Intelligence Center of Excellence in Paris.
  • Maruti Suzuki India has launched two new variants in FRONX.

News Analysis