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NSE Intra-day chart (16 May 2024)
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Market Commentary 17 May 2024
Markets likely to get flat-to-positive start on Friday

In a highly volatile session, Indian equity benchmarks fluctuated between gains and losses and finally saw a sharp rebound in fag-end on Thursday, led by gains in Capital Goods, Industrials and Consumer Durables stocks. Trading was volatile due to expiry of weekly index options on the NSE. Markets made an optimistic start as traders took support with report that India's monsoon is forecast to hit the Kerala coast in the southwest on May 31, offering relief to farmers after below average rainfall last year. The monsoon, the lifeblood of the country's $3.5 trillion economy, delivers nearly 70% of the rain that India needs to water farms and recharge reservoirs and aquifers. Nearly half of India's farmland, without any irrigation cover, depends on the annual June-September rains to grow a number of crops. However, the initial gains diminished quickly and markets witnessed sharp fluctuations on both sides as some cautiousness prevailed due to uncertainty surrounding the general election results. Some pessimism also came as the provisional data showed that foreign portfolio investors (FPIs) sold shares worth Rs 2,832.83 crore in the Indian equity market on May 15, 2024. So far in May, the FIIs have been aggressive sellers and reportedly build high short positions in the derivatives market. However, widespread buying in the closing hour of session saw key indices notch up significant gains. Traders found solace with the National Sample Survey Office (NSSO) report showing that the unemployment rate for people aged 15 years and above in urban areas declined to 6.7 per cent in the January-March period from 6.8 per cent a year ago. Traders also took a note of report by the Federation of All India Farmer Associations (FAIFA) stating that the number of startups in agriculture and allied sectors has risen to over 7,000 in the last nine years due to a conducive business environment and government support. It said before 2014-15, there were less than 50 startups in agriculture and allied sectors. Finally, the BSE Sensex rose 676.69 points or 0.93% to 73,663.72, and the CNX Nifty was up by 203.30 points or 0.92% points to 22,403.85.

The US markets ended lower on Thursday. Markets moved to the upside early in the session on Thursday but fluctuated over the course of the trading day before eventually closing modestly lower. The early strength on markets reflected an extension of the rally seen during Wednesday's session, which came amid optimism about the outlook for interest rates following tamer-than-expected consumer price inflation data. A closely watched Labor Department showed consumer prices rose by less than expected in April, reinforcing expectations the Federal Reserve will lower interest rates in the coming months. However, buying interest waned over the course of the session with traders seemingly pausing to assess the near-term outlook for the markets after the major averages reached new record highs. On the economic data front, the Labor Department released a report this morning showing a pullback by initial jobless claims in the week ended May 11th. The Labor Department said initial jobless claims slid to 222,000, a decrease of 10,000 from the previous week's revised level of 232,000. Street had expected jobless claims to fall to 220,000 from the 231,000 originally reported for the previous week. The pullback came after jobless claims rose to their highest level since the week ended August 26, 2023 in the previous week. On the sectoral front, while most of the major sectors showed only modest moves on the day, housing stocks moved sharply lower, dragging the Philadelphia Housing Sector Index down by 2.8 percent. The index pulled back off its best closing level in well over a month after a Commerce Department report showed a rebound by housing starts in April but a continued slump by building permits.

Crude oil futures ended higher on Thursday amid concerns about possible supply disruptions due to the tensions in the Middle East. Oil prices advanced, continuing to benefit from recent data showing a larger than expected decline in crude inventories in the U.S. last week. Hopes of an interest rate cut in September contributed as well to the rise in oil prices. Benchmark crude oil futures for June delivery rose $0.60 or about 0.76% to settle at $79.23 a barrel on the New York Mercantile Exchange. Brent crude for July delivery gained $0.52 or 0.62% to $83.27 per barrel on London's Intercontinental Exchange.

Indian rupee ended lower on Thursday, weighed down by unabated foreign fund outflows amid investors' weak appetite for riskier assets. Traders were cautious with a private report stating that the Reserve Bank of India may delay the expected policy interest rate cuts, but strong demand for bonds from long-term investors such as retirement funds and insurers will ensure that market interest rates are low, especially for the top-rated borrowers. On the global front, dollar skidded to multi-month lows on Thursday after U.S. core inflation hit its slowest in three years, pulling forward expectations for rate cuts in the world's biggest economy and drawing bets that the U.S. currency may have peaked, for now. Finally, the rupee ended at 83.50 (Provisional), weaker by 4 paise from its previous close of 83.46 on Wednesday.

The FIIs as per Thursday'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 11621.73 crore against gross selling of Rs 13960.57 crore, while in the debt segment, the gross purchase was of Rs 1785.54 crore with gross sales of Rs 477.65 crore.  Besides, in the hybrid segment, the gross buying was of Rs 21.23 crore against gross selling of Rs 29.13 crore.

The US markets ended lower on Thursday as investors monitored comments from Federal Reserve officials, with three suggesting keeping borrowing costs high until there's more evidence of easing inflation, signaling no rush to cut interest rates. Asian markets are trading mixed on Friday as China data pointed to slower growth on the consumer side while industrial activity remained robust. Indian markets ended notably higher on Thursday after Wall Street's three major indexes notched record closes overnight on optimism that inflation is heading back in the right direction. Today, markets are likely to get flat-to-positive start. Sentiments will get a boost as Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal said India will be a $ 4 trillion economy in 2024-25 and surpass Japan by early next fiscal to become the world's fourth largest economy. Sanyal further said that a 7 per cent economic growth rate will be a very good growth rate for India, given various constraints, including the country's weak exports. Some support will come as the United Nations revised upwards India's growth projections for 2024, with the country's economy now forecast to expand by close to seven per cent this year, mainly driven by strong public investment and resilient private consumption. The World Economic Situation and Prospects as of mid-2024 said, India's economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent in 2025, mainly driven by strong public investment and resilient private consumption. Traders will be taking encouragement as apex exporters' body FIEO said the country's merchandise exports are expected to increase about $60-70 billion to $500 billion by the end of FY25 on account of gradual improvement in global demand. In 2023-24, exports dipped over 3 per cent to $437.1 billion. Federation of Indian Export Organisations (FIEO) President Ashwini Kumar also said the country's services exports are also likely to reach $390-400 billion this fiscal. However, there may be some cautiousness amid weakness in global markets coupled with persistent foreign fund outflow. Foreign institutional investors continued to sell Indian equities, with net sales of Rs 776 crore worth of shares on May 16. There will be some buzz in the aviation industry stocks as rating agency Icra said air passenger traffic in the country is projected to touch record levels in the range of 407-418 million in the current financial year and the revenues of select airport operators together are estimated to rise 15-17 per cent during the same period. Surpassing the pre-Covid level by 10 per cent, the traffic reached 376.4 million in the fiscal ended March 2024. NBFCs stocks will be in focus as Fitch Ratings feels that the Reserve Bank of India's (RBI) latest efforts to strengthen corporate governance and risk management in the non-bank financial institutions (NBFIs) may reduce industry risks over the longer term, if successful, but it would raise near-term business volatility for those affected non-bank entities. There will be some reaction in metal stocks with a private report that India's steel industry, already reeling from cheaper imports, is worried about a surge in shipments from China after the United States imposed tariffs on Chinese steel. US President Joe Biden on Tuesday unveiled steep tariff increases on an array of Chinese imports including steel and aluminium.

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