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NSE Intra-day chart (16 June 2022)
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Market Commentary 17 June 2022
Markets likely to make flat-to-positive start on Friday

 

Extending decline for fifth straight session, Indian equity bourses ended at their lowest point of the day on Thursday, tracking feeble global cues. Initially, the benchmarks opened with an uptick, as sentiments got a boost with a report that India has witnessed the sharpest rise among the Asian economies, with a six-position jump from 43rd to 37th rank on the annual World Competitiveness Index compiled by the Institute for Management Development, largely due to gains in economic performance. Some support also came as Madhaiyaan Angamuthu, chairman of Agricultural and Processed Food Products Exports Development Authority (APEDA) said India's agricultural and processed food product exports will continue to surge in the current fiscal after a record shipment valued at $25.6 billion in 2021-22 because of global demand for the agricultural commodities. Traders took a note of a report by Microfinance Institutions Network (MFIN) showing that the microfinance industry's Gross Loan Portfolio (GLP) grew by 10.04 per cent to Rs 2,85,441 crore as of March 2022. The industry's GLP stood at Rs 2,59,377 crore in March 2021. However, the rally was short-lived as key gauges witnessed a sharp fall in second half of trading sessions, as traders turned cautious as India added 12,213 fresh COVID-19 cases in the last 24 hours, witnessing a 38.4 per cent jump from 8, 822 cases. This is the first time since February 26 that the viral infections have crossed the 10,000 mark in a day. Some concern also came after RBI Deputy Governor M Rajeshwar Rao said that despite the improvement in asset quality, financial institutions, including banks, need to proactively undertake stress testing of loan books to examine their loss absorption limits and take steps to improve them wherever required. Adding the cautiousness among market participants, Foreign Institutional Investors (FIIs) have remained net sellers for the ninth consecutive month given the weak global sentiment. They have net sold more than Rs 31,000 crore worth of shares so far in June on top of more than Rs 2.2 lakh crore of selling in the previous five straight months. Finally, the BSE Sensex fell 1045.60 points or 1.99% to 51,495.79 and the CNX Nifty was down by 331.55 points or 2.11% to 15,360.60.

 

The US markets settled deeply in red on Thursday, with Dow Jones Industrial Average tumbling below the key 30,000 level for the first time since January 2021, on concerns aggressive monetary policy action by central banks around the world may trigger a global recession. The S&P 500 and Nasdaq Composite fell further into bear market territory, ending the session down roughly 24% and 34% from their all-time highs, respectively, as inflation and fears of slowing economic growth weigh on investors.  Following the Federal Reserve's widely expected 75 basis point interest rate hike on Wednesday, the Swiss National Bank unexpectedly raised interest rates for the first time since 2007. The Bank of England also announced another 25 basis point rate hike. The Bank of England's Monetary Policy Committee voted 6-3 to raise the bank rate to 1.25 percent, the highest rate since early 2009. Taiwan's central bank also increased its benchmark rate by 0.125 percentage points, raising rates for the second time in a row. On the economic data front, the Labor Department released a report showing a modest decrease in first-time claims for US unemployment benefits in the week ended June 11th. The report showed initial jobless claims edged down to 229,000, a decrease of 3,000 from the previous week's revised level of 232,000. Street had expected jobless claims to dip to 220,000 from the 229,000 originally reported for the previous week. Meanwhile, a separate released by the Commerce Department showed new residential construction in the US plunged by much more than expected in the month of May. The Commerce Department said housing starts tumbled by 14.4 percent to an annual rate of 1.549 million in May after jumping by 5.5 percent to a revised rate of 1.810 million in April. Street had expected housing starts to decrease by 1.3 percent to an annual rate of 1.701 million from the 1.724 million originally reported for the previous month.

 

Crude oil futures ended sharply higher on Thursday after the United States (US) announced new sanctions on Iranian oil. Further, dollar's sharp drop also contributed to the rise in oil prices. Sentiments also got support as the International Energy Agency said it expects demand to rise further in 2023, growing by more than 2% to a record 101.6 million barrels per day. Optimism that China's oil demand will rebound as it eases COVID-19 restrictions is also supporting prices. Benchmark crude oil futures for July delivery rose $ $2.27 or 2 percent to settle at $117.58 a barrel on the New York Mercantile Exchange. Brent crude for August delivery surged $1.52 or 1.28 percent to settle at $120.03 a barrel (provisional) on London's Intercontinental Exchange.

 

Erasing previous session drubbing, Indian rupee ended higher against dollar on Thursday, owing to dollar sale by exporters and banks. Traders got encouragement as India witnessed the sharpest rise among the Asian economies, with a six-position jump from 43rd to 37th rank on the annual World Competitiveness Index compiled by the Institute for Management Development, largely due to gains in economic performance. On the global front, dollar retreated from a 20-year high on Thursday after the Federal Reserve delivered its biggest rate hike in decades but then tempered its outlook by telling investors that such sharp moves higher were unlikely to become a habit. Finally, the rupee ended at 78.10 (Provisional), stronger by 12 paise from its previous close of 78.22 on Wednesday.

 

The FIIs as per Thursday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 3968.51 crore against gross selling of Rs 7326.67 crore, while in the debt segment, the gross purchase was of Rs 228.49 crore with gross sales of Rs 118.69 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.80 crore against gross selling of Rs 19.81 crore.

 

The US markets ended deeply in red on Thursday as investors' grappled with recession fears post the US Federal Reserve's aggressive rate action. Asian markets are trading mostly in red on Friday following a continued sell-off on Wall Street overnight. Indian markets slumped to 13-month lows on Thursday, failing to hold on to initial gains, as nervousness set in across investors globally after the Fed announced the biggest hike in the key interest rate in almost three decades. Today, markets are likely to make flat-to-positive start despite weak global cues. Traders will be taking encouragement as a periodic labour force survey by the National Statistical Office (NSO) showed the unemployment rate for persons aged 15 years and above in urban areas dipped to 8.2 per cent in January-March 2022 from 9.3 per cent in the year-ago quarter. Some support will come as advance tax paid by companies in the first quarter of the fiscal year grew 46 per cent over that in the equivalent period in 2021-22, indicating healthy tax buoyancy that will provide the government the cushion to absorb part of the higher subsidy bill. Besides, with an improvement in the economy and some degree of softening in inflation, the Reserve Bank of India (RBI) believes that the country is better placed to avoid the pitfalls of stagflation. India's gross domestic product (GDP) growth for FY22 is estimated at 8.7%, which is above the pre-pandemic level. Meanwhile, the Goods and Services Tax (GST) Council will meet on June 28-29 to deliberate on the way forward after end of the five-year compensation period for states on June 30, including rationalization of tax rates in a phased manner, as a multi-year goal due to inflationary concerns. There will be some buzz in the banking stocks as M Rajeshwar Rao, deputy governor of the Reserve Bank of India (RBI), said gross non-performing assets (NPAs) of the banking sector dropped below 6 per cent as of March 2022 - the lowest since 2016 - and net NPAs fell to 1.7 per cent during the same period, indicating that the sector has remained largely unscathed from the ill-effects of the Covid-19 pandemic so far. Telecom stocks will be in focus after the telecom department invites players for pre-bid conference of 5G spectrum on June 20. There will be some reaction in airline stocks as the jet fuel prices were sharply hiked by 16 per cent, recording an all-time high, in order to be in-line with the soaring international crude oil prices. Fertilizer industry stocks will be in limelight with a private report that the landed price of imported urea in the country has softened by almost 27 per cent in May 2022 from the peak seen in December 2021. However, the rates are still considerably higher than the same period last year by almost 95.4 per cent.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

15,360.60

15,176.09

15,704.14

BSE Sensex

51,495.79

50,900.02

52,617.04

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil and Natural Gas Corporation

251.30

143.20

140.01

148.96

Tata Motors

222.61

393.00

381.76

412.56

NTPC

184.94

143.10

140.01

148.16

Hindalco Industries

166.14

333.40

322.55

354.00

Coal India

144.90

179.80

175.00

188.70

 

  • TCS has planned to launch TCS Pace Port Paris, an advanced research and co-innovation center, right at the heart of Paris' business district in October 2022. 
  • Tata Steel's wholly-owned subsidiary -- Tata Steel Mining has acquired additional 10% equity stake in subsidiary company -- Rohit Ferro-Tech for Rs 20.06 crore. 
  • Fitch Ratings has revised outlook of Axis Bank to stable from negative on the Long-Term Issuer Default Ratings. 
  • Bharti Airtel has launched its Fiber-To-The-Home broadband service - Airtel Xstream Fiber in Ladakh and Andaman and Nicobar Islands.
News Analysis