After trading higher for better
part of the day, Indian equity benchmarks turned volatile during the afternoon
session, and ultimately ended marginally lower on Wednesday. Initially,
supportive global cues led to a positive start of the markets. Sentiments
remained upbeat as rating agency ICRA has forecasted the economy to grow 12-13
per cent in the first quarter of the current fiscal, citing the second highest
business activity index reading in 13 months in April. Some support also came
as the Directorate General of Trade Remedies (DGTR) has initiated several
systemic and procedural changes for improving the ease of doing business and
reducing the compliance burden on stakeholders. Traders also took a note of RBI
article stating that improving infrastructure, ensuring low and stable
inflation, and maintaining macroeconomic stability is critical for reviving
animal spirits and spurring growth. It said the Indian economy consolidated its
recovery, with most constituents surpassing pre-pandemic levels of activity.
However, volatility struck the bourses in second half of the session as key
gauges erased all the gains to end lower, as traders turned cautious with Niti
Aayog CEO Amitabh Kant's statement that India has done extremely well on the
vaccination front and the challenge for the country is to grow 8-9 per cent
over the next three decades. Kant further said that rise in per capita income
of India is critical for removing poverty in the country. Some concern also
came as credit rating agency, S&P Global Ratings in its Global Macro Update
to Growth Forecasts report has cut India's growth projection for the current
fiscal to 7.3 percent from 7.8 percent earlier pegged in December last year
amid rising inflation and the longer-than-expected Russia-Ukraine conflict.
Meanwhile, RBI's monthly bulletin for May 2022 said Reserve Bank of India
turned net seller of the US currency in March after it sold $20.101 billion on
a net basis in the spot market. Finally, the BSE Sensex fell 109.94 points or
0.20% to 54,208.53 and the CNX Nifty was down by 19.00 points or 0.12% to
16,240.30.
The US markets ended deeply in
red with Target losing around a quarter of its stock market value and
highlighting worries about the US economy after the retailer became the latest
victim of surging prices. Retail stocks helped lead the markets lower on the
day, with the Dow Jones US Retail Index plunging by 7.7 percent to its lowest
closing level in almost two years. Target (TGT) posted a particularly steep
loss after the discount retailer reported quarterly earnings that missed street
estimates. Meanwhile, Substantial weakness was also visible among
transportation stocks, as reflected by the 7.4 percent nosedive by the Dow
Jones Transportation Average. Housing stocks also saw significant weakness on
the day, dragging the Philadelphia Housing Sector Index down by 4.6 percent. On
the economic data front, a report released by the Commerce Department showed a
modest decrease in new residential construction in the month of April. The
Commerce Department said housing starts edged down by 0.2 percent to an annual
rate of 1.724 million from a revised rate of 1.728 million in March. The slight
drop in housing starts came as single-family housing starts plunged by 7.3
percent to an annual rate of 1.100 million. Meanwhile, the report showed
building permits, an indicator of future housing demand, tumbled by 3.2 percent
to an annual rate of 1.819 million from a revised rate of 1.879 million in
March.
Crude oil futures ended lower on
Wednesday despite data showing a drop in crude inventories in the week ended
May 13. Data released by the Energy Information Administration (EIA) said crude
inventories dropped by 3.4 million barrels last week (May 13), as against
expectations for a rise of 2.1 million barrels. Further, a stronger dollar amid
rising prospects of sharper interest rate hikes by the Federal Reserve too
contributed to the drop in crude oil prices. Benchmark crude oil futures for
June delivery fell $2.81 or 2.5% percent to settle at $109.59 a barrel on the
New York Mercantile Exchange. Brent crude for July delivery dropped $2.41 or
2.4 percent to settle at $109.52 (Provisional) a barrel on London's
Intercontinental Exchange.
Erasing previous session gains,
Indian rupee settled substantially weaker amid unabated foreign fund outflows
and stronger greenback in overseas markets. Sentiments were fragile as S&P
Global Ratings cut India's growth projection for the current fiscal to 7.3
percent from 7.8 percent earlier on rising inflation and the
longer-than-expected Russia-Ukraine conflict. In its Global Macro Update to
Growth Forecasts, S&P said inflation remaining higher for a long is a
worry, which requires central banks to raise rates more than what is currently
priced in, risking a harder landing, including a larger hit to output and
employment. On the global front, dollar edged higher on Wednesday, a day after
posting its biggest single-day drop in more than two months after U.S. Federal
Reserve chief Jerome Powell struck a more hawkish tone as the central bank
battles to rein in surging inflation. Finally, the rupee ended at 77.61
(Provisional), weaker by 17 paise from its previous close of 77.44 on Tuesday.
The FIIs as per Wednesday's data
were net sellers in equity segment, while net buyers in debt segment. In equity
segment, the gross buying was of Rs 6301.04 crore against gross selling of Rs
7963.46 crore, while in the debt segment, the gross purchase was of Rs 242.74
crore against gross selling of Rs 154.88 crore. Besides, in the hybrid segment,
the gross buying was of Rs 4.47 crore against gross selling of Rs 7.98 crore.
The US markets ended lower on
Wednesday as concerns about rising inflation on economic growth soured
sentiment. Asian markets are trading in red on Thursday as fears resurface
about worsening inflation and its impact on world economic growth. Indian
markets failed to hold early gains and ended lower on Wednesday. Today,
benchmark indices are likely to make gap-down opening amid a global sell-off.
Traders will be concerned as the United Nations said India is expected to grow
6.4% in 2022, well below the 8.8% growth in 2021, as higher inflationary
pressures and uneven recovery of the labour market are likely to curb private
consumption and investment. There will be some cautiousness as India Ratings
and Research said the average headline inflation is set to accelerate to a
nine-year high at 6.9 per cent in FY23, and the Reserve Bank may go for more
rate hikes during the fiscal. It added that the RBI will hike rates by another
75 basis points and possibly up to 125 basis points (1.25 percentage point) as
well if the turn of events and data are very adverse. However, some respite may
come with report that global rating agency Moody's Investor Service does not
see the Russia-Ukraine war to derail India's economic recovery as the country
has come back on track following a gruelling COVID-19 pandemic. Some support
may come with a private report that foreign direct investment (FDI) has been
rising annually in contrast with the heavy selling by foreign portfolio
investors (FPIs) in recent times. Gross FDI inflows were at $83.6 billion in
FY22, surpassing $82 billion a year earlier. Meanwhile, the Union Cabinet has
approved advancing the target of blending 20 per cent ethanol in petrol by 5
years to 2025-26 as well as allowing more feedstocks for the production of
biofuels in a bid to cut reliance on imported oil for meeting the country's
energy needs. There will be some buzz in the banking industry stocks as global
rating agency Moody's said that India's economy is back on track after the pandemic
and the military conflict will not derail the country's recovery, creating
favorable operating conditions for the country's banks. Edible oil industry
stocks will be in focus as Solvent Extractors' Association of India (SEA) said
oilmeals export increased by 10 per cent in April to nearly 3.34 lakh tonnes on
higher shipments of rapeseed meal. There will be some reaction in textile
industry stocks as the textiles ministry has asked the revenue department to
remove duty on cotton imports that reach Indian shores by September 30. Telecom
industry stocks will be in limelight with a private report that telecom gear
makers say that if all goes well, they are ready to roll out the first phase of
5G services from October this year and cover the country's top 30-50 cities (in
limited areas) by March 2023. Investors also awaited the last leg of corporate
earnings from India Inc for cues.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
16,240.30
|
16,167.74
|
16,356.34
|
BSE
Sensex
|
54,208.53
|
53,964.28
|
54,619.39
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata Motors
|
204.90
|
416.30
|
411.11
|
424.41
|
ITC
|
202.00
|
266.50
|
263.84
|
268.49
|
Bharti Airtel
|
189.92
|
694.45
|
680.05
|
718.00
|
Hindalco Industries
|
180.52
|
435.90
|
426.80
|
441.70
|
NTPC
|
176.11
|
149.00
|
147.16
|
150.86
|
Reliance Industries is reportedly planning to submit a bid for Boots UK, a British medical retail chain, by month-end in a transaction which would cost as much as $10 billion.
M&M has sold entire stake in Meru Travel Solutions to Mahindra Logistics and following the sale, the shareholding of the company in MTSPL has become Nil.
HDFC and HDFC Life Insurance Company have made strategic investment in Xanadu Realty.
Sun Pharmaceutical Industries' one of wholly-owned subsidiaries is planning to launch a first-in-class oral drug, Bempedoic Acid, in India for reducing LDL cholesterol.