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Market Commentary 21 May 2024
Markets to get flat-to-positive start amid mixed global cues


Indian equity benchmarks extended previous session's gains and ended higher on Friday, driven by gains in Consumer Durables, Auto and Realty stocks. Markets made a slightly positive start but soon turned cautious as persistent foreign fund outflow weighed on market sentiments. Foreign institutional investors continued to sell Indian equities, with net sales of Rs 776 crore worth of shares on May 16. However, markets gained momentum and then traded within a narrow range for whole day as traders took support with Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal's statement that 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. Some optimism also came 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. Sentiments remained positive in late afternoon deals, taking support from Federation of Indian Export Organisations (FIEO) President Ashwini Kumar's statement that 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. He also said the country's services exports are also likely to reach $390-400 billion this fiscal. Some support also came with a private report stating that India registered very robust economic growth performance and has become an alternative investment destination for many western companies as less and less foreign investment is going into China. Traders took note of credit rating agency Crisil's report that the near-term challenge to India's exports owing to the geopolitical uncertainties seems to have been limited so far but remains a key monitorable. However, gains remained capped as concerns over election results continued to weigh. On Saturday, Sensex and Nifty ended the special trading sessions with mild gains, led by buying interest in IT, financial and energy shares amid foreign fund inflows. Finally, the BSE Sensex rose 88.91 points or 0.12% to 74,005.94, and the CNX Nifty was up by 35.90 points or 0.16% points to 22,502.00.  

The US markets ended mostly in green on Monday. The advance by the Nasdaq reflected strength in the tech sector, with semiconductor stocks turning in a particularly strong performance on the day. Chipmaker Micron Technology (MU) helped lead the way higher, surging by 3.0 percent after Morgan Stanley upgraded its rating on the company's stock to Equal Weight from Underweight. Ai darling Nvidia (NVDA) also shot up by 2.5 percent ahead of the release of its fiscal first quarter results after the close of trading on Wednesday. However, a steep drop by shares of JPMorgan Chase (JPM) weighed on the Dow, with the financial giant tumbling by 4.5 percent after ending last Friday's trading at a record closing high. The pullback by JPMorgan came after CEO Jamie Dimon implied during remarks at the company's annual investor day that he may retire in fewer than five years. Besides, overall trading remained somewhat subdued as traders seemed reluctant to make more significant bets amid a lack of major U.S. economic data on the day.

Crude oil futures ended lower on Monday despite geopolitical tensions and the death of Iran's President and Foreign Minister in a helicopter crash. Oil prices were weighed down by concerns the Federal Reserve will likely keep interest rates higher for a longer time. A couple of Fed officials said recently that they are not yet ready to say inflation trends are again moving sustainably back to the central bank's 2% target, despite last week's data showing signs that consumer price pressures are easing. Benchmark crude oil futures for June delivery fell $0.26 or more than 0.32% to settle at $79.8 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $0.27 or 0.32% to $83.71 per barrel on London's Intercontinental Exchange.

Indian rupee ended higher against the U.S. dollar on Friday on positive domestic markets and expectations of some fresh foreign inflows. Traders took some support with Federation of Indian Export Organisations (FIEO) President Ashwini Kumar's statement that 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. He also said the country's services exports are also likely to reach $390-400 billion this fiscal. Besides, 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. On the global front, dollar headed for its biggest weekly fall versus the euro in two-and-a-half months on Friday as signs of cooling inflation and a softening U.S. economy raised the prospect of rate cuts. Finally, the rupee ended at 83.37 (Provisional), up by 13 paise from its previous close of 83.50 on Thursday.

The FIIs as per Friday'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 16778.82 crore against gross selling of Rs 17401.15 crore, while in the debt segment, the gross purchase was of Rs 2297.16 crore with gross sales of Rs 1380.75 crore. In the hybrid segment, the gross buying was of Rs 44.89 crore against gross selling of Rs 48.01 crore.

The US markets ended mostly in green on Monday as investors weighed hawkish statements from the Federal Reserve against evidence of cooling U.S. inflation. Asian markets are trading mixed on Tuesday as tech shares pushed the Nasdaq Composite to record highs. Indian markets the special trading sessions scheduled on Saturday ended with mild gains, led by buying interest in IT, financial and energy shares. Stock market exchanges BSE and the NSE were closed on Monday, May 20, due to the fifth phase of Lok Sabha elections in India. Today, markets are likely to get flat-to-positive start amid mixed global cues. Sentiments will get boost as India Ratings and Research expects the country's GDP growth rate for the March quarter at 6.2 per cent and around 6.9-7 per cent for the 2023-24 fiscal. The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter and 8.4 per cent in the December quarter of 2023-24. Some support will come as data shared by the Reserve Bank of India (RBI) showed that India's foreign exchange reserves rose for the second straight week, by $2.561 billion to $644.151 billion in the week that ended on May 10. Preceding these two weeks, the forex kitty had seen three consecutive weeks of decline. Besides, Secretary in Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh said India has recently relaxed foreign direct investment norms in the space sector and there is a possibility of further FDI liberalisation in certain other areas when the new government will come to power. He added that in the last few years, India has liberalised FDI policy in many segments. However, there may be some cautiousness amid foreign fund outflows. Foreign institutional investors continue to sell Indian equities, with net sales of Rs 92.95 crore worth of shares on May 18. Traders may be concerned with a private report that demand-supply mismatches could keep prices of pulses elevated until the new crop starts arriving in the market in October, putting further pressure on already high food inflation. Edible oil industry stocks will be in focus as the Solvent Extractors' Association of India data showed that India's overall oilmeal exports during April 2024 were 6 per cent lower on a yearly basis at 4.65 lakh tonnes. During the same month last year, the total exports were 4.93 lakh tonnes. There will be some reaction in port industry stocks as an analysis by S&P Global Market Intelligence showed that the volume of container movements increased at most Indian ports on a yearly basis during the first quarter of 2024. The biggest increase was registered at Kattupalli port with a yearly increase of 91 per cent, as per the report by the financial information and analytics firm. Meanwhile, investors will be closely monitoring key earnings releases from major companies such as BHEL, Metropolis Healthcare, and Aether Industries.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,502.00

22,474.61

22,524.81

BSE Sensex

74,005.94

73,896.80

74,138.93

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

36.02

167.80

167.30

168.30

ONGC

20.11

278.95

277.70

280.95

Tata Motors

19.30

954.00

948.00

959.00

Power Grid

15.07

316.00

314.59

317.84

NTPC

10.50

366.00

364.66

367.66

  • JSW Steel through its wholly owned subsidiary, JSW Natural Resources, has executed Quotas Sale Agreement, Assignment of Contractual Position Agreement to acquire 92.19% equity stake and shareholders loans of Minas de Revuboe.
  • Tata Motors' passenger vehicles and passenger electric mobility subsidiaries -- Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility have tied up with Bajaj Finance for to extend supply chain finance solutions to its passenger and electric vehicle dealers.
  • Bharti Airtel has submitted the earnest money deposit of Rs 1,050 crore for the upcoming spectrum auction.
  • Larsen & Toubro's construction arm -- L&T construction has secured multiple orders for its Buildings & Factories Business.

News Analysis