In a highly volatile day, Indian equity benchmarks ended higher on Friday after a three-session losing streak, propped up by buying at IT, TECK and Realty counters amid a positive trend overseas. After making a positive start, key gauges soon slipped into red and traded with volatility for most part of the day, as traders got anxious with a report by economic think tank GTRI stating that India's exports of products like coffee, leather hides and paperboard worth $1.3 billion annually to the European Union will get impacted due to the deforestation regulation adopted by the EU earlier this week. Traders also took a note of report that India and Britain are struggling to make progress in free trade talks due to differences on some key tariff lines and investment protection rules, making a deal unlikely during Prime Minister Narendra Modi's second term ending next year. However, markets gained traction in late afternoon deals and settled with gains of around half a percent, as traders got solace after S&P Global Ratings affirmed India's sovereign rating at BBB- for the long term and A-3 for the short term, with a stable outlook, as sound economic fundamentals were expected to underpin growth over the next two to three years. Some support also came with provisional data from the National Stock Exchange showing that foreign institutional investors (FIIs) remained net buyers and bought shares worth Rs 970.18 crore on May 18, 2023. Meanwhile, the Securities Exchange Board of India (Sebi) has proposed to make the total expense ratio (TER) charged by mutual funds (MFs), inclusive of the Goods and Services Tax (GST) charged on management fee and has shared revised expense slabs for MFs to account for the tax outgo. Finally, the BSE Sensex rose 297.94 points or 0.48% to 61,729.68 and the CNX Nifty was up by 73.45 points or 0.41% to 18,203.40.

The US markets snapped two-day gaining streak and ended lower on Friday as Republican negotiators walked out of a meeting over raising the U.S. debt ceiling, offsetting recent optimism about an impending deal. However, selling pressure remained relatively subdued as traders still expect lawmakers to eventually reach a debt ceiling deal. Comments from Federal Reserve Chair Jerome Powell reinforcing expectations the central bank will leave interest rates unchanged next month also helped limit the downside. Citing recent turmoil in the banking sector, Powell suggested interest rates may not need to rise as much as it would have otherwise to achieve our goals. However, Powell noted inflation remains too high and stressed the Fed would be steadfast in pursuit of its goal of bringing inflation down to its 2 percent target. On the sectoral front, Airline stocks moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 1.8 percent. Significant weakness also emerged among housing stocks, with the Philadelphia Housing Sector Index falling by 1.4 percent after reaching its best intraday level in well over a year in early trading. Retail stocks also moved to the downside as the day progressed, resulting in a 1.3 percent drop by the Dow Jones U.S. Retail Index. On the other hand, biotechnology stocks turned in a strong performance on the day, driving the NYSE Arca Biotechnology Index up by 1.1 percent.

Crude oil futures trimmed their initial gains and settled lower on Friday amid reports that the debt ceiling talks paused after Republican negotiators walked out the meeting, offsetting recent optimism about an impending deal. Comments by Federal Reserve Chairman Jerome Powell that inflation remains far above the central bank's objective, and that no decisions had been made yet on the next interest rate action also weighed on markets. Meanwhile, according to a report from Baker Hughes, the oil rig count in the U.S. dropped by 11 to 575 this week, the biggest weekly decline since September 2021. Benchmark crude oil futures for June delivery fell $0.31 or about 0.4 percent to settle at $71.55 a barrel on the New York Mercantile Exchange. Brent crude for July delivery declined $0.14 or 0.17 percent to settle at $75.72 a barrel on London's Intercontinental Exchange.

Rupee settled lower against dollar on Friday weighed down by a strong greenback overseas and surging crude prices in the international market. Traders got anxious as a report by economic think tank GTRI said India's exports of products like coffee, leather hides and paperboard worth $1.3 billion annually to the European Union will get impacted due to the deforestation regulation adopted by the EU earlier this week. On the global front, the pound was heading for its second straight weekly fall against the dollar on Friday, weighed down by a resurgent dollar and weakness in the British economy. Finally, the rupee ended at 82.67 (Provisional), weaker by 5 paise from its previous close of 82.62 on Thursday.

The FIIs as per Friday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 8521.76 crore against gross selling of Rs 6717.12 crore, while in the debt segment, the gross purchase was of Rs 686.38 crore against gross selling of Rs 856.66 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.28 crore against gross selling of Rs 9.80 crore.

The US markets ended lower on Friday as investors fretted over debt default. Asian markets are trading mixed on Monday ahead of debt ceiling talks between U.S. President Joe Biden and House Republican Speaker Kevin McCarthy later in the day. Indian markets reversed their three-day losing streak on the back of renewed buying interest in auto and IT stocks. Today, start of new week is likely to be cautious amid weakness in global markets as investors remain worried about the ongoing debt ceiling negotiations in the US, the resilience of the banking space and the geopolitical situation in Europe. Some volatility may come in the markets ahead of F&) expiry later in the week. Foreign fund outflows likely to dent sentiments. Foreign institutional investors (FIIs) sold shares worth Rs 113.46 crore on May 19, provisional data from the National Stock Exchange showed. However, some respite may come later in the day as the engineering export promotion council said exports of engineering goods to Russia jumped 11 times in April this year to $133.6 million as compared to year-ago month while the US and China markets continued to soften. Some support may come as the RBI said rising for the second consecutive week, India's forex kitty jumped $3.553 billion to $599.529 billion for the week ended May 12. The overall reserves had jumped by $7.196 billion to $595.976 billion for the previous reporting week. Traders may take note of report that the Reserve Bank approved Rs 87,416 crore dividend payout to the central government for 2022-23, nearly triple of what it paid in the previous year. The dividend payout was Rs 30,307 crore for accounting year 2021-22. Besides, retail inflation for farm workers and rural labourers eased marginally to 6.5 per cent and 6.52 per cent in April compared to 7.01 and 6.94 per cent, respectively, in March this year. Meanwhile, the RBI said that currency notes of Rs 2,000 denomination will be withdrawn from circulation. The central bank has asked banks to provide deposit and/or exchange facility for Rs 2,000 notes until September 30, 2023. former finance secretary Subhash Chandra Garg said withdrawal of Rs 2,000 currency notes is a non-event and will have zero impact on the economy and monetary policy. Banking stocks will be in focus with Reserve Bank of India (RBI) data showing that credit offtake remained robust early into the current financial year, with 15.5 per cent growth year on year (YoY) clocked till May 05, 2023 as against 11.8 per cent a year ago. There will be some reaction in the hospitality sector stocks with a private report that the Indian hospitality sector seems to be a in bullish phase after hitting a low due to the pandemic. A blend of diverse positives for the sector in the form of new and emerging trends seems to have led this push. Investors await more of financial results from India Inc for domestic cues, with AB Fashion and Retail, BPCL and Indiabulls Housing Finance, among others due to post its earnings later in the day.

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

Nifty Top volumes

• State Bank of India has entered into partnership with Godrej Agrovet's Oil Palm Business to offer loans to oil palm farmers for setting up micro irrigation facility. 
• JSW Steel has reported 11.91% rise in its consolidated net profit at Rs 3741 crore for Q4FY23 as compared to Rs 3343 crore for the same quarter in the previous year. 
• HCL Technologies has launched its ADvantage Code software solution on AWS Marketplace. 
• Power Grid Corporation of India has reported 3.95% rise in its consolidated net profit at Rs 4,320.43 crore for Q4FY23 as compared to Rs 4,156.44 crore for Q4FY22.