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NSE Intra-day chart (22 May 2024)
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Market Commentary 23 May 2024
Benchmarks to get cautious start amid fading hopes of early US rate cut

Indian equity benchmarks ended a range-bound session on a positive note on Wednesday aided by buying in Realty, FMCG and IT stocks. After making a slightly positive start, markets turned cautious amid foreign fund outflows. Foreign institutional investors (FIIs) offloaded shares worth Rs 1,874.54 crore on May 21. Some concern also came as domestic rating agency ICRA projected India's GDP growth to moderate to a four-quarter low of 6.7 per cent in March quarter of 2023-24 fiscal. For the full 2023-24 fiscal, ICRA estimates GDP growth to come in at 7.8 per cent. ICRA Chief Economist, Head-Research & Outreach Aditi Nayar said the lower volume growth coupled with diminishing gains from commodity prices dampening the profitability of some of the industrial sectors is expected to dampen India's GVA growth in Q4 FY2024. However, markets soon gained some positive momentum and managed to keep their heads above water for whole day as traders took support after an article on the state of the economy published in the Reserve Bank of India's (RBI's) May Bulletin noted that India is likely to grow by 7.5 per cent in the first quarter of the current financial year (Q1FY25), with rising aggregate demand and non-food spending in the rural economy. Sentiments remained positive amid a private report stating that private sector investment is likely to pick up in the second half of the current financial year in sectors like hotel and tourism, after years of government-led robust capex to promote infrastructure building. The government has been pushing capital expenditure to promote economic growth. The push in expenditure has helped the country sustain the growth momentum in the aftermath of the Covid pandemic. Finally, the BSE Sensex rose 267.75 points or 0.36% to 74,221.06, and the CNX Nifty was up by 68.75 points or 0.31% points to 22,597.80.

The US markets ended lower on Wednesday as the Fed minutes suggested officials expect to maintain interest rates at current levels longer than previously thought. The minutes of the April 30-May 1 meeting said participants highlighted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum. The participants subsequently assessed that it would take longer than previously anticipated for them to gain greater confidence inflation is moving sustainably toward 2 percent. Meanwhile, traders seemed reluctant to make significant moves ahead of the release of quarterly results from AI darling Nvidia (NVDA). On the sectoral front, gold stocks moved sharply lower over the course of the session, resulting in a 3.7 percent nosedive by the NYSE Arca Gold Bugs Index. The sell-off by gold stocks came amid a steep drop by the price of the precious metal. A sharp decline by the price of crude oil also contributed to significant weakness among oil service stocks, as reflected by the 3.4 percent plunge by the Philadelphia Oil Service Index. Housing stocks also saw considerable weakness following the release of a report unexpectedly showing a continued decrease by existing home sales in August, with the Philadelphia Housing Sector Index tumbled by 2.4 percent. Brokerage, oil producer and steel stocks also showed notable moves to the downside, while biotechnology and semiconductor stocks bucked the downtrend.

Crude oil futures ended lower on Wednesday after data showed an unexpected rebound in crude oil inventories in the U.S. in the week ended May 17th. According to the data released by the Energy Information Administration (EIA), crude inventories in the U.S. increased by 1.8 million barrels last week, after falling by 2.5 million barrels in the previous week. Crude oil inventories were expected to drop by 3.1 million barrels in the week. Besides, concerns about the outlook for oil demand, and Fed interest rates weighed as well on oil prices. Benchmark crude oil futures for June delivery fell $1.09 or more than 1.4% to settle at $77.57 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $0.98 or 1.18% to $81.9 per barrel on London's Intercontinental Exchange.

Indian rupee settled higher on Wednesday amid softening crude oil prices. Traders got support after an article on the state of the economy published in the Reserve Bank of India's (RBI's) May Bulletin noted that India is likely to grow by 7.5 per cent in the first quarter of the current financial year (Q1FY25), with rising aggregate demand and non-food spending in the rural economy. Investors overlooked report that domestic rating agency ICRA projected India's GDP growth to moderate to a four quarter low of 6.7 per cent in March quarter of 2023-24 fiscal. For the full 2023-24 fiscal, ICRA estimates GDP growth to come in at 7.8 per cent. On the global front, the pound jumped on Wednesday after data showed UK inflation neared the Bank of England's target in April, but did not slow as much as expected, leaving the chances of a June rate cut unchanged at around 50%. Finally, the rupee ended at 83.30 (Provisional), up by 1 paisa from its previous close of 83.31 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity segments, while they were net buyers in debt segments. In equity segment, the gross buying was of Rs 17870.48 crore against gross selling of Rs 19747.76 crore, while in the debt segment, the gross purchase was of Rs 2411.22 crore with gross sales of Rs 1686.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 22.86 crore against gross selling of Rs 37.53 crore.

The US markets ended lower on Wednesday as investors parsed minutes from the U.S. Federal Reserve's most recent policy meeting. Asian markets are trading mixed on Thursday as markets digested the implications of policymakers in major economies preferring to take patient approach to monetary easing amid sticky inflation. Indian markets ended a range-bound session with decent gains on Wednesday on buying in blue-chip -- Reliance Industries and Infosys amid mixed cues from global markets. Today, markets are likely to get cautious start after minutes of the last US Federal Reserve meeting revealed Fed officials' concerns over sticky inflation, with members seemingly getting cold feet on possible interest rate cuts. Foreign fund outflows likely to dent sentiments in domestic markets. Foreign institutional investors sold Indian equities worth Rs 686 crore on May 22. However, traders may take note of report that the Reserve Bank of India's board approved transfer of Rs 2.11 trillion ($25.35 billion) as surplus to the federal government for the fiscal year ended March. As per the interim budget estimates for fiscal year 2024/25, the Narendra Modi-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks and other financial institutions. Some support may come with a private report that India is seen as an emerging economic superpower of the world. India's central bank in its monthly economic review says there is a growing optimism that India is on the cusp of a long-awaited economic take-off. India is positioned to remain the fastest-growing major economy, demonstrating resilience amid geopolitical challenges and supply chain pressures. Gold and jewelary industry stocks will be in focus with Crisil's report that benefiting from strong sales, organised gold jewellery retailers are set to clock 17-19 per cent revenue growth in the current financial year 2024-25. The rating agency asserted that the projected revenue would be driven by higher realisations stemming from elevated gold prices, while volume remains steady. There will be some reaction in paper industry stocks as The Indian Paper Manufacturers Association (IPMA) said imports of paper and paperboard in the country rose by 34 per cent to 19.3 lakh tonnes in 2023-24, driven by higher shipments from ASEAN countries. It added that the increasing imports of these products are hurting the domestic industry. Stocks of agrochemical industry will be in limelight with a private report that the Indian agrochemicals industry is projected to clock a robust compound annual growth rate (CAGR) of nine per cent from FY2025 to FY2028, driven largely by government support, expanding production capacities, a flourishing domestic and export market, and a steady stream of innovative products. Meanwhile, shares of Go Digit will list on the bourses today, where the issue price has been fixed as Rs 272.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,597.80

22,510.80

22,657.15

BSE Sensex

74,221.06

73,951.67

74,399.13

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

429.20

173.05

171.20

175.20

Coal India

283.47

501.85

493.19

508.94

HDFC Bank

199.98

1463.75

1452.74

1470.19

SBIN

192.39

818.75

812.65

825.75

ONGC

179.35

278.60

275.66

282.76

  • Cipla and its wholly owned subsidiary Cipla USA Inc have received the final approval for its ANDA for Lanreotide Injection 120 mg/0.5 mL, 90 mg/0.3 mL, 60 mg/0.2 mL from USFDA.
  • Tata Consultancy Services has signed a deal to modernize the core banking technology of Burgan Bank, a leading commercial bank in Kuwait.
  • Larsen & Toubro's heavy engineering vertical has dispatched two mammoth Ethylene Oxide Reactors for a project of the renowned chemical giant BASF in China.
  • Bajaj Finance has raised Rs 1,000 crore through the allotment of 1,00,000 Non-Convertible Debentures, at face value of Rs 1 lakh each on private placement basis.

News Analysis