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NSE Intra-day chart (24 May 2022)
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Market Commentary 25 May 2022
Markets likely to open in green tracking Asian counterparts

 

Indian equity benchmarks ended volatile session in red on Tuesday. After a cautious start, markets traded volatile, as ICRA Ratings said the economic growth may have slowed to 3.5 per cent in fourth quarter of 2021-22 from 5.4 per cent in the previous three-month period due to the impact of higher commodity prices on margins, decline in wheat yields and on higher base. The agency said the hiccups in the recovery of the contact-intensive services attributable to the third wave of COVID-19 in the country may have also affected the economic growth in the quarter. In early afternoon deals, key indices managed to trade in green terrain for a little time. Domestic sentiments were positive, as capital markets regulator Sebi allowed mutual funds to launch passively managed Equity-Linked Savings Schemes (ELSS). But again, markets came back in red in the last hours of the trade to end on a lower note, amid a private report stating that the Centre's decision to cut excise duty on petrol and diesel will put pressure on the fiscal deficit which has been estimated at 6.4 per cent of GDP for the current financial year. Besides, metal stocks remained in focus as Icra reacting to the duty-related measures taken by the government said the domestic steel sector has been hit by a moving train. Besides, infra sector stock were also in focus, as Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a neutral outlook for the overall infrastructure sector for FY23, amid likelihood of a stable operating performance for majority of the projects, long-term visibility of revenue under concession agreements and power purchase agreements, and expected improved cargo and traffic volumes. Finally, the BSE Sensex fell 236.00 points or 0.43% to 54052.61 and the CNX Nifty was down by 89.55 points or 0.55% to 16125.15.  

 

Giving back ground following the strong upward move seen in the previous session, the US markets ended mostly lower on Tuesday. The tech-heavy Nasdaq showed a particularly steep drop on the day, ending the session at its lowest closing level since November of 2020. A steep drop by shares of Snap Inc. (SNAP) weighed on the tech sector, with the Snapchat parent plummeting by 43.1 percent to a two-year closing low. The plunge by Snap comes after the company warned of weaker than expected second quarter results, saying the 'macroeconomic environment has deteriorated further and faster than anticipated.' Weakness overseas also carried over onto Wall Street, as a broad package of Chinese measures to support the economy underwhelmed investors. The pullback also came amid lingering concerns aggressive interest rate hikes by the Federal Reserve could lead to a recession. On Wednesday, the Fed is due to release the minutes from its latest monetary policy meeting, which may shed additional light on the outlook for rates. Adding pessimism on Wall Street, the Commerce Department released a report showing a much steeper than expected drop in new home sales in the month of April. The report showed new home sales plunged by 16.6 percent to an annual rate of 591,000 in April after tumbling by 10.5 percent to a revised rate of 709,000 in March. Street had expected new home sales to slump 1.7 percent to a rate of 750,000 from the 763,000 originally reported for the previous month. With the much bigger than expected decrease, new home sales dropped to their lowest annual rate since hitting 582,000 in April of 2020.

 

Crude oil futures settled marginally lower on Tuesday amid reports that U.S. Energy Secretary Jennifer Granholm said the Biden administration hasn't ruled out a ban on petroleum exports. Though, downside remained capped on optimism around plans to unwind lengthy lockdowns in Shanghai, China's largest city, but uncertainty lingers over crude demand from the world's largest oil importer as Beijing increased quarantine efforts in an effort to halt a COVID-19 outbreak. Meanwhile, markets look ahead to weekly oil reports from American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). Benchmark crude oil futures for July delivery fell 52 cents or 0.5% percent to settle at $109.77 a barrel on the New York Mercantile Exchange. However, Brent crude for July delivery added 14 cents or 0.1 percent to settle at $113.56 a barrel on London's Intercontinental Exchange.

 

Indian rupee ended tad lower against dollar on account of sustained dollar demand from importers and banks. Traders were worried as ICRA Ratings said the economic growth may have slowed to 3.5 per cent in fourth quarter of 2021-22 from 5.4 per cent in the previous three-month period due to the impact of higher commodity prices on margins, decline in wheat yields and on higher base. However, downfall remain capped as India and US signed an Investment Incentive Agreement (IIA) at Tokyo. It is a legal requirement for continuing US investment support. The pact would activate proposals worth $4 billion that are under consideration by the US International Development Finance Corporation (DFC). On the global front, euro rose to a one-month high on Tuesday after European Central Bank President Christine Lagarde said interest rates in the eurozone will likely be in positive territory by the end of the third quarter. Finally, the rupee ended at 77.57 (Provisional), weaker by 2 paise from its previous close of 77.55 on Monday.

 

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 7232.40 crore against gross selling of Rs 8517.06 crore, while in the debt segment, the gross purchase was of Rs 82.46 crore against gross selling of Rs 267.73 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.41 crore against gross selling of Rs 2.77 crore.

 

The US markets settled mostly lower on Tuesday as worries that aggressive moves to curb decades-high inflation might tip the US economy into recession dampened investors' risk appetite. Asian markets are trading mostly in green on Wednesday shrugging off a mixed session on Wall Street overnight, though global growth concerns and weak US data keep investors on the back foot. Indian markets failed to hold on to the green for yet another day on Tuesday amid volatile trade on Dalal Street. Losses in IT and FMCG shares pulled the headline indices lower. Today, markets are likely to open in green following gains in Asian counterparts. Sentiments will get a boost with a report that the country's exports rose by 21.1 percent to $23.7 billion during May 1-21, on account of healthy growth in various sectors, such as petroleum products, engineering, and electronic goods. During the second week of this month (May 15-21), the exports grew by about 24 percent to $8.03 billion. Traders may take note of report that pitching India as one of the best investment destinations globally, Union Minister Piyush Goyal asked global business leaders at the World Economic Forum Annual Meeting to come to India and grow with India. Besides, the commerce and industry ministry said as many as 853 foreign direct investment proposals have been disposed of through the foreign investment facilitation portal in the last five years. However, some cautiousness may come as Former World Bank chief economist Kaushik Basu said that even though the fundamentals of the Indian economy are strong, the rise in divisiveness and polarisation in the country is damaging the foundations of the nation's growth. Basu further said India's big challenge is unemployment and joblessness as youth unemployment in India is over 24 per cent, which is among the highest in the world. Meanwhile, stressing on the need to focus more on services sector exports, Union Minister Piyush Goyal said it can help boost the country's overall exports further and called for the government and the businesses to support each other. There will be some buzz in edible oil industry stocks as the government scrapped customs duty and agriculture infrastructure development cess on the import of crude soyabean oil and crude sunflower oil for 20 lakh metric tonnes each per year to ease local prices. Coal industry stocks will be in focus as the government said to meet the rising power demand, coal production increased to 34 million tonnes (MT) in the first half of May, adding that total coal production increased to 33.94 MT, achieving a growth of 36.23 per cent over the production of 24.91 MT during the same period last year. There will be some reaction in sugar sector stocks as the government imposed restrictions on sugar exports from June 1, a move aimed at increasing availability of the commodity in the domestic market and curbing price rise. In the primary market, Aether Industries' IPO received a 33 per cent subscription on the first day of booking. Investors awaited the last leg of earnings reports from India Inc for cues.

 

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

 

Index

Previous close

Support

Resistance

NSE Nifty

16,125.15

16,048.24

16,232.44

BSE Sensex

54,052.61

53,784.47

54,422.56

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Oil & Natural Gas Corporation

191.41

151.00

148.19

155.79

State Bank of India

171.75

463.00

459.86

466.46

NTPC

165.81

147.00

144.91

150.46

ITC

155.47

271.00

269.00

274.00

Tata Motors

145.25

424.70

417.96

429.46

 

  • HDFC Bank has teamed up with Retailio and rolled out new range of co-branded credit cards. This card primarily targeted at chemists and pharmacies in the merchant segment. 
  • IndusInd Bank and Mahagram have joined hands to enhance digital payments ecosystem in the country. 
  • Infosys has been selected by Backcountry to deliver a seamless and secure digital experience making it even easier for customers to pursue their outdoor passions.
  • ONGC has become the first gas producer to trade domestic gas on the Indian Gas Exchange, trading unspecified volumes from its eastern offshore KG-DWN-98/2 block.
News Analysis