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NSE Intra-day chart (29 May 2024)
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Market Commentary 30 May 2024
Benchmarks likely to get cautious start tracking weak global cues

Indian equity benchmarks ended in the deep red on Wednesday, weighed down by losses in Banking, Oil & Gas and IT stocks. The decline was a result of high volatility on Dalal Street and uncertainty over Lok Sabha election results and GDP data. Markets made a negative start and remained under pressure for whole day, as traders remained cautious as data released by the government showed the ratio of cost overruns in central government projects rose to a 12-month high of 20.09% in April compared with 18.65% in the previous month. It said the anticipated cost of 1,838 projects with a value of Rs 150 crore and above, at Rs 33.2 lakh crore, was Rs 5.6 lakh crore higher than the original cost, with the ratio of delayed projects also rising compared with the previous few months.  Moreover, market participants also remained on sidelines ahead of monthly F&O expiry on Thursday. Markets extended losses in late afternoon deals, tracking weakness in Asian counterparts coupled with surge in oil prices overnight and a jump in U.S. Treasury yields to multi-week highs. Traders overlooked report by SBI Research in which it anticipates India's GDP growth could touch 8 per cent in FY24, with strong performance across various economic indicators and favorable monsoon conditions. The report also highlights the potential impact of global economic resilience on India's growth trajectory. Despite the challenges faced by the global economy, including geopolitical tensions and extreme weather events, global growth remains resilient, supported by easing inflationary pressures and strong employment conditions. Traders failed to take support with data showing that foreign institutional investors (FIIs) remained net buyers on May 28 as they bought Indian equities worth Rs 65.57 crore, while domestic institutional investors (DIIs) continued their buying as they purchased equities worth Rs 3,231.67 crore on the same day. Finally, the BSE Sensex fell 667.55 points or 0.89% to 74,502.90, and the CNX Nifty was down by 183.45 points or 0.80% points to 22,704.70.

The US markets settled in red on Wednesday with the Dow showing a notable decline, fell to its lowest closing level in almost a month. The weakness on Wall Street came amid a continued increase by treasury yields, with the yield on the benchmark ten-year note climbing to its highest levels in nearly a month. The ten-year yield jumped above 4.5 percent on Tuesday, as auctions of two-year and five-year notes attracted well below average demand. The continued advance by treasury yields has added to recent concerns about the outlook for interest rates ahead of key inflation data later in the week. On Friday, the Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Federal Reserve. The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed's next monetary policy meeting on June 11-12. On the sectoral front, a pullback by the price of crude oil led to considerable weakness among energy stocks, dragging both the NYSE ARCA Oil Index and the Philadelphia Oil Service Index down by 2.2 percent. Airline stocks also saw substantial weakness on the day, with the NYSE Arca Airline Index plunging by 2.0 percent to a nearly six-month closing low. America Airlines (AAL) led the sector lower, plummeting by 13.5 percent after the airline lowered its second quarter earnings guidance. Gold stocks also saw significant weakness amid a decrease by the price of the precious metal, moving notably lower along steel, semiconductor and telecom stocks.

Crude oil futures ended lower on Wednesday despite hopes the Organization of Petroleum Exporting Countries and allies, collectively known as OPEC+ will decide to extend production cuts into the third quarter. Concerns about the outlook for interest rates, and the likely adverse impact the high borrowing costs will have on growth and energy demand, weighed on oil prices. Also, a firm dollar hurt oil prices. Earlier in the day, oil prices moved higher amid heightened Middle East tensions and hopes that major oil producing nations will continue with their production cuts. Benchmark crude oil futures for July delivery fell $0.60 or 0.75% to settle at $79.23 a barrel on the New York Mercantile Exchange. Brent crude for July delivery was down $0.74 or 0.88% to $83.20 per barrel on London's Intercontinental Exchange.

Indian rupee depreciated against the dollar on Wednesday tracking a negative trend in domestic equities and elevated crude oil prices. Dollar demand from importers and oil marketing companies (OMCs) also weighed on the rupee. Traders failed to take any sense of relief with report by SBI Research in which it anticipates India's GDP growth could touch 8 per cent in FY24, with strong performance across various economic indicators and favorable monsoon conditions. The report also highlights the potential impact of global economic resilience on India's growth trajectory. On the global front, the ringgit closed lower against the United States (US) dollar on Wednesday as upbeat consumer sentiment data in the US, coupled with rising 10-year US Treasury bond yields, has renewed worries that US interest rates would stay higher for longer. Finally, the rupee ended at 83.39 (Provisional), weaker by 20 paise from its previous close of 83.19 on Tuesday.

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 14771.36 crore against gross selling of Rs 12636.82 crore, while in the debt segment, the gross purchase was of Rs 1399.30 crore with gross sales of Rs 1120.08 crore. Besides, in the hybrid segment, the gross buying was of Rs 20.03 crore against gross selling of Rs 40.18 crore.

The US markets ended lower on Wednesday amid further gains in Treasury yields and concern over the timing and scale of possible interest rate cuts from the Federal Reserve. Asian markets are trading mostly in red on Thursday ahead of a slew of economic data releases to be out on Friday. Indian markets extended weakness on Wednesday, weighed by profit booking in financial shares and nervousness ahead of the Lok Sabha election results. Today, markets are likely to get cautious start tracking overnight losses on Wall Street coupled with weakness in Asian counterparts. Traders likely to avoid taking long positions ahead of the monthly F&O expiry for May series later in the day. Also, uncertainty ahead of Lok Sabha election results may dampen sentiments in the markets. Foreign fun outflows likely to dent sentiments in the domestic markets. Foreign institutional investors (FIIs) offloaded shares worth Rs 5,841.84 crore on May 29. As per a private report, FIIs selling now topped the Rs 40,000 crore mark in May, the highest in any month since January 2023. However, some support may come later in the day as rating firm S&P Global Ratings revised outlook for the Indian economy to positive from stable and has affirmed the overall rating at BBB- citing robust growth and improved quality of government expenditure. Traders may take note of Finance Minister Nirmala Sitharaman's statement that the revision in India's rating outlook to positive by S&P reflects solid growth performance and promising outlook for the coming years. She added India is well on track to become the third-largest economy in the third term of the government and become a Viksit Bharat by 2047. There will be some buzz in the banking stocks as an analysis by S&P Global Market Intelligence showed that India's largest banks are poised to improve their asset quality in the current fiscal year, bolstered by record net incomes that will enable them to enhance their balance sheets and underwriting standards. Sugar sector stocks will be in focus with report that the country's net sugar consumption might touch an unprecedented 30 million tonnes in the next 2024-25 season (October to September) on the back of a steady 2.2 per cent year-on-year growth rate. There will be some reaction in oil & gas sector stocks with Petroleum Secretary Pankaj Jain's statement that taxation on natural gas remains key to increasing the use of natural gas in the economy, and the government is 'cautiously optimistic' about bringing the fuel within the fold of the Goods and Services Tax (GST) regime in 2024-25. Meanwhile, Awfis Space Solutions is all set to debut on the bourses today.

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


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