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NSE Intra-day chart (10 May 2022)
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Market Commentary 11 May 2022
Markets likely to get cautious start amid mixed global cues


Indian equity benchmarks ended lower in highly volatile trade on Tuesday due to selling pressure in metal, utilities, power and realty stocks. The markets opened on a negative note amid weak global cues and remained volatile through the day, oscillating between gains and losses. Traders were concerned with a private report that Indian retail inflation likely surged to an 18-month high in April, largely driven by rising fuel and food prices and staying well above the Reserve Bank of India's upper tolerance limit for a fourth consecutive month. There was some cautiousness as Meghalaya Governor Satya Pal Malik said increasing inflation and unemployment are going to create a situation of crisis in the country but no leader is ready to speak on the issues. However, key gauges managed to trade in green terrain in afternoon deals, taking support from Union Finance Minister Nirmala Sitharaman's statement that with licence quota raj prevailing during the 70 years of Congress regime, the policy change brought in by the central government under Prime Minister Narendra Modi has created new opportunities for the private sector by allowing them to manufacture products that were normally made by public sector units (PSUs). Some support also came with private report stated that improving business sentiment has boosted the overall hiring demand which witnessed a 15 per cent year-on-year growth in April, led by banking, financial services and insurance sector as well as recovery in the retail sector. However, benchmarks failed to hold on to the green in volatile trade, as traders are concerned that central banks of key developed economies could resort to more rate hikes going ahead to temper rising inflation, which could hurt growth and trigger more foreign fund outflows from emerging markets, including India. Finally, the BSE Sensex fell 105.82 points or 0.19% to 54,364.85 and the CNX Nifty was down by 61.80 points or 0.38% to 16,240.05.


The US markets ended mostly higher on Tuesday, after moving sharply lower over the three previous sessions. Bargain hunting contributed to early strength on markets, as some traders looked to pick up stocks at reduced levels. However, traders remained wary about inflation, higher interest rates and the outlook for the global economy. Stocks continued to fluctuate over the course of the session as traders looked ahead to the release of key inflation data in the coming days. The Labor Department is due to release its report on consumer price inflation on Wednesday, with the annual rate of price growth expected to slow to 8.1 percent in April from 8.5 percent in March. The latest snapshot of inflation could impact expectations regarding how aggressively the Federal Reserve plans to raise interest rates. On the sectoral front, biotechnology stocks showed a substantial rebound following recent weakness, with the NYSE Arca Biotechnology Index surging by 3.3 percent after ending the previous session at its lowest closing level in over two years. Bargain hunting also contributed to a bounceback by semiconductor stocks, resulting in a 2.5 percent jump by the Philadelphia Semiconductor Index. The index also ended Monday's trading at a two-year closing low. Meanwhile, tobacco stocks showed a significant move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 3.5 percent to its lowest closing level in well over a year.


Crude oil futures ended lower on Tuesday, magnifying their previous session' losses, on concerns over a likely drop in energy demand due to slowing global economic growth.  Oil prices were weighed down by concerns over demand from China due to the ongoing lockdowns in the country, and on Saudi Arabia's decision to cut oil prices. Further, a stronger dollar weighed as well on oil prices. Benchmark crude oil futures for June delivery fell $3.33 or 3.2% percent to settle at $99.76 a barrel on the New York Mercantile Exchange. Brent crude for July delivery drooped $3.14 or 2.98 percent to settle at $102.80 (Provisional) a barrel on London's Intercontinental Exchange.


Erasing previous session drubbing, Indian rupee ended stronger against dollar on Tuesday, a day after melting to its all-time low of 77.44. Traders got some support with private report stating that the Confederation of British Industry (CBI), Britain's largest business organisation, and its Indian counterpart, the Confederation of Indian Industry (CII), have agreed to set up a new joint commission to increase cross-industry collaboration and to push the trade deal over the line. However, weak domestic equities and persistent foreign fund outflows restricted the gains. On the global front, pound was little changed on Tuesday, pausing after a slide to its lowest levels in nearly two years on signs that a weakening economy will force the Bank of England to slow its interest-rate hiking cycle. Finally, the rupee ended at 77.34 (Provisional), stronger by 10 paise from its previous close of 77.44 on Monday.


The FIIs as per Tuesday'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 5377.39 crore against gross selling of Rs 8268.71 crore, while in the debt segment, the gross purchase was of Rs 413.05 crore with gross sales of Rs 139.63 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.85 crore against gross selling of Rs 8.33 crore.


The US markets ended mostly higher on Tuesday with big growth shares rising after the previous day's selloff as Treasury yields tumbled. Asian markets are trading mixed on Wednesday as investors globally await a key US inflation reading to assess the course of monetary policy action going forward. Indian markets ended a volatile session in the red on Tuesday dragged by oil & gas, metal and IT shares though gains in select financial and FMCG names limited the downside. Today, markets are likely to make cautious start amid concerns of a global economic slowdown. Traders will be concerned as data released by the RBI showed that India's outward foreign direct investment (OFDI) nearly halved to $3.39 billion in April on an annual basis. The OFDI stood at $6.71 billion in April 2021. On sequential basis too, the outward investment from India in April was lower compared to USD 3.44 billion in March 2022. There will be some cautiousness with a private report that the goods and services tax (GST) council is mulling a 28 per cent tax on crypto currencies, at par with the current GST on casinos, betting and lottery. Traders may take note of a report that Commerce and industry ministers of India and Oman will hold a meeting on May 11, 2022 to discuss ways to further boost economic ties between the two countries. The bilateral trade between the two countries has risen by 82 per cent to $9.94 billion in 2021-22. Meanwhile, Finance Minister Nirmala Sitharaman has asked states to build infrastructure and do energy planning thereby ensuring uninterrupted, quality supply of power is made available to industries at reasonable rates, enabling them to grow their businesses. Oil & gas industry stocks will be in focus with report that India's fuel consumption moderated and slipped 4% in April from the previous month, as elevated domestic prices slowed activity in the world's third biggest oil consumer. There will be some reaction in edible oil industry stocks with report that India's edible oil imports are set to fall for the third year in a row on a rise in local oilseed supplies and as a rally in vegetable oil prices to a record high dented demand. Insurance industry stocks will be in limelight with a private report that the life insurance business this fiscal will face some pressure owing to a combination of factors like reversing interest rate cycle, volatility in the stock markets, high inflation and the return of postponed discretionary consumption hitting the middle class savings. There will be some earnings announcements too to keep the markets buzzing. In the primary market, logistics services giant Delhivery's Rs 5,235 crore IPO will open for subscription today. Stainless steel pipes and tubes manufacturer Venus Pipes & Tubes' IPO will also open for subscription today and close on Friday.


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