Indian equity benchmarks reversed intraday losses and ended marginally higher on Friday, led by gains in Auto, Banking and Financial Services stocks. Markets made a negative start as traders remained on sidelines ahead of macro-economic data -- consumer price index (CPI) and Index of Industrial Production (IIP) -- due to be released later in the day. There are expectations that April retail inflation to have cooled as rises in food and fuel prices moderated. However, key indices trimmed most of their initial losses in morning deals, taking support from CRISIL Rating's statement that India's vulnerability to global shocks is expected to reduce in FY24 as the Current Account Deficit (CAD) improves amid challenging external financing conditions. CAD is India's major short-term external liability, affecting the exchange rate and investor sentiment. After peaking at 3.7 per cent of Gross Domestic Product (GDP) in the second quarter of the previous fiscal (FY22), CAD shrank significantly to 2.2 per cent in the third quarter of FY23. This decline was driven by falling oil imports, boost from services exports, and rising remittances. Buying activity witnessed in the second half of the session pulled benchmark indices to the positive zone. Traders found support with provisional data from the National Stock Exchange showing that foreign institutional investors (FII) bought shares worth Rs 837.21 crore on May 11, 2023. Traders were taking a note of private report that the commerce ministry has stepped in to cut India's ballooning trade deficit with Russia, asking all Export Promotion Councils (EPCs) to identify additional products India can sell to Russia to expand its own exports. Meanwhile, another private report showed that Indian-owned companies operating in the UK have hit a record high of 954 this year, registering a significant increase over the previous year. Finally, the BSE Sensex rose 123.38 points or 0.20% to 62,027.90 and the CNX Nifty was up by 17.80 points or 0.10% to 18,314.80.

The US markets trimmed most of their losses but failed to enter green terrain and ended lower with marginal cut on Friday. Initially, there was some concern following the release of a report from the University of Michigan showing U.S. consumer sentiment deteriorated by much more than anticipated in the month of May. The report said the consumer sentiment index tumbled to 57.7 in May from 63.5 in April, while street had expected the index to edge down to 63.0. With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 56.8 last November. Meanwhile, long-run inflation expectations rose to 3.2 percent in May from 3.0 percent in April, reaching their highest reading since 2011. Worries about the debt ceiling crisis also continued to hang over the markets, with the postponement of a meeting between President Joe Biden and top lawmakers adding to jitters about a potential default. On the sectoral front, most of the major sectors ended the day showing only modest moves, contributing to the relatively lackluster close by the broader markets. Airline and banking stocks saw some weakness on the day, while natural gas stocks moved notably higher along with the price of the commodity. Meanwhile, investors will be looking ahead to the latest U.S. economic data, including reports on retail sales, industrial production, housing starts and existing home sales.  

Crude oil futures ended lower on Friday amid the dollar's strength and worries about the outlook for energy demand. Fears of the U.S. falling into a recession and the impasse in debt ceiling talks boosted dollar's safe-haven appeal and hurt oil prices. Meanwhile, according to a report from Baker Hughes, the total number of total active drilling rigs in the United States fell by 17 this week after falling by 7 last week. It is the largest single-week drop in the number of oil and gas rigs in the United States since June 2020. The total rig count fell to 731 this week, just 17 rigs higher than the rig count this time in 2022. Benchmark crude oil futures for June delivery fell $0.83 or about 1.2 percent to settle at $70.04 a barrel on the New York Mercantile Exchange. Brent crude for July delivery declined $0.72 or 0.95 percent to settle at $74.26 a barrel on London's Intercontinental Exchange.

Rupee settled lower against dollar on Friday as a strong greenback overseas weighed on investor sentiments. Traders were cautious amid worries about economic slowdown and renewed concerns about the turmoil in the US banking sector. Traders ignored private report showed that Indian-owned companies operating in the UK have hit a record high of 954 this year, registering a significant increase over the previous year. On the global front, pound steadied on Friday after data showed the UK economy avoided recession in the first quarter, recovering from its biggest one-day drop since mid-April the previous day. U.S. dollar was little changed on Friday but was heading for its biggest weekly gain since February. Finally, the rupee ended at 82.16 (Provisional), weaker by 7 paise from its previous close of 82.09 on Thursday.

The FIIs as per Friday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 7947.13 crore against gross selling of Rs 6956.78 crore, while in the debt segment, the gross purchase was of Rs 1480.75 crore against gross selling of Rs 468.66 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.10 crore against gross selling of Rs 19.21 crore.

The US markets ended lower on Friday led by weaker megacap shares following their recent rally, as data showed U.S. consumer sentiment dropped to a six-month low. Asian markets are trading mixed on Monday as investors braced for a China policy rate decision and economic data this week, while awaiting a host of U.S. Federal Reserve officials to speak to vindicate market pricing of rate cuts this year. Indian markets reversed early losses to end modestly higher on Friday despite many uncertainties on the global front. Today, start of the new week is likely to be pessimistic amid muted global sentiment due to rising worries over a possible US debt default. Investors will be also keeping eye on the WPI data for April to be out later in the day. Traders also will be analyzing the Congress party's sweeping win in the Karnataka Assembly elections. Traders will be concerned as India's industrial production growth fell to a five-month low of 1.1% in March 2023. The poor performance of the power and manufacturing sectors was primarily responsible for this decline, with the manufacturing sector growing only 0.5% compared to 1.4% a year ago. Power generation declined by 1.6% in March 2023, compared to a growth of 6.1% last year. However, some respite may come with easing inflation. India's retail inflation rate in April fell to an 18-month low on the back of a high base and easing price pressures across categories, giving the central bank elbow room to maintain an extended pause on policy rates. Foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FII) bought shares worth Rs 1,014.06 crore on May 12, provisional data from the National Stock Exchange showed. Also, India's foreign exchange reserves rose by U$7.196 billion to $595.976 billion in the week that ended on May 5, data released by the Reserve Bank of India showed. Meanwhile, Capital markets watchdog Sebi has floated a consultation paper for regulating all web-based platforms offering fractional ownership of real estate assets to protect small investors. There will be some reaction in defence industry stocks with report that, the Ministry of Defence (MoD) on Sunday promulgated a list of 928 strategically important spares and components that would face curbs on their import, With the aim of promoting aatmanirbharta (self-reliance) in weaponry and defence equipment and minimise imports by defence public sector undertakings (DPSUs). Auto industry stocks will be in focus with Passenger vehicle sales continued to be on a double-digit growth trajectory even as the country transitioned to BS VI phase II emission norms from April. In fact, domestic sales (wholesales) of passenger vehicles this April was the highest recorded in any April, said the Society of Indian Automobile Manufacturers (SIAM). Moreover, Tube Investments, Astral, Coromandel International, Pfizer, PVR Inox and a slew of other companies will announce their quarterly results later in the day.

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

Nifty Top volumes

• Tata Motors has reported consolidated net profit of Rs 5496.04 crore for fourth quarter ended March 31, 2023 as compared to net loss of Rs 992.05 crore for the same quarter in the previous year. 
• Bajaj Finserv has slashed home loan interest rate to 8.50% p.a. onwards. 
• Cipla has reported 40.68% rise in its consolidated net profit at Rs 521.51 crore for fourth quarter ended March 31, 2023 as compared to Rs 370.70 crore for the same quarter in the previous year. 
• Bharti Airtel is planning to offer content from FanCode to its subscribers. Airtel Xstream now offers content from 19 OTT platforms.