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NSE Intra-day chart (16 May 2023)
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Market Commentary 17 May 2023
Benchmarks to open in red on weak global cues


Indian equity benchmarks snapped a two-day winning streak and ended with losses of over half a percent on Tuesday, dragged by Auto, Healthcare and banking stocks. The markets made a cautious start and remained range bound for couple of hours, as traders were anxious with the government data showing that India's exports contracted by 12.7 per cent, third month in a row, to $34.66 billion in April even as the trade deficit reduced to a 20-month low of $15.24 billion. The decline in exports is mainly on account of poor demand in India's key destinations - the Europe and the US. Some pessimism also came as a private weather forecaster suggests that southwest monsoon might be delayed and weak, and needs to be watched closely. Markets saw selling pressure in the afternoon session, as sentiments remained down-beat with the commerce ministry data showing that India's exports to the UAE contracted by 22 per cent to $2.23 billion as against $2.86 billion in April. Indian and the UAE have operationalised a comprehensive free trade agreement since May 1 last year. Meanwhile, imports to the UAE also declined by 34.08 per cent to $3.15 billion in April. Traders failed to get support with Commerce and Industry Minister Piyush Goyal's statement that a free trade agreement between India and four-nation bloc EFTA will help enhance two-way commerce, investment flows, job creation and economic growth. Traders took a note of report that the government has urged the heavy equipment manufacturers to produce such machinery in the domestic market, which will help reduce the country's imports worth over Rs 3,500 crore annually. Finally, the BSE Sensex fell 413.24 points or 0.66% to 61,932.47 and the CNX Nifty was down by 112.35 points or 0.61% to 18,286.50.


The US markets ended in red on Tuesday with Dow Jones settling down by over a percent due to a decrease by shares of Home Depot (HD), with the home improvement retailer falling by 2.2 percent. Home Depot slipped after the company reported weaker than expected first quarter revenues and lowered its full-year guidance. Notable declines by Dow components Nike (NKE), 3M Co. (MMM) and Amgen (AMGN) also weighed on the blue chip index. The ongoing concerns over the U.S. debt ceiling too added pressure on the markets as President Joe Biden meets with top congressional leaders. While Biden has called for a clean bill to raise the debt ceiling, Republicans are pushing for spending cuts as well as increased work requirements for social safety net programs. On the economic data front, the Commerce Department said retail sales rose by 0.4 percent in April after falling by a revised 0.7 percent in March. Street had expected retail sales to climb by 0.7 percent compared to the 1.0 percent slump originally reported for the previous month. Excluding an increase in sales by motor vehicle and parts dealers, retail sales still rose by 0.4 percent in April after sliding by 0.5 percent in March. The rebound in ex-auto sales matched street estimates. A separate report from the Federal Reserve showed industrial production climbed by 0.5 percent in April, while revised data showed production was unchanged in each of the two previous months. Street had expected industrial production to come in unchanged compared to the 0.4 percent increase originally reported for the previous month.


Crude oil futures ended lower on Tuesday as lower-than-expected industrial production and retail sales data from China raised the concerns about the outlook for energy demand. the National Bureau of Statistics said China's industrial production posted an annual growth of 5.6% in April, faster than the 3.9% increase in March. However, the pace of expansion was weaker than street forecast of 10.9%. At the same time, retail sales growth accelerated sharply to 18.4% in April from 10.6% in March. Still, the rate missed expectations for a 21% increase. Though, down side remained capped amid a somewhat subdued U.S. dollar, and supply concerns due to wildfires in Canada. Benchmark crude oil futures for June delivery declined $0.25 or about 0.4 percent to settle at $70.86 a barrel on the New York Mercantile Exchange. Brent crude for July delivery fell $0.32 or 0.4 percent to settle at $74.91 a barrel on London's Intercontinental Exchange.


Indian rupee ended higher against the American currency on Tuesday, as the American currency retreated from its elevated levels. Easing crude oil prices also supported Rupee. Traders overlooked report that India's exports contracted by 12.7 per cent, third month in a row, to $34.66 billion in April even as the trade deficit reduced to a 20-month low of $15.24 billion. The decline in exports is mainly on account of poor demand in India's key destinations - the Europe and the US. On the global front, dollar on Tuesday sat just below the previous day's five-week high, while the pound dropped sharply then recovered after a rise in Britain's jobless numbers suggested fewer Bank of England rate increases could be needed in coming months to bring down inflation. Finally, the rupee ended at 82.21 (Provisional), stronger by 10 paise from its previous close of 82.31 on Monday.


The FIIs as per Tuesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 7668.54 crore against gross selling of Rs 5788.50 crore, while in the debt segment, the gross purchase was of Rs 539.75 crore against gross selling of Rs 894.92 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.51 crore against gross selling of Rs 9.34 crore.


The US markets ended lower on Tuesday with a disappointing forecast from Home Depot, mixed economic data. Asian markets are trading mixed on Wednesday as Japan's economy grew 1.6 per cent YoY in Q1, above expectations of a 0.7 per cent growth. Indian markets closed in red on Tuesday on the back of weakness in index heavyweights - HDFC, HDFC Bank and Reliance Industries. Today, markets are likely to get pessimistic start tracking losses in US equities overnight as Wall Street focus shifts to the ongoing talks on the debt ceiling limit. Mixed corporate results from Indian companies likely to impact the trading sentiments. Traders will be concerned as the India Meteorological Department (IMD) said a slight delay is expected in the onset of the southwest monsoon over Kerala and it is likely to arrive by June 4. Scientists, however, said the delay is unlikely to impact Kharif sowing and total rainfall over the country. The southwest monsoon normally sets in over Kerala on June 1, with a standard deviation of about 7 days. Meanwhile, India and the European Union (EU) have discussed the need to expedite the ongoing trade deal negotiations by finding convergence on all issues on the sidelines of the first ministerial meeting of the India-European Union Trade and Technology Council meeting in Brussels. Insurance industry stocks will be in focus with a private report that the Insurance Regulatory and Development Authority of India (Irdai) has decided to lower the solvency requirement for surety bonds to 1.5 times, from 1.875 times after receiving feedback from the insurance players. There will be some reaction in pharma stocks as the Centre and the pharmaceutical and medical devices industry discussed key issues related to the pricing of drugs and medical devices, including trade margin rationalisation (TMR). Investors await more of financial results from India Inc for domestic cues, with Jubilant Foodworks, Devyani International, Deepak Fertilisers, GSK Pharma, JK Tyre, RailTel Corp, Sterlite Tech, Thermax and others due to post its earnings later in the day.


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