Indian equity benchmarks extended
their losses for the second consecutive session on Wednesday with Sensex
declining by 371 points while the Nifty closing below the 18,200-level, led by
mixed global markets amid worries over the debt ceiling crisis in the US. After
making a cautious start, markets lingered in negative territory throughout the
day, as traders were anxious with the India Meteorological Department (IMD)
stating that a slight delay is expected in the onset of the southwest monsoon over
Kerala and it is likely to arrive by June 4. Some pessimism also came amid the
UN's latest report showing that prospects for a robust global economic recovery
remain dim as the lingering effects of the COVID-19 pandemic carry on. The
report found that risks of a prolonged period of low growth stand, amid
stubborn inflation, rising interest rates, and heightened uncertainties, in
addition to the ever- worsening impact of climate change. Markets extended fall
in afternoon deals, as sentiments remain dampened with a private report stating
that a cash crunch is persisting in India, pushing short-term borrowing costs
above a key policy interest rate and posing risks to an economy that needs
cheaper funding to sustain its recovery. Traders took a note of Indian Banks'
Association (IBA) chief executive Sunil Mehta's statement that banks have
requested the Reserve Bank of India (RBI) for one more year's time to implement
the system of Expected Credit Loss (ECL) for provisioning of loans. At present,
banks set aside money after an asset turns bad, and once the new system is put
in place, it is widely expected to have an one-time impact on banks' profits.
However, in the final hours of the session, the indices cut some losses, as
some support came with exchange data showing that Foreign Institutional
Investors (FIIs) were buyers on Tuesday as they bought equities worth Rs
1,406.86 crore. Finally, the BSE Sensex fell 371.83 points or 0.60% to
61,560.64 and the CNX Nifty was down by 104.75 points or 0.57% to 18,181.75.
The US markets ended higher with
notable gains of over a percent on Wednesday reflected optimism lawmakers will
eventually reach an agreement on raising the U.S. debt ceiling following
Tuesday's meeting between President Joe Biden and top congressional leaders. A
statement from the White House described the meeting as productive and said
Biden is optimistic that there is a path to a responsible, bipartisan budget
agreement. Biden directed staff to continue to meet daily on outstanding
issues, with the president cutting short an upcoming overseas trip to ensure
Congress takes action by the June 1st deadline to avert default. Also, regional
banks helped lead the rebound on Wall Street, with shares of Western Alliance
(WAL) spiking by 10.2 percent after the company said deposit growth for the
current quarter exceeded $2 billion as of May 12. On the economic data front,
the Commerce Department released a report unexpectedly showing a significant
rebound in new residential construction in the month of April. The report said
housing starts jumped by 2.2 percent to an annual rate of 1.401 million in
April after plunging by 4.5 percent to a revised rate of 1.371 million in
March. Street had expected housing starts to drop to an annual rate of 1.405
million from the 1.420 million originally reported for the previous month.
Meanwhile, the Commerce Department said building permits slumped by 1.5 percent
to an annual rate of 1.416 million in April after tumbling by 3.0 percent to a
revised rate of 1.437 million in March. Building permits, an indicator of
future housing demand, were expected to climb to a rate of 1.430 million from
the 1.413 million originally reported for the previous month.
Crude oil futures settled
significantly higher on Wednesday with gains of over 2% on the back of
prospects of higher demand and amid optimism over U.S. debt ceiling
negotiations. The International Energy Agency (IEA) said in its report expects
demand would outpace supply by 2 million barrels per day in the second half of
the year, with China contributing up to 60% of oil demand growth. Meanwhile,
data released by the Energy Information Administration (EIA) showed crude
inventories in the U.S. rose by 5 million barrels in the week ended March 12.
The EIA data showed gasoline stocks dropped by 1.38 million barrels last week,
while distillate stockpiles increased by 0.080 million barrels. Benchmark crude
oil futures for June delivery rose $1.97 or about 2.8 percent to settle at
$72.83 a barrel on the New York Mercantile Exchange. Brent crude for July delivery
gained $2.05 or about 2.7 percent to settle at $76.97 a barrel on London's
Intercontinental Exchange.
Indian rupee weakened against the
US dollar on Wednesday, weighed down by the strength of the American currency
in the overseas market and a negative trend in domestic equities. Traders were
cautious amid the UN's latest report showing that prospects for a robust global
economic recovery remain dim as the lingering effects of the COVID-19 pandemic
carry on. The report found that risks of a prolonged period of low growth
stand, amid stubborn inflation, rising interest rates, and heightened
uncertainties, in addition to the ever- worsening impact of climate change. On
the global front, the pound slipped against a strengthening dollar on Wednesday
and maintained its losses after Bank of England Governor Andrew Bailey
reiterated he expected price pressures to ease, as soon as April. Finally, the
rupee ended at 82.38 (Provisional), weaker by 13 paise from its previous close
of 82.25 on Tuesday.
The FIIs as per Wednesday's data
were net buyers in both equity and debt segment. In equity segment, the gross
buying was of Rs 7934.31 crore against gross selling of Rs 6218.41 crore, while
in the debt segment, the gross purchase was of Rs 1727.15 crore against gross
selling of Rs 564.81 crore. Besides, in the hybrid segment, the gross buying
was of Rs 9.63 crore against gross selling of Rs 23.49 crore.
The US markets close higher on
Wednesday after US President Joe Biden and Republican Party's House of
Representatives speaker Kevin McCarthy vowed to avoid an economically
catastrophic default. Asian markets are trading mostly in green on Thursday
following overnight gains on Wall Street. Indian markets extended losses for
the second straight day on Wednesday as sentiment turned cautious with fears of
US debt default mounting as the deadline to raise the government's borrowing
limit draws near. Today, start of the session is likely to be positive tracking
firm cues from global markets as leaders in the US assured there won't be a
debt default. Some support will come with a private report that the country's
current account deficit may narrow to 1.4 per cent of GDP or $50 billion in
2023 as compared to 2.4 per cent in the previous year as net remittances flows
are expected to be $104 billion. However, there may be some cautiousness with a
private report that the value of foreign portfolio investment (FPI) in Indian
equities was at $542 billion in the March quarter of 2023, a decline of 11 per
cent from the preceding year, largely due to the exodus of foreign money from
the domestic market. In comparison, the value of FPI in Indian equities was
$612 billion in the January-March quarter of 2022. There will be some buzz in
the fertilizer and agriculture related stocks with report that the Union
Cabinet approved a Rs 1.08 lakh crore package for fertiliser subsidy for the
April-September kharif season. Of the Rs 1.08 lakh crore subsidy, Rs 70,000
crore is for urea and Rs 38,000 crore for Di-ammonium Phosphate, or DAP. The
subsidy is likely to benefit about 12 crore farmers. The Kharif season is
crucial for farmers as they rely heavily on fertilisers during this time for
crop cultivation and yield enhancement. IT hardware stocks will be in focus as
the Union Cabinet approved the modified production-linked incentive (PLI)
scheme for information technology (IT) hardware to boost local manufacturing of
products like tablets and laptops, and more than doubled its budgetary outlay
to Rs 17,000 crore from the previous provision of Rs 7,325 crore. There will be
some reaction in hotel industry stocks with private report that Indian hotels
in terms of room rate and occupancy have not only reached but surpassed
pre-Covid levels. Investors also await quarterly results of companies including
State Bank of India, ITC, GAIL (India) and Interglobe Aviation, to be out with
results later in the day.
Support
and Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
18,181.75
|
18,095.06
|
18,288.71
|
BSE
Sensex
|
61,560.64
|
61,273.84
|
61,913.68
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata
Steel
|
288.95
|
106.05
|
105.24
|
107.19
|
State
Bank of India
|
237.40
|
587.20
|
580.96
|
591.96
|
ICICI
Bank
|
192.73
|
942.40
|
936.00
|
948.60
|
HDFC
Bank
|
152.33
|
1640.85
|
1627.46
|
1652.11
|
Tata
Motors
|
136.85
|
515.75
|
510.85
|
522.30
|
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Larsen & Toubro's construction arm -- L&T construction has secured EPC orders in India for its Buildings & Factories Business.
Maruti Suzuki has clocked the 30 lakh sales milestone for WagonR.