Indian equity
benchmarks declined for second straight session on Thursday mirroring losses in
global markets after the US Federal Reserve hinted that it may raise interest
rates at a much faster pace than assumed. Equity indices started session deep
in the red, as traders were concerned as India reported 62,224 new Covid-19
cases on Wednesday, taking the total to 29,633,105. The death count climbed to
3,79,573 with 2,542 fresh fatalities. Sentiments remained downbeat with a RBI
article stating that bank deposits and currency holding with the public have
been adversely impacted during the second COVID wave, indicating a heavy outgo
towards pandemic-induced medical expenditure. Sentiments were also fragile as
foreign institutional investors (FIIs) stood as net sellers in the capital
market as they offloaded shares worth Rs 870.29 crore on June 16, as per
provisional exchange data. Markets magnified their losses in late afternoon
session as anxiety came as the Reserve Bank of India (RBI) in its State of the
Economy report June bulletin has said that it sees reasons to be cautiously
optimistic as the second wave of the pandemic seems to have hit domestic
demand, while other economic indicators show the economy is coming back on
stream. Traders also took a note of the commerce ministry said that sellers who
do not declare local content percentage while uploading their products at
public procurement portal GeM will lose out on business and will not be able to
participate in bids in which buyer has chosen to procure only made-in-India
items. However, key indices were eventually able to claw back some of their
losses by the close, as traders found some solace with Confederation of Indian
Industry (CII) stating that the country's gross domestic product (GDP) is
expected to grow at 9.5 per cent in the current financial year (FY 2021-22).
This will take the GDP to a level that is slightly higher than in FY20. The
strong growth in the second-half will be supported by robust external demand
and large scale coverage of vaccination allowing resumption of economic
activity. Finally, the BSE Sensex fell 178.65 points or 0.34% to 52,323.33,
while the CNX Nifty was down by 76.15 points or 0.48% to 15,691.40.
The US markets ended mostly lower
on Thursday following the broad-based weakness seen in the previous session.
The closely-watched Federal Reserve meeting Wednesday spurred a sell-off in
equities after the central bank moved up its timeline for rate hikes, seeing
two increases in 2023. The central bank also hiked its inflation forecast to
3.4% for the year, a percentage point higher than the Federal Open Market
Committee's forecast in March. Adding to the bearish sentiment, the Labor
Department released a report showing an unexpected uptick in initial jobless
claims in the week ended June 12th. The report said initial jobless claims rose
to 412,000, an increase of 37,000 from the previous week's revised level of
375,000. The increase surprised participants, who had expected jobless claims
to edge down to 359,000 from the 376,000 originally reported for the previous
week. Jobless claims had declined in eight out of the nine previous weeks,
falling to their lowest levels since March of 2020. However, suggesting strong
economic growth will continue in the near term, the Conference Board released a
report showing another significant increase by its index of leading US economic
indicators. The Conference Board said its leading economic index surged up by
1.3 percent in May, matching the revised jump in April as well as Street
estimates. The matching increases follow a 1.4 percent spike in March.
Crude oil futures ended lower on
Thursday weighed down by a stronger dollar. The US dollar strengthened against
a basket of other currencies after the Federal Reserve signalled it might raise
interest rates at a much faster pace than assumed. A firmer greenback makes oil
priced in dollars more expensive in other currencies, potentially weighing on
demand. Crude oil futures for July fell $1.11 or 1.5 percent to settle at
$71.04 barrel on the New York Mercantile Exchange. August Brent crude dropped
$1.23 or 1.65 percent to settle at $73.16 a barrel on London's Intercontinental
Exchange.
Indian rupee ended substantially
lower against the US dollar on Thursday as US' Federal Reserve officials held
interest rates near zero but signaled they expect two increases by the end of
2023, pulling forward the date of liftoff as the economy recovers. Traders were
also worried RBI's article stating that bank deposits and currency holding with
the public have been adversely impacted during the second COVID wave,
indicating a heavy outgo towards pandemic-induced medical expenditure. On the
global front, dollar extended gains on Thursday after the U.S. Federal Reserve
surprised markets by signalling it would raise interest rates and end emergency
bond-buying sooner than expected. Finally, the rupee ended 74.08, weaker by 76
paise from its previous close of 73.32 on Wednesday.
The FIIs as per Thursday's data
were net seller in equity segment, while net buyer in debt segment. In equity
segment, the gross buying was of Rs 5927.94 crore against gross selling of Rs
6814.20 crore, while in the debt segment, the gross purchase was of Rs 782.42
crore with gross sales of Rs 661.13 crore. Besides, in the hybrid segment, the
gross buying was of Rs 3.75 crore against gross selling of Rs 13.29 crore.
The US markets ended mostly lower
on Thursday as investors continued to interpret new guidance from the Federal
Reserve, which is now looking at potentially raising interest rates as soon as
2023. Asian markets are trading mixed on Friday following an overnight drop for
the Dow Jones Industrial Average on Wall Street. Indian markets ended lower on
Thursday, weighed by banks and financials after the US Federal Reserve pulled
up the rate hike timeline to 2023 from 2024 earlier citing rising inflation.
Today, markets are likely to make positive start after two days of losses amid
mixed global cues. Inflation worries likely to ease somewhat as oil prices fell
from multi-year highs on demand worries after new coronavirus cases jumped in
Britain. Some support will come as the Confederation of Indian Industry (CII)
urged the government to provide a fiscal stimulus worth Rs 3 trillion along
with direct cash transfers to perk up domestic demand. The industry body also
sought expansion in the Reserve Bank of India (RBI) balance sheet to meet the
demand exigencies of the pandemic. Meanwhile, India maintained 43rd rank on an
annual World Competitiveness Index compiled by the Institute for Management
Development (IMD) that examined the impact of COVID-19 on economies around the
world this year. However, traders may be concerned with a private report that
lockdowns in April and May to contain Covid-19 have likely led to India's
economy contracting 12 per cent in the June quarter as against 23.9 per cent
contraction in the same quarter in 2020. Besides, an assessment made by the
Reserve Bank revealed that the devastating second wave of the coronavirus
pandemic in April-May is estimated to have cost the nation Rs 2 lakh crore in
terms of output. There will be some cautiousness as India reported 67,208 new
Covid-19 infections over the past 24 hours, data from the health ministry
showed. The country's total case load now stood at 29.70 million, while total
fatalities are at 381,903, the data showed. Coronavirus-related deaths rose by
2,330 overnight. Traders may take note of Fitch Ratings' statement that global
inflation trends and associated risks around interest rates and exchange rates
may have direct sovereign credit implications, and added that a critical
question for government debt sustainability is how inflation will affect
debt/GDP ratios. There will be some reaction in Information and broadcasting
industry stocks as the Centre amended the Cable Television Network Rules to
provide for a three-layer statutory mechanism for the redressal of complaints
relating to content broadcast by television channels. Auto stocks will be in
focus with a private report stating that India's automotive industry sold 5.35
lakh units in retail sales in May, a sharp 55 percent decline compared to April
this year and a 71 percent decline compared to May 2019.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
15,691.40
|
15,615.65
|
15,768.25
|
BSE
Sensex
|
52,323.33
|
52,067.94
|
52,551.31
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Adani
Ports And Special Economic Zone
|
708.12
|
646.90
|
621.95
|
688.25
|
Tata
Motors
|
292.36
|
345.65
|
340.96
|
351.61
|
State
Bank of India
|
230.48
|
420.25
|
415.91
|
425.26
|
ITC
|
214.76
|
205.65
|
204.44
|
207.44
|
Oil
& Natural Gas Corporation
|
181.24
|
125.10
|
123.40
|
126.90
|
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