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Market Commentary 24 May 2024
Markets likely to open in red following weak global cues

Thursday turned out to be a remarkable day of trade for Indian equity benchmarks, with frontline gauges recapturing their crucial 75,400 (Sensex) and 22,950 (Nifty) levels. After a flat start, the markets steadily climbed throughout the day, following buying in Auto, Capital Goods and Banking shares. Sentiments remained up-beat as private survey showed business activity in India expanded robustly in May, helped by the dominant services industry. It also showed exports rising at a record pace and the sharpest job addition rate in nearly 18 years. HSBC's flash India Composite purchasing managers' Index, compiled by S&P Global, rose slightly to 61.7 this month from April's final reading of 61.5, marking the 34th month above the 50-level separating growth from contraction. Markets extended rally in second half of trading session and settled at record closing highs, taking support from a private report that India is seen as an emerging economic superpower of the world. India's central bank in its monthly economic review says there is a growing optimism that India is on the cusp of a long-awaited economic take-off. India is positioned to remain the fastest-growing major economy, demonstrating resilience amid geopolitical challenges and supply chain pressures. Traders took a note of report that the Reserve Bank of India's board approved transfer of Rs 2.11 trillion ($25.35 billion) as surplus to the federal government for the fiscal year ended March. As per the interim budget estimates for fiscal year 2024/25, the Narendra Modi-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks and other financial institutions. Finally, the BSE Sensex rose 1196.98 points or 1.61% to 75,418.04, and the CNX Nifty was up by 369.85 points or 1.64% points to 22,967.65.

The US markets ended lower on Thursday with Dow Jones Industrial Average settling with cut of over 600 points, as concerns about the outlook for interest rates continued to hang over the markets following Wednesday's slightly hawkish Fed minutes. Further, potentially adding to the rate concerns, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 18th. The Labor Department said initial jobless claims slid to 215,000, a decrease of 8,000 from the previous week's revised level of 223,000. Start had expected jobless claims to edge down to 220,000 from the 222,000 originally reported for the previous week. Markets moved mostly higher at the start of trading on Thursday but failed to sustain the initial upward move and came under pressure over the course of the session. The initial strength on markets came as tech stocks rallied following upbeat quarterly results from chipmaker Nvidia (NVDA). Shares of Nvidia (NVDA) surged after the AI darling reported better than expected fiscal first quarter results and provided upbeat guidance. On the sectoral front, networking stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Networking Index down by 2.4 percent. Significant weakness was also visible among interest rate-sensitive utilities and commercial real estate stocks, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index both tumbling by 2.2 percent.

Crude oil futures ended lower on Thursday, magnifying recent sessions' losses, amid concerns about the outlook for demand. Concerns about the outlook for interest rates hurt as well. Traders await the OPEC+ meeting scheduled for June 1. It is widely expected that the group will extend the voluntary production cuts beyond June. Benchmark crude oil futures for June delivery fell $0.70 or more than 0.9% to settle at $76.87 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $0.54 or 0.65% to $81.36 per barrel on London's Intercontinental Exchange.

The forex market remained shut on May 23 on account of Buddha Purnima.

The FIIs as per Wednesday's data were net sellers in equity segments, while they were net buyers in debt segments. In equity segment, the gross buying was of Rs 17870.48 crore against gross selling of Rs 19747.76 crore, while in the debt segment, the gross purchase was of Rs 2411.22 crore with gross sales of Rs 1686.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 22.86 crore against gross selling of Rs 37.53 crore.

The US markets ended lower on Thursday as fears of a delayed Fed rate cut resurfaced following positive activity data. Growth in activity at service providers was the fastest in a year and manufacturing output expanded at a quicker pace. Asian markets are trading in red on Friday as Wall Street continued to extend losses, despite a post-earnings rally from tech darling Nvidia. Indian markets soared to new highs on Thursday, buoyed by the Reserve Bank of India's (RBI) record surplus transfer to the government. The markets were further bolstered by robust foreign portfolio investor (FPI) inflows and easing election-relation jitters. Today, domestic indices are likely to open in red tracking overnight losses on Wall Street as well as weakness in Asian counterparts. Traders will be concerned with a private report that investments by private equity and venture capital funds declined by 35 per cent to $ 4.4 billion in April compared with $ 6.8 billion in the year-ago period. As per the report, the number of deals in April stood at 98, which was 56 per cent higher than the year-ago period. However, some support may come later in the day amid foreign fund inflows. Foreign institutional investors turned buyers on May 23 as they bought Indian equities worth Rs 4,670.95 crore. Traders may take note of S&P Global Rating's statement that India can get rating support over time if it utilises the highest-ever dividend of over Rs 2.11 trillion received from the Reserve Bank to reduce fiscal deficit.  The RBI board has decided to pay a record Rs 2.11 trillion dividend to the government for the fiscal ended March 2024, more than double of what was budgeted expectation of Rs 1.02 trillion. There will be some buzz in the road industry stocks as ratings agency CRISIL Ratings (Crisil) said despite tepid exports, the revenues of road transport fleet operators are likely to grow by 9-11 per cent in 2024-25 (FY25) on the back of better domestic demand. The agency expects operating margins of fleet operators to increase by 75-100 basis points (bps) in the ongoing fiscal year. There will be some reaction in footwear industry stocks as apex body for leather and footwear exporters Council for Leather Exports (CLE) asked the government to formulate a national policy for the sector with a view to attract investments, boost India's shipments and create jobs. It said that though there are schemes and support measures at central and state levels, there is a need for holistic development of the entire sector through a national policy. Infrastructure industry stocks will be in limelight as India Ratings and Research (Ind-Ra) expects stable operating performance for most infrastructure projects in the current financial year. The rating agency maintained its stable outlook on the infrastructure sector, including the transport segment which signifies low chances of rating changes for the sector in the near to medium term.

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

Index

Previous close

Support

Resistance

NSE Nifty

22,967.65

22,698.86

23,115.01

BSE Sensex

75,418.04

74,550.95

75,892.51

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

493.78

175.15

171.84

177.14

Power Grid

357.05

319.00

311.76

323.46

ITC

262.34

440.20

436.20

444.55

HDFC Bank

204.31

1492.85

1468.05

1506.65

ONGC

177.20

283.20

280.01

285.46

  • Tech Mahindra has entered into strategic partnership with Fuji TV, the leading broadcaster in Japan.
  • Power Grid Corporation of India basis has reported 3.62% fall in its consolidated net profit at Rs 4,166.33 crore for Q4FY24 as compared to Rs 4,322.87 crore for Q4FY23.
  • Mahindra & Mahindra (M&M) has launched the new AX5 Select (AX5 S) variant for the XUV700, starting at Rs 16.89 lakh (ex-showroom).
  • ITC has reported 3.99% fall in its consolidated net profit at Rs 5,190.71 crore for Q4FY24 as compared to Rs 5,406.52 crore for the same quarter in the previous year.

News Analysis