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NSE Intra-day chart (25 May 2023)
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Market Commentary 26 May 2023
Benchmarks likely to make flat-to-negative start on Friday


The F&O expiry session on Thursday depicted its true trend and the benchmark indices, despite volatility, managed to end the session above neutral lines as traders went for value buying in last leg of trade. After making a cautious start, key gauges traded choppy for most part of the day as investors remain concerned about the state of the global economy. Deadlock in the US debt ceiling discussion too kept traders on the edge. Sentiments remain dampened since beginning of the trade after the Reserve Bank of India (RBI) in its latest monthly bulletin has said that gross foreign direct investment (FDI) flows to India, for the first time in a decade, declined on an annual basis in 2022-23 to $71 billion mainly due to a slowdown in the global economy. Traders shrugged off Reserve Bank Governor Shaktikanta Das' statement that the growth for 2022-23 is expected to be more than the advance estimate of 7 per cent on the back of economic momentum maintained in the third and fourth quarters of the last fiscal. Market participants also ignored Commerce and industry Minister Piyush Goyal's statement that India has a strong foreign exchange reserve and the country is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years. India's forex kitty jumped $3.553 billion to $599.529 billion for the week ended May 12, according to the Reserve Bank of India. However, buying which took place in last leg of trade helped markets to end the session in green terrain as traders went for beaten down but fundamentally strong stocks. Meanwhile, global crude oil prices fell after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting next week. Finally, the BSE Sensex rose 98.84 points or 0.16% to 61,872.62 and the CNX Nifty was up by 35.75 points or 0.20% to 18,321.15.


The US markets ended mostly in green on Thursday, with Nasdaq settling over one and half percent. The rebound on markets partly reflected a positive reaction to earnings news from Nvidia (NVDA), with the chipmaker soaring by 24.4 percent to a record closing high. Nvidia spiked after reporting better than expected fiscal fourth quarter results and forecasting fiscal second quarter revenue well above street estimates. The news contributed to a rally by semiconductor stocks, resulting in a 6.8 percent surge by the Philadelphia Semiconductor Index. The index reached its best closing level in over a year. Software and computer hardware stocks also saw significant strength, driving the NYSE Arca Computer Hardware Index and the Dow Jones U.S. Software Index up by 3.9 percent and 3.2 percent, respectively. However, traders kept an eye on any developments in the U.S. debt ceiling negotiations amid lingering concerns about a potential default. On the economic data front, economic front, revised data released by the Commerce Department showed economic growth in the U.S. slowed less than previously estimated in the first three months of 2023. The Commerce Department said gross domestic product climbed by 1.3 percent in the first quarter compared to the previously estimated 1.1 percent increase. Street had expected the pace of GDP growth to be unrevised. Despite the upward revision, the GDP growth in the first quarter still reflects a slowdown from the 2.6 percent jump seen in the fourth quarter of 2022.


Crude oil futures snapped 3-day winning streak and ended deeply in red on Thursday after Russian Deputy Prime Minister Alexander Novak played down the prospect of further Organization of Petroleum Exporting Countries (OPEC) and allies including Russia (OPEC+) production cuts at its meeting next week. Further, a firm dollar and uncertainty over the U.S. debt ceiling also weighed on crude oil prices. Benchmark crude oil futures for July delivery fell $2.51 or about 3.4 percent to settle at $71.83 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $2.1 or 2.68 percent to settle at $76.26 a barrel on London's Intercontinental Exchange.


Rupee settled lower against dollar on Thursday weighed down by the strength of the American currency in the overseas market. Traders were worried after Reserve Bank of India's (RBI) data showed that for the first time in a decade, the gross foreign direct investment (FDI) flows witnessed a decline of 16 per cent to $71 billion in FY23. Investors overlooked Reserve Bank Governor Shaktikanta Das' statement that the growth for 2022-23 is expected to be more than the advance estimate of 7 per cent on the back of economic momentum maintained in the third and fourth quarters of the last fiscal. On the global front, pound fell to its lowest level in almost two months on Thursday after an inflation report sowed doubts about the health of Britain's economy. Finally, the rupee ended at 82.75 (Provisional), weaker by 7 paise from its previous close of 82.68 on Wednesday.


The FIIs as per Thursday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 8466.09 crore against gross selling of Rs 6968.23 crore, while in the debt segment, the gross purchase was of Rs 489.57 crore against gross selling of Rs 204.39 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.87 crore against gross selling of Rs 15.00 crore.


The US markets ended mostly higher on Thursday as investors awaited signs for debt ceiling deal. Asian markets are trading mixed on Friday after Wall Street saw a tech rally led by Nvidia, and U.S. negotiators moved closer to a debt ceiling deal with just a week to go before the government faces a potential default. Indian markets ended the volatile session in green on Thursday as investors focused on stock-specific action and adjusted their positions amid monthly F&O expiry for May series. Today, benchmark indices are likely to get flat-to-negative start amid mixed moves across global markets as concerns remain about a looming US debt default. There will be some cautiousness with a private report that India's economy will grow about 6% this fiscal year with a small increase in private investment, but lower growth and high inflation were the biggest risks to the outlook. However, continued FII inflows and a sharp fall in oil prices in the U.S. trading session overnight may help limit overall losses to some extent. Foreign institutional investors (FIIs) bought shares worth Rs 589.10 crore on May 25, provisional data from the National Stock Exchange showed. Traders may take note of the Service Export Promotion Council's statement that India's services exports are expected to overtake merchandise exports in the next five years on the back of above-par growth in emerging areas of service economy. Meanwhile, Prime Minister Narendra Modi will chair NITI Aayog's eighth Governing Council meeting on May 27, which will deliberate on several issues including, health, skill development, women empowerment and infrastructure development, with an aim to make India a developed nation by 2047. Besides, The Finance Ministry has notified 21 countries, including the US, UK and France, from where non-resident investment in unlisted Indian startups will not attract angel tax. The list, however, excludes investment from countries like Singapore, Netherlands and Mauritius. There will be some buzz in the agriculture related stocks as the third advance estimate released by the agriculture ministry showed that India's foodgrain production has risen by 5% on year to a new record of 330.5 million tonne (MT) for the 2022-23 crop year (July-June). Banking stocks will be in focus as global rating agency Standard and Poor's (S&P) said Indian banking is making a strong recovery as asset quality improves and profitability stabilises. It added Indian banks' earnings will likely remain healthy. The sector has improved substantially in the past seven years. Investors await more of financial results from India Inc for domestic cues, with Nifty 50 companies Mahindra & Mahindra, Sun Pharma, ONGC, Grasim Industries due to post their earnings later in the day.


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