Profit booking dragged Indian
equity benchmarks in red on Thursday, with Sensex and Nifty closing below their
crucial psychological levels of 38,900 and 11,700. The start of the day was
fabulous, buoyed by the vote count leads that showed Narendra Modi-led NDA
getting a decisive majority. In morning deals, key indices hit their record
high peaks and remained positive for the most part of the session, as India Inc
expressed hope that a stable government at the centre will boost growth in the
country and lead to higher foreign fund inflows as trends pointed to BJP and
allies returning to power with a thumping majority. Market participants also
remained positive with Niti Aayog Vice Chairman Rajiv Kumar's statement that
the think tank is working on the economic agenda for the new government where
the focus will be on achieving long term sustainable growth and boosting
private investments in the country. However, the market failed to hold on to
their gains and settled the day in red terrain, tracking weak global markets.
Anxiety spread among investors, with a private report stating that the value of
merger and acquisition deals announced in April stood at $735 million (over Rs
5,100 crore), a decline of 96 per cent from the year-ago period. According to a
report, in April last year, the total M&A deal value stood at $19,142
million. Traders also got cautious with another private report indicating that
foreign direct investment (FDI) in India has been declining, even though recent
US-China trade tensions and the increasing working population should ideally
make the world's fastest-growing economy attractive for investors. This could
be because of investors' pre-election nerves and also because of recent
protectionist measures taken up by India. Finally, the BSE Sensex lost 298.82
points or 0.76% to 38,811.39, while the CNX Nifty was down by 80.85 points or
0.69% to 11,657.05.
The US markets ended lower with
cut of over one percent on Thursday amid signs that trade tensions between the
US and China are escalating. Chinese Commerce Ministry spokesman Gao Feng said
the Trump administration must show sincerity and correct their wrong actions if
the US wants trade talks to continue. Gao said that negotiations can only
continue on the basis of equality and mutual respect, noting that China is
closely monitoring developments and preparing a necessary response. The US and
China trade talks collapsed earlier this month as President Donald Trump
followed through on a threat to raise tariffs on $200 billion worth of Chinese
goods to 25% from 10%. The Trump administration also blocked US companies from
doing business with Chinese telecom giant Huawei but recently gave the company
a 90-day reprieve. With both sides seemingly unwilling to back down, traders
are becoming increasingly wary of the impact of the trade dispute on the global
economy. On the economic front, after reporting an unexpected jump in new home
sales in the US in the previous month, the Commerce Department released a
report showing new home sales pulled back by much more than anticipated in the
month of April. The Commerce Department said new home sales plunged by 6.9% to
an annual rate of 673,000 in April after spiking by 8.1% to an upwardly revised
rate of 723,000 in March. Meanwhile, first-time claims for US unemployment
benefits unexpectedly edged lower in the week ended May 18, according to a
report released by the Labor Department. The report said initial jobless claims
dipped to 211,000, a decrease of 1,000 from the previous week's unrevised level
of 212,000. The modest decrease came as a surprise to market participants, who
had expected initial jobless claims to inch up to 215,000. Dow Jones Industrial
Average declined 286.14 points or 1.11 percent to 25490.47, Nasdaq dropped
122.56 points or 1.58 percent to 7628.28 and S&P 500 was down by 34.03
points or 1.19 percent to 2822.24.
Magnifying their previous session
losses, crude oil futures ended sharply lower on Thursday as the potential for a lengthy US-China trade
standoff led to a broad aversion to assets perceived as risky, knocking down
global equities. The flare-up in trade tensions between the world's largest
economies, US and China, has raised doubt about near-term appetite for crude if
a tariff conflict remains unresolved for a protracted period. Both WTI and
Brent crude saw their biggest single-session dollar and percentage losses year
to date. Besides, the Energy Information Administration (EIA) reported that
domestic supplies of natural gas rose by 100 billion cubic feet for the week
ended May 17. Benchmark crude oil futures for July dropped $3.51 or 5.7 percent
to settle at $57.91 a barrel on the New York Mercantile Exchange. July Brent
crude declined $3.23 or 4.6 percent to settle at $67.76 a barrel on London's
Intercontinental Exchange.
Indian rupee ended considerably weaker against the US
dollar on Thursday, as demand for the American unit from importers and banks
picked up. Investors remained concerned with another private report indicating
that foreign direct investment (FDI) in India has been declining, even though
recent US-China trade tensions and the increasing working population should
ideally make the world's fastest-growing economy attractive for investors. This
could be because of investors' pre-election nerves and also because of recent
protectionist measures taken up by India. The rupee's losses were also caused
by late hour sell-off in domestic equity market along with dollar's strength
against major global currencies. On the global front, dollar hit its highest
level in a month as economic and political uncertainties swept through Europe
and Asia, pinning down most major currencies like the euro and the yuan.
Finally, the rupee ended at 70.02, 35 paise weaker from its previous close of
69.66 on Wednesday.
The FIIs as per Thursday's data
were net sellers in equity and debt segments both. In equity segment, the gross
buying was of Rs 4866.64 crore against gross selling of Rs 5608.01 crore, while
in the debt segment, the gross purchase was of Rs 633.95 crore with gross sales
of Rs 1191.91 crore. Besides, in the hybrid segment, the gross buying was of Rs
3.08 crore against gross selling of Rs 4.66 crore.
The US markets declined on
Thursday, with losses of over a percent, after the latest flare-up in US-China
trade tensions damped investors' expectations of a near-term resolution between
the world's two biggest economies. Asian markets are trading mixed on Friday on
worries the US-China trade spat was developing into a more entrenched strategic
dispute between the world's two largest economies. Indian markets erased early
gains and ended the session in red territory on Thursday as investors booked
profits after stocks soared to record highs after BJP's strong showing in the
Lok Sabha polls. Today, the markets are likely to make optimistic start after a
historic mandate won by the Narendra Modi government. Election commission data
showed Modi's National Democratic Alliance has secured around 350 seats, with
BJP alone winning around 303 seats in the 2019 general elections. Besides, fall
in crude oil prices may also aid the markets sentiment. Some support will come
with Fitch Ratings' statement that the Bharatiya Janata Party's (BJP) apparent
landslide victory is likely to improve business sentiment and outlook for
private investment. It said that from a credit rating perspective, Fitch would
focus on the extent of the next government's efforts to improve India's weak
fiscal finances. Besides, India Inc has welcomed the thumping majority accorded
to the BJP in Lok Sabha Elections 2019. At the same time, head honchos of the
corporate world have called for strong economic reforms, including measures to
boost the agrarian economy and manufacturing sector. Traders may take note of
Moody's statement that its credit view on India will depend on policies of the
new government and expressed hope that the country would continue with its
fiscal consolidation plan. However, there may be some cautiousness amid
negative global sentiment. Meanwhile, markets regulator SEBI has levied a total
fine of over Rs 39 lakh on five entities for indulging in fraudulent trades in
the illiquid stock options segment of BSE. There will be some buzz in the
aviation sector stocks with ICRA's report that the grounding of Jet Airways has
impacted industry's capacity by as much as 14%, resulting in a 4.2% fall in
domestic air traffic to 10.99 million in April. There will be lots of earnings
announcements too, to keep the markets in action.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
11,657.05
|
11,500.65
|
11,927.30
|
BSE Sensex
|
38,811.39
|
38,267.01
|
39,740.36
|
Nifty Top volumes
Stock
|
Volume
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
1,117.19
|
139.75
|
135.40
|
147.45
|
State Bank of
India
|
744.13
|
342.20
|
332.93
|
357.73
|
ICICI Bank
|
432.80
|
410.85
|
402.85
|
423.40
|
ITC
|
313.81
|
288.20
|
281.60
|
300.20
|
Adani Ports
|
230.21
|
407.55
|
389.60
|
428.05
|
L&T has raised amount aggregating to Rs 2,000 crore through issuance and allotment of 20,000 or 8.02% Rated Listed Unsecured Redeemable NCDs.
Adani Ports and Special Economic Zone has signed an agreement to develop and operate a container terminal at Yangon Port in Myanmar.
Bharti Airtel has awarded a multi-million-dollar contract to IBM to deploy a blockchain-based pan India network.
Tata Motors has launched compact truck Intra with a starting price of Rs 5.35 lakh.