Tuesday turned out to be a
volatile day for Indian equity indices, with both larger peers, Sensex and
Nifty, closing off their lifetime highs. After a negative start, markets
remained lackluster throughout the day, with industry chamber, Confederation of
Indian Industry's (CII) statement that the US decision to withdraw export
incentives from India has been taken in a haste and would hurt the domestic
exporters. CII President Vikram Kirloskar expressed hope that both the US and
India would discuss the matter and find an amicable solution to this issue.
Adding more anxiety among market participants, the Reserve Bank of India said
that over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore
have been reported in 2018-19. In the last 11 fiscal years, a total of 53,334
cases of fraud were reported by banks involving a massive amount of Rs 2.05
lakh crore. Weak trade persisted on the street, also with a private report
stating that the pre-monsoon rainfall in the country was the second lowest in
65 years. The three-month pre-monsoon season March, April and May ended with a
rainfall deficiency of 25%. As per the report, all the four meteorological
divisions - Northwest India, Central India, East-Northeast India and South
Peninsula - recorded deficit rainfall of 30%, 18%, 14% and 47%, respectively.
Traders failed to take any sense of relief with IHS Markit's latest report that
India is likely to overtake the UK to become the world's fifth largest economy
this year and added that by 2025, Indian GDP is also forecast to surpass Japan,
which will make India the second-largest economy in the Asia-Pacific region.
Investors also overlooked Finance Secretary Subhash Chandra Garg's statement
that declining global oil prices, stable rupee and falling interest rate are
sure signs of high growth in coming months. Finally, the BSE Sensex slipped
184.08 points or 0.46% to 40,083.54, while the CNX Nifty was down by 66.90
points or 0.55% to 12,021.65.
The US markets ended higher with
gains over half percent on Wednesday on optimism about a potential interest
rate cut after Federal Reserve Chairman Jerome Powell's pledged to sustain the
US economic expansion. Citing uncertainty surrounding trade negotiations and
other matters, Powell said that the central bank will act as appropriate to
support the economy. Powell's comments were widely seen as an indication the
Fed is prepared to discuss lowering interest rates if escalating global trade
disputes weigh down economic growth. Powell's comments imply that the Fed might
look to lower benchmark interest rates, which stand at a range between 2.25% to
2.50%, which would reduce borrowing costs for corporations and has sparked
fresh enthusiasm for buying equities. Besides, indicating an unexpected
acceleration in the pace of US service sector growth in the month of May, the
Institute for Supply Management (ISM) released a report showing an increase by
its non-manufacturing index. The ISM said its non-manufacturing index climbed
to 56.9 in May after falling to 55.5 in April, with a reading above 50
indicating growth in service sector activity. The increase by the
non-manufacturing index came as a surprise to participants, who had expected
the index to come in unchanged from the previous month. Dow Jones Industrial
Average surged 207.39 points or 0.82 percent to 25539.57, Nasdaq gained 48.36
points or 0.64 percent to 7575.48 and S&P 500 was up by 22.88 points or
0.82 percent to 2826.15.
Crude oil futures ended sharply
lower on Wednesday as domestic data revealed a weekly crude supply climb of
almost 7 million barrels-the largest in five weeks-to their highest level in
nearly two years. The Energy Information Administration (EIA) reported that US
crude supplies rose by 6.8 million barrels for the week ended May 31. That was
the largest weekly increase since the 9.9 million-barrel rise report for the
week ended April 26, which was the biggest of this year so far. S&P Global
Platts expected a crude-supply fall of 1.7 million barrels for crude stocks, on
average, while the American Petroleum Institute on Tuesday reported a climb of
nearly 3.6 million barrels. Benchmark crude oil futures for July plunged $1.80
or 3.4 percent to settle at $51.68 a barrel on the New York Mercantile
Exchange. August Brent dropped $1.34 or 2.2 percent to settle at $60.63 a
barrel on London's Intercontinental Exchange.
Indian rupee ended unchanged compared to its previous close
as investors remained cautious ahead of RBI's monetary policy decision. Some
concern also came with a private report stating that the pre-monsoon rainfall
in the country was the second lowest in 65 years. The three-month pre-monsoon
season March, April and May ended with a rainfall deficiency of 25%. As per the
report, all the four meteorological divisions - Northwest India, Central India,
East-Northeast India and South Peninsula - recorded deficit rainfall of 30%,
18%, 14% and 47%, respectively. The weak trade in the local equity market also
adversely impacted local forex trade. On the global front, dollar struggled to
shake off a harsh overnight session, slipping to a five-month low against the
yen on Tuesday, hurt by a sharp slide in US Treasury yields thanks to rising
bets for a near-term rate cut by the Federal Reserve. Finally, the rupee ended
unchanged from its previous close of 69.26 on Monday.
The FIIs as per Tuesday's data
were net buyers in equity and debt segments both. In equity segment, the gross
buying was of Rs 7763.83 crore against gross selling of Rs 5412.75 crore, while
in the debt segment, the gross purchase was of Rs 3311.35 crore with gross
sales of Rs 2588.31 crore. Besides, in the hybrid segment, the gross buying was
of Rs 2.52 crore against gross selling of Rs 2.73 crore.
The US markets ended higher on
Wednesday as investors further embraced the possibility that the Federal
Reserve might cut interest rates to boost the economy. Asian markets are
trading mixed on Thursday as the US and Mexico failed to reach a deal to avert
proposed tariffs and investors weighed up the latest signs of fragility in the
global economy. Indian markets ended lower on Tuesday, with cut of around half
a percent, as traders booked profits after benchmarks hit new record highs.
Markets remained closed on Wednesday on account of Ramzan. Today, the markets
are likely to start in red territory amid mixed cues from Asian peers over
concerns of escalating trade disputes. Investors will also be cautious ahead of
the outcome of second Reserve Bank of India (RBI) Monetary Policy Committee
meeting. The RBI is widely expected to reduce the repo rate by 25 basis points
(bps), a third in a row. There will be cautiousness with report that the
India's services sector activity increased at the slowest pace in a year in
May, as disruptions arising from the elections in the earlier part of the month
hampered growth of new work intakes. The seasonally adjusted Nikkei India
Services Business Activity Index fell to 50.2 in May, from 51.0 in April,
pointing to the slowest growth rate in the current 12-month stretch of
expansion. Traders will also be concerned about the India Meteorological
Department's statement that the onset of monsoon is likely to be delayed by a
week and it is now expected to arrive only by June 8. The normal onset date for
monsoon over Kerala is June 1 which also marks the official commencement of the
four-month-long rainfall season. There may be negative reaction on the National
Council of Applied Economic Research's (NCAER) report that business confidence
among Indian companies fell by 9.1% in the fourth quarter of the 2018-19
fiscal. However, traders may get some support with the Department for Promotion
of Industry and Internal Trade's (DPIIT) statement that foreign direct
investment in services sector grew 36.5% to $9.15 billion in 2018-19.
Increasing FDI inflows in services sector is vital as it contributes over 60
per cent to the gross domestic product. Meanwhile, the World Bank has retained
its forecast of India's growth rate at 7.5% for the current financial year. In
its Global Economic Prospects report, the World Bank also said growth rate is
expected to remain the same for the next two fiscals. There will be some
reaction in steel industry stocks with credit rating agency ICRA's report that
while the performance of domestic steelmakers is likely to be lower in the
first quarter of the current financial year as compared the previous year due
to several headwinds, the construction sector will be at the forefront of
demand recovery in the second half.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
12,021.65
|
11,986.60
|
12,075.95
|
BSE Sensex
|
40,083.54
|
39,972.37
|
40,253.39
|
Nifty Top volumes
Stock
|
Volume
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Yes Bank
|
455.61
|
152.80
|
149.62
|
154.92
|
SBIN
|
181.31
|
352.40
|
350.13
|
355.93
|
Tata Motors
|
174.29
|
173.25
|
171.37
|
176.17
|
ICICI Bank
|
145.14
|
419.10
|
416.82
|
422.07
|
ITC
|
138.51
|
279.25
|
277.98
|
281.33
|
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