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NSE Intra-day chart (28 May 2019)
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Market Commentary 29 May 2019
Benchmarks likely to get a cautious start amid weak global cues


In a volatile trade, key Indian bourses, Sensex and Nifty settled at record closing high points for third straight session on Tuesday. After a positive start, the markets traded volatile throughout the session, impacted with the Federation of Indian Chambers of Commerce & Industry's (FICCI) statement that India's slowing economic growth is of serious concern and the country needs to urgently cut tax and interest rates to revive the economy. FICCI made a strong case for fiscal stimulus to pump-prime the slowing economy amid global headwinds and weakening domestic demand in the next budget as the Narendra Modi government is all set to begin its second innings. Traders also remained worried with India Ratings and Research's (Ind-Ra) latest report stating that India's gross domestic product (GDP) is likely to grow at 6.9 percent in the fiscal 2018-19 (FY19), slightly lower than Central Statistics Office's (CSO) advance estimate of 7 percent. However, in the last leg of the trade, key indices managed to stage recovery and ended the trading session in green terrain, amid reports that the commerce and industry ministry is considering a major export promotion scheme to ensure expeditious refund of all un-rebated central and state levies and taxes imposed on inputs that are consumed in exports of all sectors. Adding optimism among the market participants, eminent economist Arvind Panagariya said that the new government can start by cutting corporate tax to 25 percent and removing exemptions. Meanwhile, Industry body Confederation of Indian Industry (CII) has called for lowering corporate tax rate, kick-starting government expenditure and rationalization of dispute tax resolution mechanism. Finally, the BSE Sensex gained 66.44 points or 0.17% to 39,749.73, while the CNX Nifty was up by 4.00 points or 0.03% to 11,928.75.


The US markets ended lower on Tuesday on account of lingering concerns about the economic impact of the ongoing trade dispute between the US and China. President Donald Trump warned that US tariffs on Chinese goods could go up very, very substantially, very easily. Trump also said the US is not ready to make a deal and suggested China probably wishes they made the deal that they had on the table before they tried to renegotiate it. The trade war worries contributed to a slump in treasury yields, which in turn added to concerns about a potential recession. The yield on the benchmark ten-year note dropped to its lowest levels since September of 2017. However, during a trip to Japan over the weekend, President Donald Trump expressed optimism the US and China will eventually reach a trade agreement. On the economic front, a report released by the Conference Board showed another substantial improvement in US consumer confidence in the month of May. The Conference Board said its consumer confidence index surged up to 134.1 in May after jumping to 129.2 in April. Street had expected the index to inch up to 129.8. The bigger than expected spike by the headline index was partly due to a sharp increase by the present situation index, which shot up 175.2 in May from 169.0 in April. The jump by the present situation index was primarily driven by employment gains, as consumers saying jobs are plentiful inched up to 47.2 percent from 46.5 percent and those claiming jobs are hard to get dropped to 10.9 percent from 13.3 percent. Dow Jones Industrial Average declined 237.92 points or 0.93 percent to 25347.77, Nasdaq dropped 29.66 points or 0.39 percent to 7607.35 and S&P 500 was down by 23.67 points or 0.84 percent to 2802.39.


Crude oil futures ended higher on Tuesday but, Brent crude prices finished flat. Oil exports have fallen in Iran because of the US sanctions while outages in Venezuela, and elsewhere, have further reduced supply. However, oil shipments from Russia are recovering after contamination affected Druzhba pipeline. This should ease supply concerns slightly, potentially leading to weakness in prices -everything else being equal. Weekly data on US petroleum supplies are delayed this week due to Monday's holiday. The American Petroleum Institute will release its figures late Wednesday, while the Energy Information Administration's report is due on Thursday. Benchmark crude oil futures for July rose 51 cents or 0.9 percent to settle at $59.14 a barrel on the New York Mercantile Exchange. July Brent crude settled unchanged at $70.11 a barrel on London's Intercontinental Exchange.


Indian rupee ended weaker against the US dollar on Tuesday, on the back of consistent demand for the greenback from state-run banks and importers. Traders remained concerned with the Federation of Indian Chambers of Commerce & Industry's (FICCI) statement that the India's slowing economic growth is of serious concern and the country needs to urgently cut tax and interest rates to revive the economy. Some cautions also prevailed in the markets ahead of GDP number that will be released later this week. A rebound in the dollar from multi-week lows too put pressure on the rupee in the forex market. On the global front, dollar rose against its major peers on Tuesday as investors awaited new trading catalysts after the European Union parliamentary elections showed a polarisation of the 28-member block. Finally, the rupee ended at 69.69, 18 paise weaker from its previous close of 69.51 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 6414.77 crore against gross selling of Rs 3480.95 crore, while in the debt segment, the gross purchase was of Rs 2813.93 crore with gross sales of Rs 1726.79 crore. Besides, in the hybrid segment, the gross buying was of Rs 15.19 crore against gross selling of Rs 2.75 crore.


The US markets ended lower on Tuesday amid lingering concerns about the economic impact of the ongoing trade dispute between the US and China. Asian markets are trading mostly in red on Wednesday as investors remained cautious, awaiting new developments between Beijing and Washington amid the ongoing trade tensions. Indian markets ended higher with marginal gains to settle at record closing highs for third straight session on Tuesday, amid expectations that a stable government at the Centre will boost growth and lead to higher foreign fund inflows. Today, the markets are likely to make a cautious start tracking weak global cues. Traders will be concerned about the Department for Promotion of Industry and Internal Trade's (DPIIT) latest data showing that foreign direct investment (FDI) in India declined for the first time in the last six years in 2018-19, falling by 1 per cent to $44.37 billion as compared to $44.85 billion in 2017-18. According to the data, FDI inflows in telecommunication, construction development, pharmaceuticals and power sectors declined significantly in 2018-19. Decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee. However, some respite may come later in the day with a global study showing that India has moved up one place to rank as the world's 43rd most competitive economy on the back of its robust economic growth, a large labour force and its huge market size, while Singapore has toppled the US to grab the top position. Traders may take note of a private report indicating that India can attract FDI to a ratio of 1.5 per cent to 2 per cent of its GDP by further improving on ease of doing business and building infrastructure. There will be some buzz in the steel industry stocks with a report that amid concerns about sluggish steel demand and dumping threat from China, domestic steel may register a growth of 6-8 per cent in the current financial year. There will be some reaction in power sector stocks with report that power production in India is expected to grow by five to six per cent during FY 2019-20, riding on improved demand from newly connected households. Also, there will be some buzz in the oil marketing companies (OMCs) stocks with report that thinner spreads and rising under-recoveries are expected to shave the operating profit margins of OMCs by 1.5-1.7 per cent this fiscal, even as crude prices remain elevated and volatile. There will be lots of earnings reaction based on the performance of the companies.


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  • Bharti Airtel's subsidiary -- Airtel Africa is planning to go for an IPO and listing on London Stock Exchange. 
  • Tech Mahindra has entered into collaboration with Mitsui Knowledge Industry to develop next generation digital enterprise solutions, in the Japanese market. 
  • Maruti Suzuki India has shut production for a day at Gurgaon, Manesar plants to manage rising inventory levels. 
  • Reliance Industries' telecom arm -- Jio has added over 2.50 lakh subscribers in March in Punjab circle.
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