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NSE Intra-day chart (30 May 2018)
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Market Commentary 31 May 2018
Markets likely to make optimistic start to F&O series expiry session


Indian equity benchmarks ended the volatile day of trade with marginal losses on Wednesday amid feeble global cues as Italy's political turmoil roiled global markets. Markets started the session on pessimistic note as sentiments remained down-beat on report that hardening domestic fuel prices are likely to weigh on the Reserve Bank's rate setting panel, MPC, at its 3-day meet from June 4. The monetary policy review will take into account the retail inflation which rose to 4.58% in April mainly on account of increasing prices of petrol and diesel. Investors failed to take any sense of relief with CRISIL's report stating that direct tax collection has surged dramatically post 2016 due to the Income Declaration Scheme and demonetisation. The income tax growth increased from 8.2% in FY16 to 26.8% in FY17 and 21.0% in FY18. The corporate tax growth in the corresponding years were 5.7%, 7.0% and 16.3% respectively. This indicates a significant jump in the number of new income tax filers. However, markets pared all of their losses to enter into green terrain in noon deals as some support came with FICCI's report that India's GDP growth is expected at 7.1% for the January-March quarter of the last fiscal and 6.6% for the entire 2017-18. The Central Statistics Office (CSO) is scheduled to release GDP numbers for the fourth quarter as well as the 2017-18 fiscal on May 31. Market participants also got some solace with exporters body FIEO's statement that India's exports are expected to record a growth of about 15-20% and touch $350 billion in the current fiscal on account of a host of factors including rise in commodity prices. But, the recovery proved short-lived as markets once again slipped into red terrain to end marginally lower after Moody's Investors Service has cut India's GDP growth forecast to 7.3% in 2018, from previous forecast of 7.5% due to higher oil prices and tighter financial conditions. It, however, kept growth expectation for 2019 unchanged at 7.5%. The region-wise forecast comes with a model error of plus and minus 8%. Finally, the BSE Sensex declined 43.13 points or 0.12% to 34,906.11, while the CNX Nifty was down by 18.95 points or 0.18% to 10,614.35.


Rebounding from the previous session's steep losses, the US markets ended sharply higher on Wednesday, with the Dow industrials gaining more than 300 points, as worries over Italy's political crisis eased. A coalition government led by antiestablishment parties might be in the cards again for Italy, after it was blocked earlier in the week. Rebounding crude oil prices also supported the rally in US markets, as gains were recorded across the energy sector. A private report indicated that output cuts implemented by members of the Organization of the Petroleum Exporting Countries (OPEC) and nonmembers led by Russia will remain in place, sending oil prices sharply higher. Prices had been pressured in recent sessions amid expectations that OPEC would decide to lift production to help offset output losses from Iran and Venezuela. On the US economic front, payroll processor ADP released a report showing private sector employment increased by slightly less than expected in the month of May. ADP said private sector employment climbed by 178,000 jobs in May after rising by a downwardly revised 163,000 jobs in April. Economists had expected employment to increase by 190,000 jobs compared to the jump of 204,000 jobs originally reported for the previous month. The Dow Jones Industrial Average surged 306.33 points or 1.26 percent to 24667.78 and the S&P 500 increased by 34.15 points or 1.27% to 2724.01 and the Nasdaq was up by 65.86 points or 0.89 percent to 7462.45.


Snapping six-day losing streak, Crude oil futures rallied on Wednesday, with a report suggesting OPEC will keep its supply quota plan at least through year's end. Prices in recent sessions had declined on concerns that the Organization of the Petroleum Exporting Countries and non-OPEC members led by Russia would decide to lift output to help make up for any loss production from Venezuela and Iran. As per the report, OPEC and its nonmember allies plan to continue their agreement to curb output until the end of 2018, citing a gulf source familiar with the thinking of Saudi Arabia, OPEC's swing producer. The oil producers, however, were ready to make gradual adjustments in the event of any supply shortage. Benchmark crude oil futures for July delivery surged $1.48 or 2.2 percent to settle at $68.21 a barrel on the New York Mercantile Exchange. July Brent crude gained $2.11 or 2.8 percent to settle at $ 77.50 a barrel on London's Intercontinental Exchange.


After yesterday's steep losses, Indian rupee gained ground against dollar and ended significantly higher on Wednesday, on persistent selling of the American currency by exporters. Sentiments turned optimistic with Ficci's report that India's GDP growth is expected at 7.1 per cent for the January-March quarter of the last fiscal and 6.6 per cent for the entire 2017-18. The Central Statistics Office (CSO) is scheduled to release GDP numbers for the fourth quarter as well as the 2017-18 fiscal on May 31. The domestic unit also found support from Indian Meteorological Department's (IMD) statement that monsoon season rainfall for the country as a whole is likely to be 97% of the LPA. IMD also said that rainfall in India for the 2018 southwest monsoon season is most likely to be normal and this year will be the third year for the normal monsoon with very less chance of rain deficit. On the global front, euro recovered from 10-month lows on Wednesday after reports that Italy's biggest party would make a renewed attempt to form a coalition government and end months of political turmoil. Finally, the rupee ended at 67.43, 45 paise stronger from its previous close of 67.88 on Tuesday.


The FIIs as per Wednesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4512.97 crore against gross selling of Rs 4005.49 crore, while in the debt segment, the gross purchase was of Rs 386.35 crore with gross sales of Rs 314.92 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.43 crore against gross selling of Rs 1.63 crore.


The US markets rose sharply on Wednesday, rebounding from the previous day's rout, as energy shares bounced back amid a rally for oil prices and worries over Italy's political crisis faded. Asian stocks rebounded from a two-month low and are trading mostly in green in early deals on Thursday, as political turmoil in Italy that had roiled global financial markets showed signs of easing. Indian equity benchmarks edged marginally lower on Wednesday as worries about political uncertainty in Italy and Spain as well as fresh fears of a trade war between the U.S. and China sapped investors' appetite for risk. Today, the markets are likely to make optimistic start to the F&O series expiry session, tracking positive global cues. Traders will get some encouragement with report that India likely to retain the position of world's fastest growing major economy in the January-March quarter, surpassing China's growth of 6.8 per cent, driven by gains in manufacturing and consumer spending. The poll on the latest quarter's annual growth was 7.3 per cent, the best pace since July-September 2016, the quarter before the government unexpectedly scrapped high-value currency notes. Some support will also come with commerce and industry minister Suresh Prabhu's statement that India will pitch for continuing the eligibility of its 3,500-odd goods for low or zero duties in the US. Reports that exports from the country's special economic zones (SEZs) grew 5.44 percent in April to Rs 20,548 crore as against Rs 19,488 crore in the same month a year ago, too could add to the optimism. According to Export Promotion Council for EOUs & SEZs (EPCES), highest growth in outward shipments was recorded from the Cochin SEZ which witnessed a 704 percent jump from Rs 461 crore in April last year to Rs 3,708 crore this year. However, there will be concern with credit rating agency Moody's cut its forecast for India's GDP growth in 2018 to 7.3 percent from 7.5 percent earlier.


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  • Indian Oil Corporation has marginally cut down prices of petrol and diesel, around India. 
  • M&M is planning to invest around Rs 15,000 crore in the next three years for product development, capacity expansion and investment in other companies. 
  • Infosys has completed the acquisition of Wongdoody, a US-based, full-service creative and consumer insights agency. 
  • Reliance Industries' telecom arm - Jio is planning to provide internet access, videos and voice calls for less than Rs 1,000 per month.
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