Tuesday's
trading session turned out to be a disappointing day of trade for Indian equity
benchmarks where frontline gauges failed to hold their initial gains and ended
slightly in red, as uncertainty with respect to formation of government in
Karnataka loomed. Despite making cautious start to the session, markets gained
traction to trade jubilantly for most part of the day, as sentiments remained
up-beat with India Ratings and Research (Ind-Ra) expecting the Corporate
Outlook for FY19 to remain stable, driven by profitability improvement in FY18,
leading to deleveraging. However, the improvement remains restricted to the
metals sector and a broader recovery could take much longer. Meanwhile, in
order to meet the ever- increasing demands of India's growing population, NITI
Aayog CEO Amitabh Kant has said that the country's real Gross domestic product
(GDP) must register a growth of around 10 percent annually over the next three
decades. However, market participants pared all of their initial gains in
second half of the trade which dragged market lower after reports of Congress-JD(S)
alliance in Karnataka. According to media reports, JD(S) has accepted Congress'
proposal of making HD Kumaraswamy the state's chief minister. Sentiments also
remained dampened on a private report stating that the Reserve Bank of India is
expected to begin its rate hike cycle from December quarter, and may go for
three rate hikes by 2019 taking the key policy rate to 6.75%. Adding to the
pessimism, India's Retail inflation, measured by the consumer price index (CPI)
rose to 4.58% in April 2018 as compared to 4.28% in March 2018, while rural
inflation increased to 4.67% and urban inflation surged to 4.42% in April 2018.
However, CPI food inflation for April eased marginally to 2.80% versus 2.81% in
last month. Finally, the BSE Sensex slipped 12.77 points or 0.04% to 35,543.94,
while the CNX Nifty was up by 4.75 points or 0.04% to 10,801.85.
The US markets closed lower on
Tuesday, with a lengthy winning streak for the Dow coming to an end as a
benchmark government bond yield jumped to a multiyear high, challenging
appetite for equities compared with climbing rates for risk-free bonds. The
day's losses were widespread and steep, with major indexes seeing their biggest
one-day drop in about three weeks. Dallas Federal Reserve Bank President Robert
Kaplan said he wasn't concerned with the rise in the yield on the 10-year
Treasury note which pushed further above 3% to its highest level since 2011. On
the economy front, sales at US retailers rose in April for the second straight
month, adding to evidence the economy has sped up again after a slower start to
the year. Retail sales climbed 0.3% last month following an even larger gain in
March than originally reported. March sales were revised to show a 0.8%
increase instead of 0.6%. Retail sales also rose 0.3% last month if auto
dealers and gasoline stations are omitted. The Empire State manufacturing index
rose in May, to a reading of 20.1 from 15.8 in April. The new-orders index
gained 7 points to 16, and the shipments index rose 1.6 points to a reading of
19.1. The prices paid index rose to its highest level in several years. Labor
market indicators pointed to modest increase in employment and longer
workweeks. The six-month outlook index rebounded partially to 31.1 in May after
a plunge to 18.3 in April from 44.1 in March. The Dow Jones Industrial Average
lost 193.00 points or 0.78 percent to 24,706.41, the Nasdaq dropped 59.688
points or 0.81 percent to 7,351.63, and the S&P 500 was down by 18.68
points or 0.68 percent to 2,711.45.
Crude oil futures
settled higher on Tuesday, even though the US stocks and other commodities
melted down. Besides, tensions in the Middle East supported the gains in crude
futures. Turmoil in the Middle East and US trade sanctions against major oil
producer Iran has supported higher prices for oil. Moreover, the Organization
of the Petroleum Exporting Countries (OPEC), in its most recent report, reduced
its forecast for global oil production. Meanwhile, traders are looking ahead to
data about US oil output from the Energy Information Administration on
Wednesday as well as a report on inventories from the International Energy
Agency on the same day. Benchmark crude oil futures for June delivery rose 35
cents or 0.50 percent to settle at $71.31 a barrel on the New York Mercantile
Exchange. July Brent crude gained 20 cents or 0.30 percent to settle at $78.43
a barrel on London's Intercontinental Exchange.
Stretching
slide for the fifth straight session, Indian rupee breached the psychological
68/dollar mark to hit its lowest in sixteenth month on Tuesday, on the back of
consistent demand for the greenback from state-run banks and importers. The
sentiments remained under pressure with a private report stating that the
Reserve Bank of India is expected to begin its rate hike cycle from December
quarter, and may go for three rate hikes by 2019 taking the key policy rate to
6.75%. Adding to the pessimism, India's Retail inflation, measured by the
consumer price index (CPI) rose to 4.58% in April 2018 as compared to 4.28% in
March 2018, while rural inflation increased to 4.67% and urban inflation surged
to 4.42% in April 2018. Besides, the greenback's gains against major global
currencies too weighed on the domestic unit. On the global front, euro remained
stuck near 4-month lows on Tuesday after weaker-than-expected economic growth
out of Germany and a rise in US Treasury yields helped the dollar recover
following a pause in its rally. Finally, the rupee ended at 68.10, 59 paise
weaker from its previous close of 67.51 on Monday.
The FIIs as per Tuesday's data
were net buyers in equity segment, while they were net sellers in debt segment.
In equity segment, the gross buying was of Rs 4778.15 crore against gross
selling of Rs 3956.49 crore, while in the debt segment, the gross purchase was
of Rs 759.93 crore with gross sales of Rs 1093.53 crore. Besides, in the hybrid
segment, there was no gross buying against gross selling of Rs 0.22 crore.
The US markets ended lower on
Tuesday, as investors worried about a lack of progress in US-China trade talks
and Treasury yields rose after US retail sales data indicated rising inflation.
Asian markets were trading mostly lower on Tuesday, after North Korea cancelled
high-level talks with Seoul and threatened to scrap a historic summit next
month between US President Donald Trump and North Korean leader Kim Jong Un,
saying the joint Air Force drills taking place in South Korea are ruining the
diplomatic mood. Indian equity benchmarks ended marginally lower on Tuesday,
after the BJP emerged as the single-largest party in Karnataka, but fell short
of majority to form the next government on its own. Today, the markets are
likely to make pessimistic start, amid weak global cues. Traders will remain
concern with report that India's trade deficit slightly widened to $13.72
billion in April from $13.25 billion a year ago. Exports grew by 5.17% to
$25.91 billion in April compared to the same month last year on account of
healthy performance by engineering, chemicals and pharmaceutical segments.
Imports too grew by 4.60% to $39.63 billion in the month on yearly basis.
Traders will react negatively on a private report that inflation is set to rise
further towards the second half of the fiscal, and could average 5.1% this
financial year compared to 3.6% last year. According to the global financial
services major, the factors that are likely to impact inflation going forward
include higher oil prices, a weaker rupee, higher MSPs and more currency in circulation.
However, traders may get some support later in the day with Commerce and
Industry Minister Suresh Prabhu pitching for inclusion of the trade
facilitation pact on services in the World Trade Organisation (WTO) saying it
would help promote growth of the global economy. He said that the proposed
agreement would help professionals move smoothly from one place to another. There
will be some important earnings announcements too, to keep the markets buzzing.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,801.85
|
10,745.77
|
10,893.57
|
BSE Sensex
|
35,543.94
|
35,363.40
|
35,859.01
|
Nifty Top volumes
Stock
|
Volume
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Power Grid Corporation of India
|
315.23
|
213.85
|
209.67
|
217.02
|
State Bank of India
|
180.27
|
248
|
243.45
|
255.00
|
ICICI Bank
|
164.01
|
308.25
|
303.03
|
315.48
|
Vedanta
|
154.12
|
281.7
|
278.03
|
285.43
|
Tata Motors
|
153.24
|
310.1
|
302.52
|
320.87
|
Bharti Airtel and Telenor South Asia Investments have completed their transaction, wherein, Airtel has acquired the operations of Telenor India.
Lupin has reported consolidated net loss of Rs 783.54 crore for Q4FY18 as compared to a net profit of Rs 380.21 crore for Q4FY17.
NTPC has signed a MoU with Government of Bihar and Bihar power utilities on May 15, 2018.
The NCLT has approved Tata Steel's resolution plan for debt ridden Bhushan Steel under the IBC.