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NSE Intra-day chart (03 June 2019)
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Market Commentary 04 June 2019
Markets to make pessimistic start amid weak global cues


Indian equities hit lifetime closing high on Monday, with Sensex and Nifty settling above their crucial psychological levels of 40,200 and 12,000, respectively, first time. The start of the day was firm, as Goods and Services Tax (GST) collections touched Rs 1 lakh crore in May 2019 as compared to Rs 94,016 crore in the year ago period. The total gross GST revenue collected in the month of May, 2019 was Rs 1,00,289 crore of which CGST  (Central GST) was Rs 17,811 crore, SGST (State GST) was Rs 24,462 crore, IGST (Integrated GST) was Rs 49,891 crore and Cess was Rs 8,125 crore. Adding more optimism, Indian manufacturing sector growth gained momentum in the month of May, on the back of faster expansions in output and order books. Aggregate manufacturing output increased at the quickest pace in three months. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 52.7 in May from 51.8 in April. Markets continued their gaining momentum in second half of the session, amid reports that the government decided to extend PM-KISAN scheme to all 14.5 crore farmers, costing Rs 87,000 crore a year, and also announced over Rs 10,000 crore pension scheme for five crore farmers, thereby fulfilling the BJP's poll promise. Traders also remained positive with a report stating that overseas investors pumped in a net amount of Rs 9,031 crore into the Indian capital markets in May on expectations of more business-friendly measures following the BJP's landslide victory in the general elections. Markets participants overlooked reports that India's gross domestic product (GDP) grew at its slowest pace in the January-March period of fiscal year 2018-19 (FY19) and hit a 5-year low of 5.8%. For the entire FY19, GDP growth stood at 6.8%, a five-year low after FY14, when the economy grew at 6.4%. Finally, the BSE Sensex gained 553.42 points or 1.39% to 40,267.62, while the CNX Nifty was up by 165.75 points or 1.39% to 12,088.55.


The US Markets ended mostly lower, with Nasdaq closing cut of over one and half percent, on Monday amid reports that the US government is planning to target a host of big companies in the industry with antitrust and business practice probes. Shares of Alphabet, Amazon, Facebook and Apple all weighed on the market during Monday's session. Further, trade concerns also continued to weigh on the markets after an official document from the Chinese government blamed the US for the escalating trade dispute between the world's two largest economies. The white paper, issued by China's State Council Information Office, argued the US is solely responsible for the collapse of trade talks. China accused President Donald Trump's administration of continually changing its demands, arguing the setbacks in the talks were all the result of US breach of consensus and commitments, and backtracking. On the economic front, construction spending in the US came in virtually unchanged in the month of April, according to a report released by the Commerce Department. The Commerce Department said construction spending edged down by less than a tenth of a percent to an annual rate of $1,298.5 billion in April after inching up by 0.1 percent to a revised rate of $1,299.2 billion in March. The slight drop came as a surprise to participants, who had expected spending to climb by 0.4 percent compared to the 0.9 percent slump originally reported for the previous month. Besides, a report released by the Institute for Supply Management (ISM) showed the pace of growth in US manufacturing activity unexpectedly saw a continued slowdown in the month of May. The ISM said its purchasing managers edged down to 52.1 in May from 52.8 in April, dropping to its lowest level since hitting 51.7 in October of 2016. Nasdaq declined 120.13 points or 1.61 percent to 7333.02 and S&P 500 was down by 7.61 points or 0.28 percent to 2744.45, while Dow Jones Industrial Average gained 4.74 points or 0.02 percent to 24819.78.


Crude oil futures ended lower for fourth straight session on Monday on heightened concerns for the global economy and tariff tensions that could both potentially hurt demand for oil. The market has primarily been stricken by growing fears that trade clashes between the US and its international counterparts will weaken economic output in an already fragile world, thereby hurting appetite for crude. Besides, the next Organization of the Petroleum Exporting Countries (OPEC) meeting, which had been scheduled for June 25-26, may be postponed to early July at the request of Russia. Benchmark crude oil futures for July declined 25 cents or 0.5 percent to settle at $53.25 a barrel on the New York Mercantile Exchange. August Brent dropped 71 cents or 1.2 percent to settle at $61.28 a barrel on London's Intercontinental Exchange.


Indian rupee continued its upward momentum for the second day on Monday, driven by weakening of the greenback in overseas markets. The rupee's rise was also aided by fall in crude oil prices and hope of rate cut after weak Q4 GDP data in the ongoing monetary policy committee (MPC) meeting of the Reserve Bank of India. Markets participants overlooked reports that India's gross domestic product (GDP) grew at its slowest pace in the January-March period of fiscal year 2018-19 (FY19) and hit a 5-year low of 5.8%. For the entire FY19, GDP growth stood at 6.8%, a five-year low after FY14, when the economy grew at 6.4%. On the global front, yen brushed a more than four-month high against the dollar on Monday as US President Donald Trump's hard stance on trade broadened to countries beyond China, forcing investors to safe-haven assets, including government bonds. Finally, the rupee ended at 69.26, 44 paise stronger from its previous close of 69.70 on Friday.


The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 9541.23 crore against gross selling of Rs 8547.42 crore, while in the debt segment, the gross purchase was of Rs 2590.35 crore with gross sales of Rs 670.16 crore. Besides, in the hybrid segment, the gross buying was of Rs 21.64 crore against gross selling of Rs 20.61 crore.


The US markets ended mostly lower on Monday amid a drop in big tech stocks and the latest developments in US-China trade tensions. Asian markets are trading mostly in red on Tuesday amid ongoing global trade tensions. Indian markets settled at fresh all-time highs on Monday on back of strong domestic cues like higher GST mop-up and increase in Nikkei PMI May data coupled with sharp decline in oil prices. Today, the markets are likely to make pessimistic start tacking weak global cues. There will be some cautiousness with a private report 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. However, some respite may come later in the day with 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. Traders may take note of a report that India is forecast to overtake the UK to become the world's fifth largest economy this year and projected to surpass Japan to feature at the second position in the Asia-Pacific region by 2025. Meanwhile, with the Modi government beginning its second innings with a greater mandate, the industry has pitched for a series of reforms, including in critical areas of land and labour, to take India's economic growth to double-digits in the next five years. To target GDP growing up to 10% by 2023-24, the total investment requirement is estimated at $5.74 trillion (around Rs 397 lakh crore) for the next five years. There will be some buzz in the banking industry stocks as the Reserve Bank of India modified the guidelines on large exposures for banks with a view to reduce concentration of risk and align them with the global norms. The modified Large Exposures Framework (LEF) provides exclusion of entities connected with the sovereign from definition of group of connected counter-parties. There will be some reaction in cement industry stocks with a report that after six strong quarters, growth in demand for cement, a proxy for construction activity in the economy, is set to see a sharp drop of 500 basis points (bps) to 3-5% in the first quarter of this financial year, against a 9-10% rise in the January-March quarter of 2018-19. Also, there will be some buzz in the power sector stocks with global ratings agency Moody's Investors Service's statement that the increasing share of renewables in the total energy mix of the country may lead to an increase in regulatory risk for coal-based projects in the long term.


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  • Hero MotoCorp has reported sales of 652,028 units of motorcycles and scooters in the month of May 2019. 
  • Bharti Infratel has received approval from NCLT for the planned merger with Indus Towers. 
  • TCS has launched MasterCraft TransformPlus 4.0, a major upgrade of the product, with new cognitive features for analysis and modernization of legacy applications. 
  • M&M's Farm Equipment Sector has reported domestic tractor sales of 23,539 units in May 2019, as against 28,199 units during May 2018, registering a fall of 17%.
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