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NSE Intra-day chart (15 May 2018)
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Market Commentary 16 May 2018
Markets likely to make negative start on feeble global cues


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)



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Tata Motors






  • 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.
News Analysis