Thursday turned out to be a disappointing day of trade, where frontline gauges failed to hold on to their early gains and ended in red terrain, as traders remained on sidelines ahead of the outcome of the Karnataka Assembly elections which will have larger implications for the way the capital markets will view the future of reforms. Markets started the session on an optimistic note as traders took some encouragement with India Ratings' report that the Indian economy is gradually coming out of the twin shock of demonetisation and GST which temporarily derailed growth. The ratings agency, however, cautioned on the possible widening of the current account deficit (CAD) due to rising oil prices which was creating pressure on the currency. Some support also came with Commerce Secretary Rita Teaotia's statement that India is not expecting any major shift in trade with Iran following the US decision to re-impose trade sanctions against the Islamic nation. The bilateral trade between India and Iran has increased to $12.9 billion in 2016-17 from $9 billion in the previous fiscal. Additionally, Rita Teaotia said that the commerce ministry is working with different ministries to formulate separate plans for 12 services sector, including IT, tourism and logistics, with a view to boost growth in these segments. However, markets lost momentum and pared all of their gains in last leg of trade to end in red terrain. Sentiments turned pessimistic after International Monetary Fund (IMF) in its report highlighted that in India, given increased inflation pressure, monetary policy should maintain a tightening bias. The advice came at a time when oil poses an upside risk to the inflation. Earlier, the Monetary Policy Committee (MPC) had raised several areas of concerns, including high and volatile crude prices. Sentiments also remained dampened on Assocham's statement that President Donald Trump's announcement of the US pulling out from the Iran deal and his decision to re-impose sanctions on the key crude oil producer will exert pressure on fuel prices and affect the Indian economy on the downside. Finally, the BSE Sensex declined 73.08 points or 0.21% to 35,246.27, while the CNX Nifty was down by 25.15 points or 0.23% to 10,716.55.

The US markets closed higher on Thursday, with equities advancing in a broad rally that gave the Dow Jones Industrial Average its longest winning streak since February. Technology stocks led the day's gains, extending this month's trend. But Wall Street was also supported by the latest economic data, which suggested the economy was healthy, but not growing so quickly that it was at risk of overheating. On the economy front, the US took in $510 billion in receipts in April and spent $296 billion, leaving the Treasury with a record monthly surplus of $214 billion. The prior record, set in April 2001, was about $190 billion. Tax receipts poured in during April, when tax returns and certain taxpayers' quarterly estimated payments are due. Individual receipts climbed by $66 billion over last April, something the Congressional Budget Office has attributed to stronger-than-expected income growth in 2017, as well as larger-than-anticipated payments for economic activity in 2018. Spending rose in April as well, climbing 8% thanks to higher payments on Social Security and interest on the public debt. Meanwhile, the number of people who applied for US unemployment benefits in early May stood at 211,000 for the second straight week, keeping initial jobless claims near a 49-year low. New claims were flat at 211,000 in the seven days ended May 5. The Dow Jones Industrial Average added 196.99 points or 0.80 percent to 24,739.53, the Nasdaq gained 65.07 points or 0.89 percent to 7,404.98, and the S&P 500 was up by 25.28 points or 0.94 percent to 2,723.07.

Crude oil futures ended with modest gains on Thursday, as calmer heads prevailed in the wake of the U.S. decision to exit the Iran nuclear pact. Various news reports on Thursday said Iranian Oil Minister Bijan Zanganeh told that nothing noteworthy will happen to oil exports after the Iran sanctions. Moreover, a sign of a further rise in U.S. crude stockpiles and a wind-down period ahead of the start to sanctions on Iran also helped to calm concerns about the risks to the flow of crude in the Middle East. Benchmark crude oil futures for June delivery gained 22 cents or 0.3 percent to settle at $71.36 a barrel on the New York Mercantile Exchange. July Brent crude jumped 26 cents or 0.3 percent to settle at $77.47 a barrel on London's Intercontinental Exchange.

Indian rupee ended marginally lower against US dollar on Thursday, due to fresh demand for the American currency from banks and importers. Traders remained concerned with Assocham's statement that President Donald Trump's announcement of the US pulling out from the Iran deal and his decision to re-impose sanctions on the key crude oil producer will exert pressure on fuel prices and affect the Indian economy on the downside. Besides, the weak trade in the local equity market also hit the rupee sentiment. However, losses were limited as some support came with India Ratings' report that the Indian economy is gradually coming out of the twin shock of demonetisation and GST which temporarily derailed growth. The ratings agency, however, cautioned on the possible widening of the current account deficit due to rising oil prices which was creating pressure on the currency. On the global front, dollar slid lower against a currency basket on Thursday, as investors took a breather after this week's rally to four-and-a-half month highs as interest rate differentials continued to drive strength in the US currency. Finally, the rupee ended at 67.31, 4 paise weaker from its previous close of 67.27 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4048.75 crore against gross selling of Rs 4738.63 crore, while in the debt segment, the gross purchase was of Rs 1648.41 crore with gross sales of Rs 2422.86 crore. Besides, in the hybrid segment, the gross selling was Rs 4.29 crore against no buying.

The US markets ended in green on Thursday following the release of a Labor Department report showing a slightly smaller than expected increase in consumer prices in the month of April. Asian markets were trading higher on Friday, as signs of thawing relationships in the Korean peninsula and expectations that expansionary monetary policies will likely be in place for some more time helped fuel demand for riskier assets. Indian markets ended slightly in red on Thursday as investors stayed on the sidelines ahead of assembly elections in Karnataka. Today, the markets are likely to make an optimistic start amid firm global cues. Traders will get some support with External Affairs Ministry Spokesperson Raveesh Kumar's statement that India was closely monitoring the situation arising out of Trump's announcement to pull the US out of the Iran deal. India will take necessary measures to offset any adverse impact on its interests due to US President Donald Trump's decision to dump the Iran nuclear deal. However, there will be some concern on private report stating that continuing fall in the rupee will push trade deficit up to a four-year high of $178.1 billion or 6.4 per cent of GDP this fiscal year. The estimate comes amid a depreciation in the rupee against the dollar, wherein it has shed over 5 per cent to breach the Rs 67-mark to the dollar. There will be buzz in telecom stocks after Reliance Jio launched a new postpaid plan starting at Rs. 199 per month that will redefine postpaid services in the country. Stocks related to Hotel industry will be buzzing on report that the Authority for Advance Ruling (AAR) has said, Hotel or restaurant services provided to SEZ developers or units will not be treated as zero-rated supplies and hence will be taxable under the Goods and Services Tax (GST) regime. There will be some important earnings announcements too, to keep the markets buzzing.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Cipla has entered into an exclusive marketing and distribution agreement with US-based MannKind Corporation for Afrezza in India. 
• Infosys has released new enhancements to its artificial intelligence-powered plug-and-play solution, Infosys Enterprise Service Management Cafe. 
• Lupin, under its consumer healthcare division - LupinLife, has launched Corcal Bone and Beauty, a novel calcium health supplement for women. 
• Asian Paints has reported a 4 percent YoY rise in consolidated net profit at Rs 480.99 crore in Q4FY18.