The benchmark stock market indices opened in green in keeping with positive Asian and US stock markets. At 09:16 AM, the Sensex was up 516.68 points or 0.93 percent at 56,185.71. The broader Nifty was up 157.20 points or 0.94 percent at 16,834.80. About 1,610 shares have advanced, 395 shares declined, and 60 shares are unchanged.
Among early gainers on the Nifty were Hindalco Industries, Infosys, Tata Steel, ONGC and Tech Mahindra. Nestle, Apollo Hospitals, Tata Consumer Products, Asian Paints and NTPC were among major laggards.
Asian stocks up
Stocks climbed in Asia, amid a bout of investor relief after the Federal Reserve raised interest rates as expected to tackle inflation while countering fears of super-sized hikes.
Nifty fell sharply on May 4, following an unscheduled sudden announcement by the RBI Governor raising repo rate and CRR. At close, Nifty was down 2.29 percent or 391.5 points at 16,677.6. In the process, Nifty was the worst performing index in the Asian region.
Nifty fell below the crucial support level of 16,824 and now seems headed for 16,013 over the next few sessions/weeks, albeit after some intermittent bounces one of which could happen today. On upsides, 16,824-16,889 band could now act as a resistance.
US stocks close higher after Fed hikes rates
US stocks ended sharply higher, after the Federal Reserve delivered the first 50-basis-point interest rate hike since 2000, but said larger 75-basis-point increases weren’t in play. Powell said half-point rises remain on the table for the next couple of meetings.
The Fed also outlined plans to reduce its near $9 trillion balance sheet. The 50-basis point move was the biggest from the US central bank since 2000 when President Bill Clinton occupied the White House, and comes as the central bank works to cool hot inflation without setting off an economic recession.
Powell talked about a strong economy, but also the pain consumers have been feeling at the grocery store and gas pump, in afternoon news conference, saying higher interest rates are the cure.
The central bank also outlined a process to slash its balance sheet, first by $47.5 billion a month starting in June, but ramping up to $95 billion a month. This will result in a nearly $3 trillion reduction in its record size over the next three years.
The Dow Jones Industrial Average rose 932.27 points, or 2.81 percent, to 34,061.06, the S&P 500 gained 124.69 points, or 2.99 percen, to 4,300.17 and the Nasdaq Composite added 401.10 points, or 3.19 percen, to 12,964.86. Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off, Reuters said.
US trade deficit jumps to record high
Private payrolls climbed by 247,000 in April, according to the ADP National Employment Report released Wednesday. The US trade deficit jumped 22.3 percent to record $109.8 billion in March, the USCensus Bureau and the US Bureau of Economic Analysis said Wednesday. US imports climbed 10.3 percent to $351.5 billion, while US exports increased 5.6 percent to $241.7 billion in March.
In addition, the Institute for Supply Management services index showed weaker new-orders growth and employment, with the number dropping to 57.1 percent in April from 58.3 percent, below forecast.
RBI hikes repo rates
The Reserve Bank of India's Monetary Policy Committee in an unscheduled meeting on Wednesday unanimously decided to increase the policy repo rate by 40 basis points to 4.40 percent with immediate effect citing inflation worries. This is the first increase in the policy repo rate since May 2020 marking a reversal of the RBI's monetary policy stance.
Crude prices up
Crude prices shot up as the European Union spelled out some of the details of its plan to ban the use of Russian oil, heightening concerns about supply. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.93 percent although trading was thin with Japanese and Korean markets closed for public holidays.
On Wednesday, crude oil prices settled on a positive note in the international markets. Brent crude gained more than 4.5 percent, and settled around $110.12 a barrel, while US West Texas Intermediate (WTI) crude futures climbed above $107.80 a barrel. Domestic markets also settled on a positive note with MCX Crude futures trading above Rs 8225, up by 4.41 percent. Crude oil prices gained after EU said it will gradually stop buying oil from Russia.
Crude oil prices have risen as the EU commissioner proposed sanctions on Russia this morning. The EU will stop buying oil in phases over the next 6 months. Natural Gas prices jumped more than 9 percent at one point to a session high of $8.169 per million British thermal units (MMBtu), the highest level since September 2008. Natural gas jumped on prospects over increasing demand for US LNG exports, while warmer-than-usual weather forecasts could increase cooling demand. However, disappointing US data, weakness in dollar Index and Chinese demand concerns could restrict gains.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd said, "We expect crude oil prices to remain volatile in today’s session. Crude oil is having support at $105.20-$103.80 and resistance t $108.90–110.40, In INR terms crude oil has support at Rs8,050-7,940, while resistance is at Rs 8,380–8,520."
Fuel prices remain unchanged
Petrol and diesel prices remained unchanged for the 29th consecutive day on Thursday. In Delhi, the price of petrol and diesel remains Rs 105.41 per litre and Rs 96.67 per litre respectively.
In Mumbai, the price of petrol was held unchanged at an all-time high of Rs 120.51 per litre. Diesel price also continues to be at Rs 104.77 a litre, the highest among metros.
In Chennai, petrol costs Rs 110.85 per litre and diesel Rs 100.94 per litre. In Kolkata, petrol is at Rs 115.12 per litre and diesel Rs 99.83 per litre.
Petrol and diesel prices were last hiked by 80 paise a litre each on April 6, taking the total increase in rates in 16 days to Rs 10 per litre.
Bullion likely to open positive
On Wednesday, gold and silver ended on a positive note in the international markets. Gold June futures contract settled at $1,881, up by 0.30 percent and silver July futures contract ended at $22.99, up by 1.71 percent. However, the bullions ended negative in the domestic market. Gold futures contract settled at Rs 50,562 per 10 grams with a loss of 0.48 percent and silver futures contract settled at Rs 62,080 per kilogram with a loss of 1.54 percent.
Gold and silver prices are advancing firmly towards the psychological resistance of $1,900 and $23 respectively following a strong upside in gold from around $1,866.00 and Silver from around $22.25, as the announcement of the interest rate hike decision by the Federal Reserve underpinned the precious metal against the greenback. The outcome of US Fed meet dragged the US dollar index below the round level support of $103.00 strongly, but Gold and Silver prices jumped after Fed Chair Jerome Powell said the US central bank was not actively weighing a 75-basis point increase.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, On May 5, Today, bullion prices are expected to open positive. Gold has support at $1884-1872 and resistance at $1912-1920, while Silver has support at $22.88-21.64 and resistance at $23.40-23.55. In INR terms, gold has support at Rs 50,450–50,310 and resistance at Rs 52,110–52,350, while Silver has support at Rs 61,920-61,715 and resistance at Rs 63,330–63,910.
USDINR to remain volatile
USDINR 27May futures contract showed high volatility on yesterday’s trading session and showed profit taking at higher levels. USDINR dropped after RBI unexpectedly raised interest rates by 40 bps aiming to tackle surging inflationary pressures. After outcome of US FED which has dragged the US dollar index below the round level support of $103.00 strongly.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd said, "We expect the pair to cross the levels of 76.92, indicating further strength in the upcoming sessions, else it could test its support level of 76.05 again. Looking at the technical set-up, the pair could show weakness in the upcoming sessions till 76.05. Today USD-INR will remain volatile ahead of the U.S. Federal Reserve policy meetings outcome. We suggest closely watching the levels of 76.05".
(With inputs from Reuters)
