The trends on SGX Nifty indicate a flat opening for the broader index in India with a gain of 5 points. Deepak Jasani, Head-Retail Research, HDFC Securities, said, the Indian markets could open flat to mildly lower in line with mixed Asian markets today and mixed US markets on Friday.
Nifty rose smartly on May 20 aided by positive global cues. At close, Nifty was up 456.7 points or 2.89 percent at 16266.2.
A higher than expected record cut in China's 5 year PLR for mortgages (for the second time this calendar year) raised hopes for more policy loosening ahead and boosted risk sentiments, said Jasani.
Nifty has shown first signs of forming a sustainable bottom in the short term. A move above 16,404 will reinforce those hopes. 16,624 will be the next resistance. The key thing is whether or not there’s going to be a recession. In the last three bear markets in the US, where there was no recession, the decline was 21.3 percent and that fall is already achieved in the current downmove. Bear market falls have been much larger. Markets could take longer to decide whether we are headed for a recession and in the meanwhile we may witness a bounce, Jasani added.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, In early action, SGX Nifty is indicating a higher opening for local benchmark indices. Key benchmark indices last week snapped a 5-week losing streak as investors lapped up beaten-down stocks following a continuous sell off. However, the threats of rising inflation and higher interest rate scenario continue to weigh on investors' minds. Technically speaking, both the bulls and bears will return to their previous rightful places (bulls all around and the bears nowhere to be seen) only if Nifty closes above its biggest hurdles at the 16,411 mark. A close below 15,951 mark will spell trouble for Nifty bulls, Tapse added.
Mohit Nigam, Head - PMS, Hem Securities said, the bBnchmark indices are expected to open on a flat to negative note as suggested by early trends on SGX nifty. Both US and European markets closed with firm gains or flat last week. Investor sentiments got a boost after the announcements regarding reducing the custom duty on Petrol and diesel as it will reduce the input cost for the company's. We believe this trend will continue and the indices can further rally towards 16500 and presents the time to approach cautiously with every major news and events impact on the markets. As investing with caution is the best approach till the market doesn’t provide a clear direction.
On the technical front, the key resistance level for Nifty50 is 16,400 followed by 16500 and on the downside 16,000 and 15,750 will act as strong support. The key resistance level for bank nifty is 34,500 followed by 34,800 and on the downside 33,800 and 33,400 will act as strong support, he added.
The market may remain volatile this week due to the May month expiry, said Santosh Meena, On the global front, the minutes of the FOMC meeting will be released on May 25 which will be an important trigger while the movement of the dollar index and other commodity prices will be other important factors.
Asian stocks trade mixed
Asian stocks traded mixed Monday as investors assess the impact of China’s COVID policies on growth and the outlook for the world’s largest economies. Beijing reported a record number of COVID cases during its current outbreak, reviving concern the capital may face a lockdown as authorities seek to stamp out community spread of the virus. The city reported 99 cases for Sunday, up from 61 on Saturday. While the total is still low, the spike is one of the biggest since the outbreak started, with the case tally mostly hovering around 50 a day.
US stock close mixed
US stocks closed mixed Friday, with the S&P 500 index eking out a gain after trading in bear-market territory earlier in the session, but all three major benchmarks booked another week of losses. The Dow Jones Industrial Average suffered an eighth straight weekly decline, marking its longest losing streak since April 1932. For the week, the Dow fell 2.9 percent, the S&P 500 dropped 3.1 percent and the Nasdaq slid 3.8 percent.
Stocks were initially buoyed after the People’s Bank of China on Friday cut in its rate on five-year loans, aimed at shoring up weak housing sales by reducing mortgage costs.
Govt cuts customs duty cut on select raw materials
India has cut customs duty on raw materials for coal, iron and steel, and plastic products to tame inflation in the country. The central government has reduced excise duty on petrol and diesel alongside a series of steps intended to bring down inflation in the economy. The government will also set aside more funds to subsidise fertilisers and gas cylinders to reduce the impact of higher prices.
India's fiscal deficit could worsen: Nomura
As per Nomura, India's fiscal deficit could worsen to 6.8 percent of gross domestic product for the year March 2023, as compared with the budget estimate of 6.4 percent, after the government announced a slew of measures to fight inflation.
FPIs dump Indian equities worth over Rs 35,000 cr so far
Exodus of foreign money from the Indian equity markets continues unabated with FPIs pulling out over Rs 35,000 crore so far this month on concerns over the prospects of more aggressive rate hike by US Fed and appreciation of the dollar.
With this, net outflow by Foreign Portfolio Investors (FPIs) from equities reached Rs 1.63 lakh crore so far in 2022.
Crude oil prices to remain volatile
Crude oil prices settled higher on Friday as hopes of crude oil demand rebounding in China after Shanghai lifted some coronavirus lockdowns had offset worries of sluggish global economic growth. The jump in ccrude oil prices were supported by record gains in the U.S. gasoline prices, weakness in the dollar index and easing covid-19 lockdown restrictions in China. The dollar index also slipped from 20 year highs and supported global commodities. Meanwhile, last week, the US dollar index witnessed a steep fall after failing to sustain around the fresh 19-year high at 105.00 that also supported crude oil prices.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, “We expect crude oil prices to remain volatile in today’s session. Crude oil price has support at $106.20-$104.40 and resistance at $111.40-$113.65, In INR terms crude oil has support at Rs 8,510-8,420, while resistance is at Rs 8,750–8,870”.
Gold prices snapped a four-week losing trend, managing to close on a higher note. Last week gold prices gained around 2% while silver prices also recovered around 6% from their lows amid fall in US dollar index and US bond yields. Last week, the US dollar index witnessed a steep fall after failing to sustain around the fresh 19-year high at 105.00. The US dollar index eased more than 2% from its recent highs and U.S. 10-year bond yields also cooled off and slipped below 2.80%. Bullion prices also get support from weak US data. Unemployment claims also rises again and existing home sales and the Philly Fed manufacturing index also disappointed.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, This week investors’ focus will remain on the release of the Fed Open Market Committee (FOMC) report, which is due on Friday. Gold has support at $1832-1820, while resistance is at $1858-1870. Silver has support at $21.48-21.20, while resistance is at $22.10-22.38. In INR terms gold has support at Rs 50,640–50,410, while resistance is at Rs 51,140–51,350. Silver has support at Rs61,010-60,750, while resistance is at Rs 62,350–62,610.
Rupee to remain volatile
The dollar index showed very high volatility last week and slipped from their highs. The dollar index was settled on a slightly positive note at 103.015 with a gain of 0.26% on Friday. The USD-INR 27 May futures contract was settled on a slightly weaker note at 77.57 with a loss of 0.10% on the National Stock Exchange on Friday.
The benchmark 10-year bond yields also cooled off and slipped below 2.80 percent. Downbeat US economic data and sell-off in the U.S. equity markets restricted gains of the dollar. The dollar index also slipped amid recovery in the peer currencies. A pound, euro, Swiss franc and Japanese yen recovered from their lows last week and restricted gains of the dollar.
However, weakness in the dollar and recovery in the domestic equity markets from lower levels supported the rupee. Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, “We expect the rupee to remain volatile this week and could test 78.10 levels. We suggest fresh buying in the pair on dips around 77.35 with a stop loss of 77.20 on a daily closing basis for the target of 77.85-78.10.”
The following companies will release their results today: Zomato, Divis Laboratories, Bharat Electronics, Birlasoft, TRF, SAIL, Nelcast, Pricol, The Ramco Cement, TTK Healthcare, Patel Engineering, Igarashi Motors, Graphite India, Data Patterns (India), Shilpa Medicare, and Vaibhav Global.
Stocks under F&O ban
Five stocks - BHEL, Delta Corp, GNFC, Indiabulls Housing Finance, and Punjab National Bank - are under the F&O ban on the NSE today.
(With inputs from Reuters, Agencies)