Trends in SGX Nifty indicate a positive opening for Indian indices

The trends in SGX Nifty indicate a positive opening for Indian indices. Indian markets could open flat to mildly higher in line with mixed Asian markets today and despite positive US markets on Wednesday, said Deepak Jasani, Head-Retail, HDFC Securities.

Nifty lost the opening gains on May 25 and once again ended in the negative. At close Nifty was down 0.62 percent or 99.4 points at 16,025.8, a little above its intra day low. 15,842 is the next support for the Nifty while 16,263 remains a stiff resistance, said Jasani.

Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, the Markets are likely to open on a positive note on the back of firm global cues. Overnight, the Fed minutes were released where all participants agreed for 50 basis point interest rate hike and laid out plans for aggressive Quantitative Tightening to begin in June. Our call of the day suggests that any intraday bull ride is likely to last only for a brief period and probably, gradually pave the path for the bear to a sleepover. Nifty is likely to witness mostly downward fluctuation owing to growth and inflation bets which continue to dominate investors’ sentiment negatively.

The line in the sand is at Nifty’s support at 15,971 mark and below the same, the index could swiftly slide to 15,671 mark. Nifty is likely to gain strength only above 16,411 mark on a closing basis with 200 - DMA at 17261 mark, Tapse added.

Mohit Nigam, Head - PMS, Hem Securities said, Benchmark Indices are expected to open on a positive note as suggested by trends on SGX Nifty. US markets closed higher yesterday after minutes from FED’s latest monetary policy meeting. European markets also closed in green yesterday. Asian markets are trading mixed in the early Thursday trade with HangSeng trading in red while Nikkei trading in green. Oil prices are trading higher on signs of tight supply. Earnings today include Hindalco Industries, Motherson Sumi Systems, Muthoot Finance, Berger Paints, Colgate Palmolive India, Page Industries, Prestige Estate Projects etc.

Overall we believe that market volatility may remain at elevated levels and investors should maintain a cautious stance. One can use these dips to start making new positions in fundamentally good stocks but in a staggered manner and try to diversify their portfolio across different sectors.

Immediate support and resistance for Nifty are 15,800 and 16,200 respectively. Immediate support and resistance for Bank Nifty are 34,000 and 35,000 respectively, added Nigam.

At close, the Sensex was down 303.35 points or 0.56 percent at 53,749.26. The broader Nifty was down 99.40 points or 0.62 percent at 16,025.80.

Asian shares stumble

Asian share markets slipped on Thursday after minutes from the Federal Reserve's early May meeting showed a majority backing half-percentage-point rate hikes in June and July, and as persistent concerns over global growth sapped confidence.

Chinese blue-chips fell 1.11 percent despite another drop in daily COVID-19 cases in the country, where lockdowns aimed at curbing the spread of the virus threaten to undermine recent economic support measures. Chinese blue-chips fell 1.11 percent despite another drop in daily COVID-19 cases in the country, where lockdowns aimed at curbing the spread of the virus threaten to undermine recent economic support measures.

US stocks close higher

US stocks closed higher Wednesday as investors took away a message of flexibility from the release of minutes of the early May Federal Reserve meeting about its path to higher interest rates.

Stocks closed higher after the Federal Reserve released minutes of its early May meeting, which signaled the central bank remains open to rethinking aggressive plans to raise rates to tame high inflation.

Dow Jones Industrial Average rose 0.6 percent, the S&P 500 gained 0.95 percent and the Nasdaq Composite added 1.51 percent.

Minutes from the May meeting showed support for half-point moves by the Fed as it seeks to get its policy rate “expeditiously toward neutral,” over the next couple of meetings and that high inflation remains a key focus.

The market found some relief on the notion that the Minutes revealed a broad consensus for 50bps hikes in June and July and the possibility for a pause later in the year

Orders at US factories for long-lasting goods such as machinery and electronics rose 0.4% in April, signaling the economy was still growing at a steady pace in the early spring. Economists polled by The Wall Street Journal had forecast a 0.7% increase.

US Fed hikes interest rates by 50 bps

The Federal Reserve's latest monetary policy meeting showed policymakers unanimously felt the US economy was very strong as they grappled with reining in inflation without triggering a recession. The minutes from the Federal Open Market Committee's May meeting, which culminated in a 50-basis-point hike in the Fed funds target rate - the biggest jump in 22 years - showed most of the committee's members judged that further such rate hikes would "likely be appropriate" at its upcoming June and July meetings.

In its statement, Fed stated that the committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2% objective and the labor market to remain strong.

Crude prices up

Oil prices rose on Wednesday, buoyed by tight supplies and as U.S. refiners pushing processing activity to their highest level since the beginning of the coronavirus pandemic. In international markets WTI crude settled at $110.33 and Brent settled at $114.03. In domestic markets, crude prices settled on a positive note at Rs 8,549, up by 0.43 percent. As per the U.S. EIA, crude oil inventories fell by 1.0 million barrels last week and gasoline inventories also fell drastically due to rising demand.

Crude oil prices rose amid weak Russian oil production since its invasion of Ukraine. Russia’s crude producers are struggling to place all their oil on the market—especially the European one—and domestic refinery throughput is also slumping amid lower demand. Despite this, rising oil and gas prices have resulted in record-high oil and gas revenues for Russia. US natural gas futures skyrocketed above the $9/MMBtu mark for the first time since August of 2008 and more than doubled in value since the beginning of 2022, with higher domestic and international demand being the primary driver.

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 $107.20-$105.40 and resistance is at $112.40-$114.95, In INR terms crude oil has support at Rs8,410-8,280, while resistance is at Rs8,690–8,820".

Fuel prices unchanged

Fuel prices remained unchanged for the fourth consecutive day on Thursday, May 26, 2022.

In the national capital, petrol is being reailed at Rs 96.72 per litre while cost of diesel is Rs 89.62, as per the data available on Indian Oil Corporation website.

In Mumbai, petrol costs Rs 111.35, while diesel is retailing at Rs 97.28, following the reduction of excise duty and VAT. In Chennai, the petrol and diesel prices are at Rs 102.65 and Rs 94.24 per litre. In Kolkata, the price of petrol is Rs 106.03 and diesel Rs 92.76 per litre.

Gold, silver to remain volatile

On Wednesday, Gold and silver prices dropped after a five-session positive close, weighed down by a rebound in the dollar after minutes from the Federal Reserve's May meeting showed that most participants believed half-percentage-point rate increases would likely be appropriate in June and July. In the international markets, Gold settled at $1,846.30, down by 1.02 percent and silver settled at $21.87, down by 0.86 percent. In the domestic market, gold settled at Rs 50,819, down by 0.66 percent and silver was at Rs61,534, down by 0.71 percent. Sentiment-wise, market players shrugged off concerns that the Federal Reserve’s tightening cycle could cause a recession.

The gold market is holding support above $1,850 an ounce, however disappointing manufacturing data is not providing any new bullish momentum for the precious metal as prices remain in negative territory early in the session. Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We expect gold and silver to remain volatile in today’s session. Gold has support at $1834-1822, while resistance is at $1862-1874. Silver has support at $21.55-21.40, while resistance is at $22.10-22.38. In INR terms gold has support at Rs 50,740–50,510, while resistance is at Rs51,140–51,350. Silver has support at Rs 60,980-60,650, while resistance is at Rs 61,680–62,110.

USDINR

The dollar index recovered from four week lows after the US Federal Reserve signalled further interest rate hikes. The dollar index settled on a positive note at 102.145 with a gain of 0.38 percent on Wednesday. The USD-INR 27 May futures contract also settled on a slightly positive note at 77.65 with a gain of 0.05 percent on Wednesday.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We expect the dollar index to remain volatile in today’s session and could hold its support level of 101.20 on a closing basis. On the other hand, the rupee traded sideways on Wednesday and failed to gain strength amid recovery in the dollar index and higher global energy prices. Besides, the rupee is also struggling due to rising domestic inflation and rising imports. We expect the rupee to remain volatile this week and could hold its major support level of 78.1000 against the U.S. dollar. We suggest closely watching the levels of 77.30-78.10 for taking fresh positions in the pair, either side breakout of the range would give further directions, Kalantri added.

Results today

The followig companies will release their quarterly results today: Hindalco Industries, Motherson Sumi Systems, Muthoot Finance, Zee Entertainment Enterprises, Aarti Surfactants, Oberoi Realty, Aban Offshore, AllCargo Logistics, Ansal API, Astrazeneca Pharma, Berger Paints, Colgate Palmolive India, Cummins India, Good Year India, Gujarat State Fertilizers Corporation, India Glycols, Jet Airways, Kirloskar Industries, Chemcon Speciality Chemicals, NMDC, Page Industries, Prestige Estate Projects, Quess Corp, Shalimar Paints, and Sudarshan Chemicals will be in focus on May 26 ahead of their March quarter earnings.

(With inputs from Reuters, Agencies)