Indian markets could open sharply lower in line with lower Asian markets today and sharply negative US markets on Friday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Nifty fell on May 6 after opening with a downgap following the rout in the US markets. At close Nifty was down 1.63 percent or 271.4 points at 16411.3. Nifty ended the week on May 6 in a bearish phase falling with a downgap. However the fact that it did not close at the intra day low was a bit heartening. US Markets ended mixed on Friday with tech shares continuing to face selling pressure.
The key concerns faced by the global equity markets do not seem to be ending soon. FPI selling continues unabated. US CPI number for April is due on Wednesday. If the number is in line with or better than the expected 8.2 percent (vs 8.5 percent for March), then we could see a short term bounce in the markets. 15868-16078 band could provide support on dips while 16624 could offer resistance, said Jasani.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, the steep fall in SGX Nifty is indicating a gap-down start much in line with global cues. India VIX, which measures the expected volatility in the market, had inched up to 21.25 levels in Thursday’s trade, and we suspect the VIX to shoot up till 25 levels given the bearish outlook. The recent rate hike by the US Fed has further intensified FII selling in the domestic market, which sold shares worth Rs 5,517.08 crores on Friday. Technically speaking, Nifty’s interweek support is seen only at 15901 mark, and below the same expect a waterfall of selling up to 15200-15250 mark.
Asian markets weak in early trade
Asian markets got off to a shaky start on Monday as US stock futures took an early skid on rate worries, while a tightening lockdown in Shanghai stoked concerns about global economic growth and possible recession.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, and Japan's Nikkei 1.2 percent. Investors were also tense ahead of the US consumer price report due on Wednesday where only a slight easing in inflation is forecast, and certainly nothing to prevent the Federal Reserve from hiking by at least 50 basis points in June. Core inflation is actually seen rising by 0.4 percent in April, up from 0.3 percent the previous month, even as the annual pace dips a bit due to base effects.
US stocks close lower
All three major US stock benchmarks closed lower Friday, each booking another week of losses, as investors weighed April jobs data amid heightened stagflation fears.
US job data
The latest US jobs data cemented expectations the Federal Reserve will remain on its rate-hike path to combat stubbornly high inflation. The S&P 500 fell for a fifth straight week, its longest losing streak since June 2011. For the week, the Dow and S&P 500 each slipped 0.2 percent while the technology-heavy Nasdaq Composite fell 1.5 percent. The Nasdaq Composite declined for a fifth straight week — marking its longest weekly losing streak since 2012.
The US economy added 428,000 new jobs in April, according to a report Friday from the US Bureau of Labor Statistics. But an acute labor shortage showed little improvement last month, which could underline worries about inflation already running its hottest in 40 years. Economists polled by The Wall Street Journal had forecast 400,000 new jobs. The unemployment rate was unchanged at 3.6 percent, the government said Friday, just above a 54-year low. Average hourly earnings cooled, rising 0.3 percent in April versus expectations for a 0.4 percent increase.
US stock likely to remain volatile
The 10-year US yield rose 5.8 basis points on Friday to 3.124 percent, the highest level since Nov. 13, 2018.
After a week of extraordinary turbulence, stocks are likely to remain volatile as investors await fresh data on inflation and watch the course of bond yields. The big report for markets is Wednesday’s April consumer price index. Economists expect a high inflation reading, but it should moderate from the 8.5 percent year-over-year pace of March. A second inflation report, the producer price index, which is a gauge of wholesale prices, is released Thursday.
LIC IPO subscribed 1.79 times on Day 5
Life Insurance Corporation's IPO, the country's biggest public offer, was subscribed 1.79 times on the penultimate day of the offer on Sunday.
Against 16,20,78,067 shares on offer, 29,08,27,860 bids were received, according to the data posted on stock exchanges at 7 PM. However, the Qualified Institutional Buyer (QIB) category is yet to be fully subscribed. Bids were received for 0.67 per cent of the shares earmarked for the segment, showing a poor response.
With regard to non-institutional investors (NIIs), a total of 3,67,73,040 bids were received for 2,96,48,427 shares reserved for the category, reflecting a subscription of 1.24 times. Retail individual investors bid for 10.99 crore shares as against 6.9 crore shares on offer for the segment, translating into an over-subscription of 1.59 times.
Of the total, the policyholders' portion was subscribed 5.04 times, while that for employees was subscribed 3.79 times.
FPIs withdraw Rs 6,400 cr
Foreign investors have pulled over Rs 6,400 crore from the Indian equity market in the first four trading sessions of the ongoing month when the Reserve Bank of India (RBI) and US Federal Reserve raised interest rates.
Foreign Portfolio Investors (FPIs) remained net sellers for seven months to April 2022, withdrawing a massive amount of over Rs 1.65 lakh crore from equities. This was largely on the back of anticipation of a rate hike by the US Federal Reserve and due to the deteriorating geopolitical environment following Russia's invasion of Ukraine.
Fuel prices unchanged
Fuel prices remained unchanged on May 9. Prices of petrol and diesel have remained steady for 33 days nowPetrol in Delhi costs Rs 105.41 per litre and diesel Rs 96.67 per litre. In Mumbai, petrol and diesel prices per litre are at Rs 120.51 and Rs 104.77 respectively. 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.
Results on May 9
The following companies will release their quarterly earnings today: UPL, PVR, Godrej Agrovet, Infibeam Avenues, Dalmia Bharat, Gujarat Narmada Valley Fertilizers & Chemicals, 3i Infotech, Aarti Drugs, BASF India, Borosil, Central Bank of India, CMS Info Systems, Craftsman Automation, Vedant Fashions, Suven Pharmaceuticals, VST Tillers Tractors, ISMT, Mold-Tek Packaging, Visaka Industries, and Vishwaraj Sugar Industries will release quarterly earnings on May 9.
(With inputs from Reuters, Agencies)
