The trends on SGX Nifty indicate a gap-up opening for Indian indices with a gain of 223 points. Indian markets could open higher in line with positive Asian markets today and despite mildly negative US markets on Thursday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
India's stock benchmarks logged one of their worst days of 2022 on May 19, as markets tumbled after a steep fall in Wall Street caused ripple effects in global equities. The Sensex lost 2.61 percent (about 1,416 points) to 52,792.23. The Nifty fell by a similar magnitude to 15,809.40.
Nifty fell gap-down once again on May 19. 15,736 is the crucial support while on rises, 16,211 could act as a resistance. It would be crucial to watch as to whether Nifty succeeds in sustaining or building on to opening gains or runs into another bout of profit taking.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, said, SGX Nifty bucking the overnight weakness in US markets is indicating Nifty's downward momentum from yesterday's trade is likely to fizzle out. Another positive catalyst is the 3 percent drop in US Treasury bond yields and 1 percent fall in the US Dollar Index. However, Nifty is still at the risk of a collapse due to concerns of FII selling, higher oil prices, rising inflation, hawkish US Federal Reserve, and a probable aggressive rate hike by the RBI. Technically speaking, sell-off on Dalal Street can gain steam if Nifty slips below 15,671 mark and below the same, it could slip further to 15,000 mark. Bulls have a chance to fight only above 16,411 mark.
Mohit Nigam, Head - PMS, Hem Securities said the benchmark indices is expected to make gap-up opening today as suggested by early trends on SGX nifty. Indices is set to trade with firm gains amid positive signals from its Asian peers. US markets ended the day in red as fear of rising inflation and slowdown in economic growth looms. On Thursday bears continued the downward pressure as nifty fell more than 2.5% amid global sell off. The IPO of eMudhre will be opening today for subscription.
On the technical front, the key resistance level for Nifty50 is 15,900 followed by 16100 and on the downside 15,750 and 15,600 will act as strong support. They key resistance level for bank nifty is 33,550 followed by 33,800 and on the downside 33,100 and 32,900 will act as strong support, he added.
Asian stocks up in early trade
Stocks in Asia and US futures pushed higher Friday amid a bout of relative calm in markets, though worries about a darkening economic outlook and China’s COVID struggles could yet stoke more volatility.
US stocks close lower
US stocks gave up earlier gains to end lower Thursday, following the worst slide in nearly two years for the S&P 500 index in the previous session, leaving it down almost 19 percent from its record, or close to a bear market. The S&P 500 finished closer to bear-market territory as the Russia-Ukraine war, a slowdown in China’s economy, high inflation and rising interest rates cause investors to worry about corporate profits and economic growth. Investors dumped stocks on fears of sluggish growth and bought safe-haven assets such as government debt and the Swiss franc.
Cisco was the latest major company to plunge on results with the tech bellwether down 13.7 percent on Thursday. Cisco said after the bell Wednesday that quarterly revenue fell short of analysts expectations and it warned revenue would disappoint in the current quarter.
Japan's consumer inflation rises above central bank target
Japan's core consumer inflation in April rose above the central bank's 2 percent target, hitting a more than seven-year high as increases in energy and commodity costs are causing broader price hikes that are pressuring households. The nationwide core consumer price index (CPI), which excludes volatile fresh food costs but includes those of energy, surged 2.1 percent in April from a year earlier.
Oil prices rebound
In a very highly volatile session on Thursday, oil prices rebounded from two days of losses, bolstered by weakness in the dollar and expectations that China could ease some lockdown restrictions that could boost demand. In the international markets, WTI crude settled at $109.89 per barrel and Brent settled at $111.52 per barrel. Domestic market also settled on a positive note at Rs 8,464 per barrel, up by 1.73 percent.
The dollar index fell around 1 percent after downbeat US economic data supported global commodity prices. Crude oil prices also recovered amid revival in Chinese oil demand. Possibility of easing of Covid-19 restrictions in most populous city of China from June 1 could lift Chinese oil demand.
After decline in COVID-19 cases lockdown restrictions start easing in Shanghai from 1st June and could increase Chinese oil demand. Crude oil prices were also supported by a possible ban on Russian oils by the European Unions. The US oil demand is also increasing and gasoline prices hit record highs this week.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd, said, "We expect crude oil prices to remain volatile in today’s session as US President Joe Biden could meet Saudi Arabia’s Mohammed bin Salman, or MbS, as early as next month, according to sources." Crude oil is having support at $106.20-$104.40 and resistance is at $110.40-$112.65. In INR terms crude oil has support at Rs8,250-8,120; while resistance is at Rs 8,550–8,640, Kalantri said.
Gold, silver to remain volatile
On Thursday, Gold and silver logged significant gains, boosted by a sharply falls in US dollar index and a slight decline in US Treasury yields. Amid growing weakness in the US labor market, more than expected American workers applying for first-time unemployment benefits also appears to be adding to gold’s technical bullish momentum. On Thursday, the US Labor Department said that weekly jobless claims rose by 21,000 to 218,000, up from the previous week's revised estimate of 197,000 claims.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, "We expect bullions prices to remain volatile in today’s session". Gold has support at $1822-1810, while resistance is at $1850-1862. Silver has support at $21.48-21.20, and resistance at $22.05-22.30. In INR terms gold has support at Rs 50,330–50,110, while resistance is at Rs 50,740–50,950. Silver has support at Rs61,140-60,750, while resistance is at Rs 61,950–62,410, he said.
Dollar index to remain volatile today
The dollar index showed very high volatility and crashed after downbeat US economic data. The dollar index settled on a weaker note at 102.918 with a loss of 0.99 percent on Thursday. The USD-INR 27 May futures contract was settled on a slightly positive note at 77.7000 (LTP) with a gain of 0.03 percent. The dollar index also struggled due to smart recovery in the Japanese yen and Swiss franc. However, weakness in the U.S. equity markets and possible Fed rate hikes in the upcoming meetings supported the dollar at lower levels.
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 levels of 102.55 on a closing basis. On the other hand, the rupee also showed high volatility but gets support of weaker dollar. We expect high volatility in the pair and is expected to trade in the range of 77.30-78.10 on either side breakout of the range which would give further directions".
Economic growth likely to be robust at 8.9% in current fiscal: FM
India's economic growth is likely to be robust at 8.9 percent in the current financial year, reflecting the country's strong resilience and speedy recovery, Finance Minister Nirmala Sitharaman said on Thursday. Sitharaman also expressed confidence that India will continue to achieve a high growth rate in the next financial year as well, the finance ministry said in a statement.
China cuts borrowing rate again
China cut its benchmark reference rate for mortgages by an unexpectedly wide margin on Friday, its second cut this year as Beijing seeks to revive the ailing housing sector to prop up the economy. Senior officials have pledged further measures to fight a slowdown in the world's second-biggest economy, hit by COVID-19 outbreaks that prompted stringent measures and mobility restrictions, causing huge disruptions to economic activity.
US dollar heads for worst week since early February
The dollar index, which measures it against six major rivals, was down 1.5 percent for the week to 102.96, on track to snap a six-week winning run. A week earlier it had soared to the highest since January 2003 at 105.01. The benchmark 10-year Treasury yield sank overnight to a more than three-week low of 2.772 percent, from a 3 1/2-year high of over 3.2 percent earlier this month.
US weekly jobless claims continue to rise
The new claims for US unemployment benefits unexpectedly rose last week, but the labor market remains tight amid worker shortages, with the number of Americans on jobless rolls at its lowest since 1969 in early May. Initial claims for state unemployment benefits increased 21,000 to a seasonally adjusted 218,000 for the week ended May 14, the highest level since January, the Labor Department said on Thursday. Economists polled by Reuters had forecast 200,000 applications for the latest week.
The following companies will release their quarterly results today: NTPC, One 97 Communications (PayTM), Amara Raja Batteries, Gati, HeidelbergCement India, Indiabulls Housing Finance, IDFC, Indigo Paints, Indian Railway Finance Corporation, JK Tyre and Industries, CE Info Systems, Metro Brands, Narayana Hrudayalaya, Nuvoco Vistas Corporation, Paras Defence and Space Technologies, Pfizer, SML Isuzu, Sobha, Thermax, and Zydus Lifesciences.
Stocks under F&O ban
Four stocks – Delta Corp, GNFC, Indiabulls Housing Finance, and Punjab National Bank – are under the F&O ban today.
(With inputs from Reuters, Agencies)