Indian markets could open lower in line with mostly lower Asian markets today and sharply negative US markets on Monday, said Deepak Jasani, Head-Retail Research, HDFC Securities.
Nifty opened with a downgap on May 9 and inched up through the day. However it repeatedly kept facing selling pressure on rises. At close, Nifty was down 0.67 percent or 109.4 points at 16301.8. Continued selling pressure in the US markets could prevent any substantial bounce in our markets. Nifty could remain in the 16,142-16,422 band in the near-term, Jasani added.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, said, Domestic markets could witness a steep fall in early trades today, mirroring overnight slump in US markets and subsequent fall in the SGX Nifty. The Nifty Put-Call Open Interest Ratio at 1.26 indicates that weakness may continue, while FIIs selling domestic shares to the tune of Rs 3,361.8 crores on Friday further validates that overseas investors are switching funds to safe investment havens. India VIX has inched up to 22.0325 levels in Monday’s trade, and we suspect the VIX to shoot up till 25 levels given the bearish outlook. Technically speaking, Nifty’s interweek support is seen only at 15,901 mark and below the same expect a waterfall of selling up to 15,200-15,250 mark.
Mohit Nigam, Head - PMS, Hem Securities, said, based on the SGX Nifty and global trends, the Indian market is expected to open lower. Wall Street plunged to its lowest level in more than a year on Monday, as markets were already hit by rising interest rates. Following the decline in global stocks, Indian equity indexes may face some pressure. Asian markets are trading down on expectations of an economic downturn later this year as a result of growing inflation, higher interest rates, and the continued harsh COVID-19 lockdown restrictions in Shanghai. At current levels, the IT sector appears positive as a drop in the rupee might assist firms counter some of the cost and growth challenges. Positive geopolitical developments, as well as stronger-than-expected key macroeconomic data this week, might help turn the tide and entice investors to return to risk assets.
Immediate support and resistance for Nifty are 16,000 and 16,500 respectively. Immediate support and resistance for Bank Nifty are 33500 and 35,000 respectively.
At close on May 10, the Sensex was down 364.91 points or 0.67 percent at 54,470.67, NSE Nifty was down 109.40 points or 0.67 percent at 16,301.90.
Asian shares tumble to lowest in nearly two years
Asian shares tumbled to their lowest in nearly two years on Tuesday as investors shed riskier assets on worries about higher interest rates and their impact on economic growth, while the dollar held near 20-year highs.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.8 percent, falling for a seventh straight session and extending declines to 17 percent so far this year. Across Asia, share indexes were a sea of red. The Nikkei lost 0.9 percent, Australian shares shed 2.5 percent and Korean stocks lost 2 percent.
S&P 500 stock futures and Dow Jones futures both fell 0.5 percent and Nasdaq futures were down 0.6 percent. "The idea of a benign and gentle tightening cycle has evaporated," ANZ analysts said in a report.
LIC IPO gets 2.95 times subscription
The Life Insurance Corpation's (LIC) mega public offering -- India's largest to date -- on Monday closed with nearly 3 times subscription, predominately lapped up by domestic retail and institutional buyers, but foreign investor participation remained muted.
The government, which raised Rs 20,500 crore from sale of 3.5 percent of its stake in the country's largest insurer, however, shrugged off the muted participation of foreign investors, saying the issue was an example of 'Atmanirbhar Bharat' (self-reliant India) and the issue saw interest from a cross section of investors.
Focus on secondary markets
With LIC IPO receiving a good response, traders will bring the full focus back to the secondary markets said Jasani. The higher listing of Campus IPO could improve sentiments. The Russian President's address in the course of May 9 celebrations did not bring any fresh negatives, he added.
US stocks finish sharply lower
US stocks finished sharply lower Monday led by mega caps as investors fretted over stagflation threats — giving Dow industrials, the S&P 500, and the Nasdaq Composite their biggest three-day percentage drops since 2020.
The Nasdaq suffered its biggest three-day point decline on record, while the S&P 500 slipped below 4,000 for the first time in 13 months. Investors are assessing the risks of continued high inflation against the prospects of weakening growth, combined with the need of policy makers to continue lifting interest rates. There are concerns about the Federal Reserve’s ability to tame inflationary spirals without throwing the economy into a recession.
Bitcoin plunges 9%, loses over 50% value
Bitcoin plunged 9% toward $30,000, losing more than 50% of value from its record high set in November.
Prudent Corporate IPO opens today
Prudent Corporate Advisory Services on Monday said it has raised a little over Rs 159 crore from anchor investors ahead of its initial share sale.
The company has decided to allocate a total of 25,30,651 equity shares to anchor investors at Rs 630 apiece, aggregating the transaction size to Rs 159.43 crore, as per the circular uploaded on BSE.
The IPO with a price band of Rs 595-630 per share will be open for public subscription on May 10-12. At the upper end of the price band, the firm will raise around Rs 538.61 crore via IPO.
China's export growth hits two-year low
In April, China's export growth dropped to its lowest level in over two years, while imports scarcely moved, as the curbs introduced to battle COVID has hit factory production, disrupted supply chains and weakened domestic demand too, The Guardian reported.
Exports slowed to 3.9 percent year-on-year in April, the weakest since June 2020.
Crude oil prices close 6% lower
Oil prices closed 6 percent lower to start the week. Crude tracked a selloff in global assets on Monday, with the commodity pressured as Saudi Arabia cut prices for Asian customers, and, elsewhere, China reported sharply weaker export data. In the international markets, WTI crude settled at $103.09 per barrel and Brent settled at $105.07 per barrel. Domestic markets also settled on a weaker note at Rs7,979 per barrel, down by 5.54 percent.
Crude oil prices also slipped amid rise in the U.S. dollar and bond yields. The dollar index is hovering near 20-year highs and U.S. 10-year bond yields are also trading near four year highs and pushed global commodities lower. Crude oil also fell due to China’s fragile economy, after data showed exports rose just 3.9 percent on year in April, after a blistering 14.7 percent gain in March. The slowdown came as COVID lockdowns hit supply chains and closed factories, adding to worries about growth in the world’s No. 2 economy.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We expect oil prices to remain volatile in today’s session. WTI Crude oil has support at $98.40-$96.50 and resistance at $102.80-$104.65, In INR terms, crude oil has support at Rs 7,870-7,720 and resistance is at Rs 8,150–8,250.
Bullion to remain volatile
Gold and silver prices extended losses on Monday as the dollar rallied to two-decade highs while US Treasury yields also advanced, curbing investors’ enthusiasm for the safe haven metal.
Coming off a run of three straight weekly losses, in international, Gold settled at $1,858.60, down by 1.29 percent and silver settled at $21.82, down by 2.46 percent. Domestic markets also settled on a weaker note. Gold ended at Rs50,959 down 0.75 percent and silver settled at Rs 61,497 down by 1.68 percent.
Bullion has been sliding since mid-April as the Federal Reserve and other central banks tighten policy to fight rising consumer prices. The monetary squeeze has sent yields on US government bonds past 3 percent and fueled five weeks of gains for the dollar, making non-interest-bearing gold less attractive.
Still, there could be more bond market swings to come as a swathe of inflation data feeds the debate on price pressures and monetary policy. US consumer prices are set to be released on Wednesday, with China, India, Mexico and Brazil also reporting during the week.
Investors also digested trade data from China Monday that showed the damage caused by covid-19 lockdowns in the world’s second-biggest economy. The nation’s exports and imports struggled in April as worsening virus outbreaks cut demand, undermined production and disrupted logistics.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, Today, Bullion prices will remain volatile. Gold has support at $1850-1840, and resistance at $1874-1984. Silver has support at $21.65-21.40, while resistance is at $22.28-22.55. In INR terms, gold has support at Rs 50,770–50,610, while resistance is at Rs 51,280–51,550. Silver has support at Rs 60,840-60,350, while resistance is at Rs 62,150–62,510.
USDINR
The USD-INR 27 May futures contract settled on a positive note at 77.6650 (LTP) with a gain of 0.76 percent on the National Stock Exchange on Monday. The dollar index is hovering near 20-year highs amid fears of further interest rate hikes by the US. Federal Reserve in the upcoming policy meetings. The dollar index witnessed high volatility and extended its gains. The dollar index settled on a slightly positive note at 103.778 with a gain of 0.09 percent on Monday. Looking at the technical set-up, if a pair continues to sustain above 77.55 levels, it could show further strength towards 77.80-78.05 levels; 76.60 acts as a major support for the pair. Strength in the dollar index, the US bond yields and sell-off in the domestic equity markets pushed the rupee lower. Besides, the rupee also showed weakness due to falling foreign exchange reserves and widening trade deficits. Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, We expect the rupee to remain weak this week and could test 77.8000-78.0500 levels.
Results today
The following companies will release their quarterly earnings today: Asian Paints, Cipla, Vodafone Idea, Gujarat Gas, Ajanta Pharma, Cera Sanitaryware, Chalet Hotels, Chemplast Sanmar, Dishman Carbogen Amcis, Elantas Beck India, Electrosteel Castings, Kansai Nerolac Paints, Max Financial Services, Mahanagar Gas, MRF, Polycab India, Neuland Laboratories, Orient Electric, Reliance Capital, R Systems International, Shemaroo Entertainment, Tajgvk Hotels & Resorts, TD Power Systems, Torrent Power, Venky's (India), and Welspun India.
(With inputs from Reuters, Agencies)
