Sensex up 280 points, Nifty breaches 16,300

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Benchmark equity indices opened higher on May 23, the first day of the new week.

As of 9:16 a.m., the Sensex was up 288.99 points or 0.53% at 54,615.38. The wider Nifty rose 77.80 points or 0.48% to 16,344. About 1,563 shares were up, 531 shares were down and 98 shares were unchanged.

Among the Nifty’s top winners were Maruti Suzuki, M&M, Hero MotoCorp, Asian Paints and NTPC. Tata Steel, JSW Steel, Hindalco, ITC and Coal India were the main laggards.

Nifty rose smartly on May 20, helped by positive global indices. At the close, Nifty was up 456.7 points or 2.89% at 16,266.2.

Asian stocks trade mixed

Asian stocks traded mixed on Monday as investors assess the impact of China’s COVID policies on the growth and outlook of the world’s largest economies. Beijing has reported a record number of COVID cases during its current outbreak, reigniting fears the capital will face a lockdown as authorities seek to stamp out community spread of the virus. The city reported 99 cases on Sunday, down from 61 on Saturday. Although the total is still small, the spike is one of the largest since the start of the outbreak, with the number of cases mostly hovering around 50 a day.

US stocks close mixed

U.S. stocks closed mixed on Friday, with the S&P 500 index gaining after trading in bearish territory earlier in the session, but all three major benchmarks posted another week of losses. The Dow Jones Industrial Average suffered an eighth consecutive weekly decline, marking its longest losing streak since April 1932. For the week, the Dow Jones fell 2.9%, the S&P 500 fell 3.1% and the Nasdaq by 3.8%.

Stocks were initially buoyed after the People’s Bank of China cut its rate on five-year loans on Friday, aiming to shore up weak home sales by cutting mortgage costs.

The government reduces customs duties on certain raw materials

India has reduced tariffs on raw materials for coal, iron and steel and plastic products to control inflation in the country. The central government has reduced excise duties on petrol and diesel along with a series of measures to reduce inflation in the economy. The government will also set aside more funds to subsidize fertilizers and gas cylinders to reduce the impact of rising prices.

India’s budget deficit could worsen: Nomura

According to Nomura, India’s budget deficit could worsen to 6.8% of gross domestic product for the year March 2023, from the budget estimate of 6.4%, after the government announced a series of measures to combat inflation.

REITs drop Indian stocks worth over Rs 35,000 cr so far

The exodus of foreign capital from Indian equity markets continues unabated, with REITs withdrawing more than Rs 35,000 crore so far this month on concerns over the prospects of a more aggressive rate hike by the part of the American Fed and the appreciation of the dollar.

With that, net equity outflows from Foreign Portfolio Investors (REITs) reached Rs 1.63 lakh crore so far in 2022.

Crude oil prices will remain volatile

Crude oil prices stabilized on Friday as hopes of a rebound in demand for crude oil in China after Shanghai lifted some coronavirus shutdowns offset fears of sluggish global economic growth. Rising crude oil prices were supported by record U.S. gasoline price gains, dollar index weakness and the easing of 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 fell sharply after failing to hold around the new 19-year high at 105.00 which also supported crude oil prices.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, “We expect crude oil prices to remain volatile during 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”.

Fuel prices remain unchanged

Fuel prices remained unchanged on Monday after the government announced a cut in excise duty on petrol of Rs 8 per liter and Rs 6 per liter on diesel on Saturday.

The price of petrol in Delhi is now lower at Rs 96.72 and the price of diesel at Rs 89.62 per liter each.

On Sunday, the Maharashtra state government reduced value added tax (VAT) on petrol and diesel. VAT on petrol has been reduced by 2.08 rupees per liter and 1.44 rupees per liter on diesel. The price of petrol in Mumbai is now at Rs 111.35 per liter and diesel at Rs 97.28 per litre.

In Kolkata, petrol retails at Rs 106.03 per liter and diesel at Rs 92.76 per litre. In Chennai, petrol costs Rs 102.63 per liter and diesel Rs 94.24 per litre.

Bullion Outlook

Gold prices broke a four-week downtrend, 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 falling US dollar index and yields US bonds. Last week, the US Dollar Index fell sharply after failing to hold around the new 19-year high at 105.00. The US dollar index fell more than 2% from its recent highs and US 10-year bond yields also cooled and slipped below 2.80%. Bullion prices are also supported by weak US data. Unemployment claims are also rising again and existing home sales and the Philadelphia Fed manufacturing index also disappointed.

Rahul Kalantri, Vice President of Commodities, Mehta Equities Ltd., said: “This week, investors’ attention will remain on the release of the Fed’s Open Market Committee (FOMC) report, which is expected 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 Rs62,350–62,610.

The rupee will remain volatile

The dollar index showed very high volatility last week and slipped from its highs. The dollar index settled on a slightly positive note at 103.015 with a 0.26% gain on Friday. The USD-INR futures contract for May 27 settled on a slightly lower note at 77.57 with a loss of 0.10% on the National Exchange on Friday.

Benchmark 10-year bond yields also cooled and slipped below 2.80%. Disappointing economic data in the United States and a sell-off in US equity markets limited the dollar’s gains. The dollar index also slipped amid rallying peer currencies. The pound, euro, Swiss franc and Japanese yen recovered from their lows of last week and limited the dollar’s gains.

However, the weakness of the dollar and the recovery of domestic stock markets from lower levels supported the rupiah. Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said: “We expect the Rupee to remain volatile this week and could test the 78.10 levels. We suggest further buying in the pair on dips around 77.35 with a stop loss of 77.20 on a daily close basis for the 77.85-78.10 target.

Results today

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 today under the F&O ban on the NSE.

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Posted: Monday May 23rd 2022, 09:27 IST

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