Trends on SGX Nifty indicate a positive start for the broader index in India with a gain of 98 points. HDFC Securities Head-Retail Research Deepak Jasani said Indian markets may open flat today despite mostly higher Asian markets and marginal positivity in US markets on Tuesday.
Indian markets recovered sharply on May 02 after opening a gap down on weak overnight cues and closed near the day’s high. Nifty ended the day with a slight decline of 33 points and closed at 17069 level.
On the daily charts, Nifty has formed a double bottom near the 16,900 level. Short term traders should keep Nifty long with a tight stop loss of 16,824. Given the slackness in the current trend, any pull back rally can be used to lighten long commitments. Jasani said the Nifty trend will be considered bearish till it crosses the 17,378 resistance in the near term.
Prashant Taapsee, Vice President (Research), Mehta Equities Ltd, said major local benchmark indices are set to open on a positive note, thanks to recovery in US markets overnight and early gains in SGX Nifty.
Two big events will come to the fore today; The giant LIC public issue is open for public subscription today and later in the day, the US Fed will meet to discuss the rate hike decision. Emerging markets like India can easily zoom more if the Federal Reserve is ‘less whimsical’. To be honest, low spirits will be seen as new hypocrisy. With this, buying can start on Dalal Street. Technically speaking, Nifty’s interweek support is seen only at 16807 points and the index needs to stay above its 200-DMA at 17,233 points for buying momentum.
Asian stocks rise
Asian stocks rose on Wednesday as investors braced for the biggest Federal Reserve interest rate hike since 2000 and waited for more clues on how aggressively they were planning to tackle inflation.
US stocks close to rise
Major US stock indices ended higher on Tuesday after choppy trading on the eve of the Federal Reserve’s most aggressive monetary policy tightening in two decades. The market is divided between those who think the Federal Reserve will have to tighten up too much and kill the economy” versus those who believe the Fed won’t have to “price” as much as it already has for this year.
MSCI’s all-country world index rose 0.4 per cent and the pan-European STOXX 600 index closed up 0.53 per cent after surviving a “flash crash” in Nordic markets on Monday due to Citigroup’s sell order trade. The Dow Jones Industrial Average rose 0.17 percent, the S&P 500 0.48% percent and the Nasdaq Composite rose 0.16 percent.
The Federal Open Market Committee began a two-day meeting on Tuesday, which is expected to end the first half percent since 2000, as well as plans to reduce the size of its balance sheet. Fed Chair Jerome Powell will hold a press conference on Wednesday afternoon.
Economic data released on Friday underscored a tight labor market. Job opportunities in the US reached a record 11.5 million in March, while the number of job losses also hit an all-time high. Meanwhile, orders for US manufactured goods were up 2.2 percent in April.
Australia’s central bank raised interest rates
Overnight in Asia, Australia’s central bank raised its key rate by 25 basis points higher than expected. The Bank of England is expected to raise rates for the fourth time in a row on Thursday.
India’s April exports fall
India’s merchandise exports stood at $38.19 billion (24.2 per cent year-on-year) in April, up from $42.22 billion a month ago. Imports, however, did not fall by the same magnitude, coming in at $58.26 billion (26.6 percent yoy) against $60.74 billion in March. Thus, the trade trade deficit increased from $18.51 billion to $20.07 billion (31.2 percent y-o-y) during this period.
Crude oil prices will remain under pressure
Crude oil closed on a weak note in the international markets on Tuesday as WTI crude closed at $102.58 a barrel and Brent crude at $104.97 a barrel. Oil in the domestic market closed down 2.07 percent at Rs 7,892 per barrel. China’s Covid lockdown continued and investors weighed in on a possible embargo on Russian oil from the European Union to put downward pressure on benchmarks against a weak demand backdrop. The European Union strengthened plans to tighten sanctions against Russia, with Germany saying it stood ready to support an immediate sanctions on Russian oil. Similar data came from China, the world’s second-largest economy, reporting that factory activity contracted for the second straight month since February 2020 amid renewed coronavirus-induced lockdowns.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, “We expect crude oil prices to remain volatile and trading under pressure in today’s session. Crude oil is finding support at $100.20-$98.40 and resistance at $98.40. 104.50-106.10, in INR terms, crude oil has support at Rs 7,720-7,580 while resistance lies at Rs 8,050-8,174.
Bullion prices will fluctuate
Gold and silver prices remained firm on Tuesday after a continuous sell-off on Monday, taking both the precious metals to 2.5-month lows. Short covering by short term futures traders has led to gains in gold and silver prices. Bulls are trying to stop the bleeding in down-trending markets, which have been punished by a stronger US dollar and rising bond yields. In the international markets, gold closed at USD 1,868.12 and silver at USD 22.58 an ounce. In the domestic market, gold rose 0.29 per cent to Rs 50,808, while silver rose 0.33 per cent to Rs 63132. However, weakness in US bond yields, prolonged lockdown in China and a possible slowdown in global economic growth are supporting the precious metals. ,
Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, “Ahead of the outcome of the US Federal Reserve’s policy meeting today, bullion prices will remain volatile. Gold has support at $1850-1838, while resistance at $1882-1895. Silver has support at $22.10-21.80, while resistance lies at $22.94-23.22. In rupee terms, gold has support at Rs 50,550-50,320, while resistance lies at Rs 52,110-52,350. Silver has support at Rs 62,650-62,215, while resistance lies at Rs 63,830-64,210.
USDINR 27 May futures contract showed high volatility last week and showed gains at higher levels. On the weekly technical chart, the pair is trading above its resistance level of 76.3500. Going by the daily technical chart, we saw a pair forming a double top pattern on the weekly technical chart. We expect the pair to only cross the 77.20 level, show further strength in the upcoming sessions or else it may test its support level of 76.35 again. Looking at the technical set-up, a pair only crosses the 77.20 level, may show further strength in the upcoming sessions or else it may test its support level of 76.35 again.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd said, USD-INR will remain volatile ahead of the outcome of US Federal Reserve policy meetings today. We suggest taking a closer look at the levels of 76.3500-77.2000 to take a new position in the pair.
The following companies will announce their quarterly earnings today: Kotak Mahindra Bank, Tata Consumer Products, ABB India, Adani Green Energy, Cartrade Tech, Adani Total Gas, Equitas Small Finance Bank, Havells India, Bombay Dyeing and Manufacturing Company, Deepak Nitrite, Lakshmi Organic Industries, Mahindra EPC Irrigation, Satin Creditcare Network, SIS, Oracle Financial Services Software, Rain Industries, EIH, IIFL Wealth Management, Aptech, Signity Technologies and MAS Financial Services.