PremiumThe next test for markets is the US inflation print on Friday, which will provide clues about how aggressively the Federal Reserve must raise rates. The data are expected to show annual consumer-price gains of more than 8%.
India's benchmark indices slumped today, registering their worst week in four, led by losses in IT, financials, banks and metal stocks. Declines were largely the result of a surge in oil prices and concerns over aggressive tightening by central banks to rein in high inflation.
European stocks also extended losses as investors braced for US inflation data that may help decide the course of the Federal Reserve’s tightening path.
Back home, the benchmark Sensex tanked 1,017 pts to end the day at 54,303.44, while the Nifty fell 276.30 points to 16,201.80. All sectoral indices ended in the red.
On the Nifty, Bajaj Finance, Kotak Mahindra Bank, HDFC, Hindalco and Reliance Industries were the worst hit. Shares of Grasim, Apollo Hospitals, Dr Reddy's, Asian Paints and Divis Labs rose.
Passenger vehicle dispatches to dealers in India rose over two-fold last month on a low base of Covid-19-hit May last year.
As per the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle wholesales rose to 2,51,052 units last month as compared to 88,045 units in May 2021.
The two-wheeler sales rose to 12,53,187 units in May as compared to 3,54,824 units in the year-ago period.
Similarly, total three-wheeler dispatches stood at 28,542 units last month as against 1,262 units in May 2021.
Overall sales of PVs, two-wheelers and three-wheelers rose to 15,32,809 units in May. The same stood at 4,44,131 units in the preceding year.
Nifty June series sentiment remains weak. Sell on rise advisable for the near term. Only a strong matured reversal will change the monthly outlook. Selective stocks are available at medium term value levels while broadly risk reward remains skewed. Liquidity remains the main reason behind the current corrective phase.
Gold discounts in India this week were stretched to their highest level in seven weeks as higher prices repelled demand, while fresh concerns over the spread of COVID in top-consumer China left buyers reluctant to make purchases.
This week, dealers in India were offering a discount of up to $10 an ounce over official domestic prices — inclusive of the 10.75% import and 3% sales levies, up from the last week's discount of $9.
Retail buying in India will remain weak, especially from rural areas as farmers focus on planting of summer-sown crops, said a Mumbai-based dealer with a private bullion importing bank.
European shares extended losses to a fourth session on Friday, as market participants braced for May U.S. inflation data that could guide the Federal Reserve's policy decision next week.
All sectors were trading well in negative territory, with banks weighing the most on the pan-European STOXX 600 index, which lost 1.3%. The index was on course to end the week about 2.5% lower - its sharpest decline since early May.
Concerns also mounted about demand and growth in China, the world's second-largest economy, after Shanghai and Beijing went back on fresh COVID-19 alerts on Thursday and imposed new lockdown restrictions.
The U.S. Labor Department's Consumer Price Index was expected to have accelerated to 0.7% last month from 0.3% in April. But when stripped of volatile food and energy products, it was seen cooling a nominal 0.1 percentage point to 0.5%.
The basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen.
The Indian basket on June 9 touched $121.28, matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC).
As per the PPAC, the Indian basket of crude oil averaged $111.86 per barrel between February 25 and March 29 - the immediate period after Russia's invasion of Ukraine sent oil on fire.
It averaged $103.44 a barrel between March 30 and April 27.
International oil prices held near a 13-week high on Thursday, underpinned by robust demand from key buyers like the US.
India’s economy expanded 8.7% in the fiscal year ended March 2022, the world’s quickest pace.
Amazon.com Inc. is planning to withdraw from a heated competition for the rights to stream Indian Premier League cricket matches, according to people familiar with the matter, ceding one of the world’s most popular sporting contests to rivals from Walt Disney Co. to Mukesh Ambani’s Reliance Industries Ltd. (Read here)
Indian state fuel retailers have agreed to provide monetary relief to sugar mills and other producers of ethanol to compensate for high energy costs to boost biofuel production, according to a letter written by the companies to manufacturers.
India, the world's third biggest oil importer and consumer, has expedited efforts to double ethanol blending with gasoline to 20% from the current 10% across the country from 2025/26.
The Indian government fixes the ethanol purchase prices for fuel retailers - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp -- every marketing year.
However, the fuel retailers have announced they will pay extra to ethanol manufacturers to compensate for high energy and power costs, a BPCL spokesman said.
The three state fuel retailers have announced the 'relief scheme' for June 1 to Nov. 30.
The companies will pay an additional 1,604 rupees ($20.62) per kilolitre for ethanol produced from sugar cane juice, and 1,493 rupees for B- heavy molasses and 1,179 rupees for ethanol produced from C-heavy molasses, the letter showed.
The B-heavy molasses juice has some sucrose content left in them for sugar production, whereas C-heavy molasses is a cane by-product that has no sugar content left in it.
For a kilolitre of ethanol produced from damaged foodgrains and rice, the relief is fixed at 2,337 rupees and 1,437 rupees, the letter showed.
Prime Minister Narendra Modi has pledged to achieve net-zero carbon emissions by 2070, and is encouraging industries to switch to cleaner options including renewable and biofuels to cut carbon footprint.
The IMF has said it was concerned by the use of food and fertilizer export restrictions by some nations which can exacerbate global price increases and market volatility and welcomed India's recent decision to relax its originally announced ban on wheat exports and allow some shipments to proceed.
A senior International Monetary Fund official observed that some 30 countries have curtailed exports of commodity goods including food and fuel since the war in Ukraine began.
(Details here).
The Indian Metrological Department (IMD) has forecasted a normal monsoon for calendar year 2022. In its second long-range forecast, IMD said that it expects rainfall during the current monsoon season to be 103% of the long-period average. For the fourth year in a row, the monsoon season is expected to be normal.
However, in a report dated 9 June, economists at Barclays said, “Despite an early start, the progress of monsoon has been tepid so far. Cumulative rainfall during 1-9 June was 41% below the long-period average (LPA), though it remains too early to draw any meaningful conclusions, given that it is still very early in the monsoon season." (Read here)
Shares of Mahindra & Mahindra Ltd (M&M) have risen by 24% so far in calendar year 2022 outperforming the sectoral index, Nifty Auto, which gained by only 4% in the same span.
The turnaround in M&M’s automotive segment has boosted investor sentiments. Also, the outlook is firm as the demand for its products such as XUV700 continues to grow. (Read here)
Fitch Ratings on Friday revised its outlook on India's long-term foreign currency Issuer Default Rating (IDR) to "Stable" from "Negative," citing diminished downside risks to medium-term growth.
The ratings agency said risks to the country's medium-term growth lessened due to rapid economic recovery and easing financial sector weaknesses, despite near-term headwinds from the global commodity price shock.
We believe strong support for the Nifty is placed at 16100 zone. However, for a meaningful pullback to materialise the index needs to decisively close above past three session’s identical high of 16500 to extend the pullback towards last week’s high of 16800. Else, there will be prolonging of consolidation in the 16500-16100 range amid stock specific action
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Dasatinib Tablets have an estimated market size of $1465 million for twelve months ended December 2021, according to IQVIA.
Malaysia's May palm oil end-stocks fell 7.37% from the month before to 1.52 million tonnes, data from industry regulator the Malaysian Palm Oil Board (MPOB) showed on Friday.
Crude palm oil production edged down 0.07% from April to 1.46 million tonnes, while palm oil exports jumped 26.67% to 1.36 million tonnes, MPOB said.
A Reuters survey forecast end-May inventories to shrink 6% to 1.54 million tonnes. Production was seen falling 4% to 1.4 million tonnes. Exports was seen up 20% at 1.27 million tonnes.
The US inflation data, due today, is expected to set the tone for the US Fed’s next policy decision. While a 50 basis point is very much in the cards, the forward looking commentary for future action could be greatly influenced by today’s data.
While many have been peddling the possibility of the inflationary trend to be levelling out, today’s data will possibly validate or negate the same. Globally, the central banks seem to be operating in unison to stamp out inflation using interest rate hikes. The ECB announced on Thursday that it will prepare a quarter-point interest rate hike in July and suggested a bigger hike in the fall over long-lasting high inflation. The inflation in the Eurozone now exceeds 8%. The ECB also said that it will end net asset purchases on July 1, 2022.
This didn’t build confidence for the bullion bulls, resulting in small correction in prices . Rising US treasury yields didn’t help the cause either.
Gold edged down on Friday and was set for a weekly fall, as Treasury yields rose, with investors awaiting key monthly U.S. inflation data for cues on the future of the Federal Reserve's monetary policy.
Spot gold eased 0.2% to $1,844.78 per ounce, while U.S. gold futures eased 0.3% to $1,848.10.
Benchmark U.S. 10-year Treasury yields edged up, hurting demand for zero-yield gold.
The rupee depreciated 8 paise to a record low of 77.82 against the US dollar in opening trade on Friday, tracking the strength of the greenback in the overseas market.
At the interbank foreign exchange, the rupee opened on a weak note at 77.81 against the American dollar, then lost ground to quote at 77.82 -- its all-time low level, registering a fall of 8 paise from the last close.
On Thursday, the rupee fell by 6 paise to close at 77.74 against the US dollar.
Asian and emerging market peers have started mixed, while Asian equity remained under pressure and could weigh on sentiments, Iyer noted.
Global oil benchmark Brent crude futures fell 0.66 per cent to USD 122.26 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent lower at 103.17.
As far as immediate supports are concerned, 16350 followed by 16300 – 16260 should be seen as key levels. Traders are advised to remain positive but yes aggressive positions are not advisable till the time trend becomes strong.
India's retail inflation likely slipped modestly in May, but stayed well above the Reserve Bank of India's upper tolerance limit for a fifth consecutive month, as lower fuel prices offset surging food costs, a Reuters poll found.
But the dip is expected to be temporary and analysts say the RBI remains on track to keep raising interest rates.
The June 6-9 Reuters poll of 45 economists showed inflation measured by the consumer price index (CPI) likely slipped to 7.10% in May on a year ago, from 7.79% in April.
Forecasts for the data, due on 14 June, were in a 6.70%-8.30% range.
The auction of 5G airwaves is likely to get delayed beyond mid-July as the government is yet to decide on the issue of private 5G networks that has become a bone of contention between telecom service providers and tech companies. (Read here)
Shares of Reliance Industries, HDFC, banks, IIFL Finance, Bajaj Auto, among others, will be in focus today.
A consortium of Reliance Industries Ltd (RIL) and buyout firm Apollo Global Management Inc. has emerged as the strongest contender to acquire Walgreens Boots Alliance Inc.’s Boots pharmacies unit in the UK, two people directly aware of the matter said.
The consortium has valued the assets in the range of $7-8 billion, the people said, without specifying the exact bid. (Read full story here)
Oil prices fell on Friday but still hovered near three-month highs, with fears over new COVID-19 lockdown measures in Shanghai outweighing solid demand for fuels in the world's top consumer United States.
Brent crude futures for August was down $1.01, or 0.8%, at $122.06 a barrel in early deals, after a 0.4% decline the previous day. U.S. West Texas Intermediate crude for July fell 98 cents, or 0.8%, to $120.53 a barrel, having dropped 0.5% on Thursday.
Nifty futures on the Singapore Exchange fell 228.50 points, or 1.4%, to 16,243 in early deals on Friday, indicating a gap-down start for the Indian benchmark.
On Thursday, Sensex rose 427.79 points to end the day at 55,320.28, while the broader Nifty50 climbed 121.85 points to reclaim the 16,450 mark.
China's factory-gate inflation cooled to its slowest pace in 14 months in May, official data showed on Friday, depressed by weak demand for steel, aluminium and other key industrial commodities due to tight COVID-19 curbs.
The producer price index (PPI) rose 6.4% year-on-year, the National Bureau of Statistics (NBS) said in a statement, after the 8.0% rise in April, and in line with forecasts in a Reuters poll. It was the weakest reading since March 2021.
The consumer price index (CPI) gained 2.1% from a year earlier in May, in line with April's growth. In a Reuters poll, the CPI was expected to rise 2.2%.
The world's second-largest economy has slowed significantly in recent months, hit by strict COVID-19 controls, disrupting supply chains and jolting production and consumption.
Stocks extended a selloff on Friday and the dollar held near a three-week high as the twin blows of high inflation and slowing economic growth stirred investor anxiety.
An Asian equity gauge shed 1%, in part as Chinese tech shares slid on uncertainty over the regulatory outlook and Covid lockdowns.
Alibaba Group Holding Ltd. was in the red after China’s regulator denied a Bloomberg News report that it had started early stage discussions on reviving the initial public offering of Jack Ma’s Ant Group Co.
European futures retreated and US contracts wavered.
S&P 500 futures were steady and the Nasdaq 100 futures were little changed. Euro Stoxx 50 futures declined 0.9%.
Japan’s Topix index lost 0.8%, Australia’s S&P ASX/200 index fell 0.7%, South Korea’s Kospi index shed 1.2%, Hong Kong’s Hang Seng index fell 1.1%, and China’s Shanghai Composite index dropped 0.2%.
Overnight On Wall Street, the Dow Jones Industrial Average fell 1.94%, the S&P 500 lost 2.38% and the Nasdaq Composite dropped 2.75%.
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