The equity benchmarks, the BSE Sensex and the NSE Nifty, are poised to open lower on Monday, tracking bearish trends across Asian markets and a negative finish on Wall Street after the U.S. employment report on Friday signalled the Federal Reserve would continue rate hike to combat rising inflation. The weak trends on SGX Nifty also indicated a gap-down opening for the domestic bourses, with SGX Nifty futures trading 67 points, or 0.4%, lower at 16,521 on the Singapore Stock Exchange at 8:10 AM. The persistent concerns about higher inflation amid rising oil prices and continued selling by foreign investors will also keep investors on edge. This week, RBI monetary policy, global macro data, and crude prices trend will set the tone for the market. The RBI policy will be announced on June 8, while IIP data will be released on June 10. On the global front, US jobless claim will be unveiled on Thursday, and CPI numbers will be out on Friday, which will be key drivers for global equities.
Last week, the domestic equity benchmarks ended higher for the third straight time, supported by better macro data and a reduction in selling by foreign investors. The BSE Sensex soared 885 points, or 1.61%, to 55,769 during the week ended June 3, 2022. Similarly, the NSE Nifty index added 232 points, or 1.42%, to settle at 16,584 during the period under review. The broader indices, the BSE midcap and smallcap also surged 1.14% 2.98%, respectively. Among individual stocks, state-owned coal miner Coal India was the best performer on NSE, followed by Mahindra & Mahindra, Reliance Industries and Tata Consultancy Services. On Friday, the 30-share Sensex ended 49 points lower at 55,769, and the 50-share Nifty dropped 43 points to 16,584.
Stocks to watch
Vedanta: The mining giant has received its board approval to raise up to ₹4,089 crore via debentures on a private placement basis. The company proposed to issue 40,890 secured, rated, listed, redeemable, non-convertible debentures (NCDs) of face value ₹10 lakh each aggregating up to ₹4,089 crore.
Adani Transmission: The Adani group company has signed a share purchase agreement with Essar Power to acquire its 100% stake in Essar Power Transmission Company (EPTCL).
Sun Pharma: The Mumbai-based drug major reportedly plans to increase its field force in the domestic market by 10% in the current fiscal in order to drive twin objectives of brand focus and geographical expansion.
Punjab & Sind Bank: The RBI on Friday slapped a penalty of Rs 27.5 lakh on the state-run bank for non-compliance with certain directions issued by it on 'external benchmark-based lending'.
NTPC: The state-owned power major has awarded multiple contracts to import 6.25 million tonne (mt) of coal to Adani Enterprises at a cumulative value of ₹6,585 crore.
L&T Infotech: The IT company has said its Chief Executive Officer and Managing Director Sanjay Jalona has relinquished office on June 3. He had resigned on May 6 after announcing the merger of Mindtree with Larsen and Toubro Infotech (LTI), citing personal reasons.
Ujjivan Small Finance Bank: The lender’s board will meet on June 8 to consider the proposal for raising of funds by way of issuance of debt securities on a private placement basis, in one or more tranches.
Poonawala Fincorp: Market regulator SEBI has revoked the market ban imposed on Abhay Bhutada, Managing Director of Poonawalla Finance, in a case related to alleged insider trading activities in the shares of Magma Fincorp (which is now known as Poonawalla Fincorp).
Here are the key things investors should know before the market opens today:
Wall Street falls on rate hike concerns
On Friday, all three major U.S. indices ended in negative terrain as better-than-expected job data raised concerns that the Federal Reserve would continue its aggressive policy stance to curb inflation. As per the data released by the U.S. Labor Department, the US economy added 390,000 jobs in May, while the unemployment rate was steady at 3.6% for a third consecutive month, much higher than market estimates. The Dow Jones Industrial Average declined 0.98%, the S&P 500 tumbled 1.57%, and the Nasdaq Composite ended 2.46% lower.
Asian stocks trade mostly in red
Shares in the Asia-Pacific region were trading mostly lower in opening trade on Monday, following negative closing on Wall Street on Friday. The investors remained concerned about the uncertainty regarding the pace of the U.S. Federal Reserve's interest rate hikes, and the impact of higher commodity prices, especially crude oil, on inflation.
Regional heavyweight Japan’s Nikkei 225 slipped 0.1%, the Straits Times Index in Singapore shed 0.3%, and Australia’s ASX 200 fell 0.4. The Hang Seng index in Hong Kong also dipped 0.2%.
Bucking the trend, Taiwan’s Weighted index was trading marginally higher by 0.1%.
In mainland China, shares were trading mixed, with the Shenzhen Component rallying 1.1%, while the Shanghai Composite fell by 0.4%.
Crude prices rebound
The price of Brent and U.S. crude rose nearly 1% on Monday after Saudi Arabia raised prices sharply for its crude sales in July. The price hike was announced even after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) in its last policy meeting agreed to increase output in July and August by 648,000 barrels per day, or 50% more than previously planned.
In Asian trading hours, the Brent oil for July delivery climbed 0.7% to $120.5 per barrel, while the U.S. West Texas Intermediate (WTI) crude July futures rose 0.67% to $119.7 a barrel.
FPIs pull out ₹40,000 cr from Indian equities in May
Continuing its selling spree for the eighth straight month, foreign portfolio investors (FPIs) withdrew nearly ₹40,000 crore from the Indian equity market in May amid concerns about an aggressive rate hike by the U.S. Federal Reserve and higher inflation. As per data, net outflow by FPIs from equities reached at ₹1.69 lakh crore so far in 2022, data with depositories showed.
FIIs remain net sellers, DIIs net buyers
The foreign institutional investors (FIIs) continued their selling spree in the Indian equity market on June 3, while domestic institutional investors (DIIs) continued to support the market. As per the exchange data, FIIs net sold shares worth ₹3,770.5 crore, while DIIs net purchased shares worth ₹2,360.5 crore.