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Market Update

Equity benchmark Sensex fell by nearly 300 points, while the Nifty dropped below the 25,000 mark, as gains in financial and realty stocks were offset by losses in IT shares. This decline came amid weak global sentiment, following Moody’s downgrade of the U.S. government’s credit rating. Despite this, broader markets outperformed, with the domestically focused Nifty Smallcap 100 index rising by 0.7%. The advance-decline ratio for Nifty 500 stocks stood at 1.4:1, suggesting that traders were shifting their focus to mid and small-cap stocks from large-cap ones. The Sensex lost 271 points, or 0.3%, closing at 82,059, while the Nifty dropped 74 points, or 0.3%, ending at 24,945.

• Globally, Asian and European markets, as well as U.S. Index Futures, saw a decline of up to 1% after Moody’s downgraded U.S. sovereign debt from its AAA rating to Aa1. IT stocks experienced profit booking due to the downgrade, as many IT firms derive a significant portion of their revenue from the U.S. As a result, the Nifty IT index slipped by 1.2%. On the other hand, the Nifty PSU Bank Index rose by 1.5%, driven by strong quarterly results from banks such as Bank of India, PNB, IOB, and Central Bank, which saw gains of 2-5%. Real estate stocks continued their upward trajectory due to strong demand and positive quarterly results, with DLF, Godrej Property, Phoenix Mills, and Macrotech Developers rising by 2-4%

• Shares of graphite electrode companies, HEG and Graphite India, surged by up to 16% after Japan’s Resonac Holdings announced plans to halt production in China and Malaysia due to margin pressures. In individual stocks, Vodafone Idea and Indus Tower saw declines of 9% and 3%, respectively, after the telecom operator moved to challenge the government’s decision to deny its request for a waiver of over $5 billion in interest and penalties on statutory dues.

Technical Outlook:

• Nifty Index opened on a flattish note and traded in a choppy manner for most part of the session. As the day progressed, it witnessed a steady decline and eventually slipped below the 25K mark. Upside momentum remained weak, though key support zones continued to hold firm.

• On the daily chart, it formed a small bodied bearish candle and forming lower lows from last two sessions and closed the day with minor losses of around 70 points. Now it has to cross and hold above 25000 zones for an up move towards 25200 then 25400 zones while supports are placed at 24850 then 24750 zones.

Derivative Outlook:

• Nifty future closed negative with loss of 0.45% at 24965 levels. Positive setup seen in Delhivery, CDSL, Divis Lab, Astral, Bajaj Auto, CESC, NCC, Supreme Industries, Union Bank, Bank of India, Oberoi Realty, Inox Wind, BSE, Paytm and Godrej Properties while weakness in Idea, GMR Airports, PB Fintech, LIC Housing finance, Indus Tower, Naukri, Patanjali Foods, Grasim, INFY, Lupin and IRB Infra.

• On option front, Maximum Call OI is at 26000 then 25000 strike while Maximum Put OI is at 24000 then 24500 strike. Call writing is seen at 25000 then 25200 strike while Put writing is seen at 24900 then 25000 strike. Option data suggests a broader trading range in between 24500 to 25500 zones while an immediate range between 24750 to 25200 levels.

• SBI cuts fixed deposit rates by 20 bps - Country's largest lender State Bank of India (SBI) has cut fixed deposit rates by 20 basis points across tenors effective May 16. As per the bank's website, the cut in interest rates on retail domestic term deposits below Rs 3 crore is applicable for both general public and senior citizens.

• Top Court Rejects Airtel, Vodafone Pleas for Dues Waiver - Supreme Court has rejected Bharti Airtel’s and Vodafode’s petitions seeking a waiver on dues owed to the government. Vodafone Idea was seeking a waiver related to penalty and interest on the so-called adjusted gross revenue dues of more than Rs30000cr ($3.5 billion).

• Japan's Resonac to close graphite electrode plants in China, Malaysia - Japan's Resonac Holdings said it will quite production in China and Malaysia due to margin pressure. Resonac is a major producer of graphite electrodes, which are used mainly in electric arc furnaces to melt scrap iron. The report also goes on to add that the shutdown in China and Malaysia can impact up to one-third of Resonac's capacity. HEG has one of the largest integrated graphite electrode plants in the world, and exports over 70% of its production to more than 30 countries of the world.

• NBCC - company successfully sold 446 residential units at Aspire Silicon City in Noida through an e-auction, generating Rs 1,468 crore in sales.

• Servotech Renewable Power Systems - Reports that Errol Musk—the father of Tesla and SpaceX CEO Elon Musk—is planning a visit to India between June 1 and June 6, during which he is expected to tour Servotech’s manufacturing facility. The visit is linked to his recent appointment to the Global Advisory Board of the company, which has fueled fresh investor optimism.

• Ceigall India board approves merger of Ceigall Infra with C&C Construction to boost infra play - Company said its board has approved the merger of wholly-owned subsidiary Ceigall Infra Projects with publicly listed C&C Construction to enhance business. Ceigall India will hold up to 95 per cent of the merged entity, with plans to reduce its stake to 75 per cent in line with Sebi regulations. • Zydus Wellness Q4 FY25 - Net Profit Rs171.9cr (up 14% YoY), Revenue Rs913cr (up 16.7% YoY), Ebitda Rs190cr (up 17% YoY) and Ebitda Margin 20.8% vs 20.7% YoY

Global Market Update

• European Market - European stocks slipped as investor sentiment soured globally after Moody’s Ratings stripped the US government of its top credit rating, pushing US equity-index futures and government bonds lower. Germany, UK and France Index fell nearly 0.5% each.

• Asian Market - Asian stocks were set for their longest run of losses in over a month, with tech shares leading the retreat following Moody’s downgrade of the US’ credit rating. Japan, Hong Kong, China and Australia Index decline up to 0.5%.

• US Data - Leading Index.

• Commodity - Oil edged lower, with talks to end the war in Ukraine and a reduction of the US credit rating in focus. Brent fell as much as 1.1% to near $65 a barrel.

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