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Nifty50: 18,716 ▲ 114 (+0.6%)
Sensex: 63,143 ▲ 418 (+0.6%)

Howdy, folks!

You know how we all say, ‘stay home, stay safe’? Well, a couple in Australia would like to disagree after they found an eight-foot python chilling in their hallway. A reptile relocation expert safely evicted the slithery house guest by releasing it back into its natural habitat. Now, that was one hiss-terical situation, indeed! With the reptile back in green surroundings, it’s time to talk about the markets, which also closed in the green.

• Benchmark indices rose for the second straight day amid strong global cues
• In all, 36 of the Nifty50 stocks closed in the green
• US inflation eased to 4% in May 2023, lowest since March 2021

Among the Nifty sectoral indices, Realty (+3.0%) and Media (+1.7%) were the top gainers, while Auto (-0.1%) was the sole loser today.

What’s trending

⭐L&T bags new order 

Construction firm said its energy hydrocarbon division has secured a major order, ranging ₹1,000 to ₹2,500 crore from a prestigious overseas client. This new order involves construction and setup of new offshore structures.

⭐ MRF touches ₹1 lakh per share

Shares of MRF reached a new milestone today, crossing the ₹1 lakh mark. The stock rose over 1%, touching a new 52-week high of ₹1,00,439 per share. So far in 2023, MRF’s share price is up nearly 13%. The company tops the list of stocks with the highest price tag. Meanwhile, its market capitalization stands at ₹42,379 crore.

⭐ Zydus Lifescience receives USFDA nod

The pharma major has received multiple drug approvals from the USFDA. The company received final approval to manufacture and market Varenicline tablets, which are used to treat smoking addiction and has annual sales of $501 million in the US market. The company also received approval for manufacturing Diclofenac Sodium tablets, which have annual sales of $13 million. Following the announcement, company’s share price rose over 1.5% intraday.  

⭐ Crude oil rises as US inflation eases 

International crude oil prices rose sharply with Brent crude up 2.5% at $73.7 per barrel. This comes after US inflation eased to 4% in May, which may prompt the US central bank to hit the pause button on interest rate hikes. Rising interest rates add pressure on economic activity, which in turn dents the demand for oil.

In Focus

Inflation eases; will interest rates fall?

Domestic inflation eased to a 25-month low of 4.25% in May 2023, close to RBI’s target of 4%. With ease in inflation numbers, many would think the central bank will start cutting interest rates. However, experts believe rate cuts will still take time. Wondering why? Let’s explore in detail.

Inflation ease due to base effect 

A sharp drop in inflation in May has come as a relief to many. However, this decline in numbers was largely due to a high base effect of last year along with a slower increase in prices of specific food items such as edible oils, vegetables, meat and fish as compared to last year.

However, on close examination of numbers, cereal inflation continues to be in double digit at 12.65% whereas prices of milk (8.9%) and pluses (6.6%) also remained firm mainly due to the demand-supply mismatch. 

What RBI said on inflation 

The RBI, in its bi-monthly meeting last week, said multiple factors such as subdued monsoon, the impact of El Nino and volatility in crude oil prices could have its impact on inflation in the months ahead.

As a result, experts believe a fall in inflation numbers provides temporary comfort, which may prompt the central bank to pause its key policy rates for an extended period. Meanwhile, the pivot to a rate cut will take time as price pressure still remains uneven and could even start rising from June.

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