Late comeback

Nifty50: 15,350 ▲ 56 (+0.3%)
Sensex: 51,597 ▲ 237 (+0.4%)

Hello, people!

Bulls were in the mood for a comeback today, as they swept away losses. Just like a traffic constable swept up gravel from the road to ensure the safety of motorists. 

Meanwhile, 2022 has been a washout year for the Indian markets. But how are other countries faring this year? More on that ahead.

• After a volatile session, markets snapped a 6-day long losing streak and closed higher.
• In all, 27 of the Nifty50 closed in the green.
• The rupee closed at 77.98 against the dollar compared to 78.07 on Friday.

Among the Nifty sectoral indices, FMCG (+1.8%) and Financial Services (+0.9%) saw gains, while Metal (-3.9%) and Oil and Gas (-3.2%) were the top losers.

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What’s trending

⭐ Steel stocks feel the heat 🔩

TATASTEEL (NSE) 865 ▼ 41 (-4.6%); JSWSTEEL (NSE) 551 ▼ 2.9 (-0.5%)

Shares of steel companies like Tata Steel and JSW Steel have nosedived by 16% to 24% in the last few weeks. This seems to be the direct impact of the 15% export duty hike by the government on 22 May. After the export duty hike, the profitability of large steelmakers could take a hit as high-margin export business will become uncompetitive at the global level. Also, as per CRISIL report, India’s steel export is expected to fall by 40% to 12 million tonnes (MT) in the ongoing fiscal year.

⭐ Vedanta puts copper plant on sale 🏭

VEDL (NSE): 232 ▼ 31 (-12.0%)

Vedanta's stock plunged 15% intraday after its subsidiary Sterlite Copper put a copper plant on sale. The plant, based in Tamil Nadu, has been shut since mid-2018 over environmental concerns. Official statements had earlier suggested that the company was doing its best to get the plant up and running again. When operational, the plant produced about 40% of India's total copper demand.

⭐ Dilip Buildcon wins large order🚇

DBL (NSE): 198 ▼ 0.4 (-0.2%)

Infrastructure company Dilip Buildcon rose over 2% in early trade as it was declared the lowest bidder for the Surat Metro Rail Project in Gujarat. The order size is ₹1,061 crore, and the project is to be completed within 26 months. The company has also received completion certificates for two road projects in Karnataka.

⭐ ACs to get costlier? 😕

VOLTAS (NSE): 949 ▼ 5.5 (-0.5%); BLUESTARCO (NSE): 914 ▲ 9.1 (+1.0%)

Energy rating rules for air conditioners are set to tighten in July. After the change, ACs that could get a 4-star rating earlier can now only get a 3-star rating. This will boost energy efficiency of ACs by 20%. But according to AC makers, this will lead to a 7-10% rise in cost of production. Companies are required to make ACs with the new norms, while the old stock has to be liquidated within six months.

⭐ May bonanza for India Inc 😎🤝
While May is the hottest month, for India Inc, the month was hot in a different way. A total of 190 deals were signed with a total value of $19 billion. The month witnessed a jump of 58% in deal volumes, as per data from industry experts. Start-up, e-commerce and IT led the deal volumes.

In Focus

Indian markets vs. the world

The Indian markets are witnessing a continuous selloff in 2022. If we look at the Nifty50 index, it is down 12.9% so far this year. Foreign portfolio investors have pulled out ₹1.98 lakh crore from the markets as of 17 June. But how have the Indian markets fared compared to global peers? Let's find out.

Note: Indices as of 6:00 p.m. IST on 20 June 2022.

As you can see, stock markets across the globe are in the same boat. Some markets, like the US, have entered a bear market, or dropped 20% or more from a recent peak. This is mainly due to the geopolitical uncertainties, rising inflation and the aggressive rate hikes by central banks across the world. 

But while Nifty50 seems better off than the S&P 500, it’s too soon to say whether the market has bottomed out. The RBI has hiked rates twice already in two consecutive months, with a focus on curbing inflation. This could lead to more rate hikes down the road. 

However, there's light at the end of the tunnel. For one, India is expecting a healthy monsoon this year. This could boost the rural economy, and increase domestic consumption. Additionally, the government has been taking measures to increase the supply of commodities in the country, which could bring down their prices and ease inflation. 

So at this point, it’s best to keep your calm, and carry on.

IPO Corner

Rising inflation and interest rates have dashed hopes of many companies planning their IPOs this year. So far in 2022 , the global markets have seen IPOs and follow-on public offers worth just $198 billion. This is 70% lower than the same period last year and the lowest since 2005. 

Good to know

What is an open interest?

Open interest (OI) is a derivative indicator that refers to the total number of outstanding derivative contracts, such as options or futures, that are unsettled at a given point in the market. For instance, if a trader goes long and buys two contracts, the open interest will be two. Similarly, if another trader goes short and sells one contract, now the total open interest will be three. Until their counterpart exits the position, it will be considered as ‘open’. Open interest is also a good indicator of the prevailing liquidity in the market. Before entering a position, traders use OI data to gauge the underlying market sentiment.

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