1. Domestic & Global Market Updates • Indices Close in Green: Sensex settled at 75,415.35 (+231.99 pts, +0.31%) and Nifty 50 at 23,719.30 (+64.60 pts, +0.27%) on Friday, May 22; Nifty Private Bank surged 1.49% to 26,376.2 as Axis Bank (+2.56%), ICICI Bank (+1.73%) and HDFC Bank (+1%) led gains while Sun Pharma (-2.4%) and Nifty Pharma (-1.27%) were notable underperformers on disappointing operational results. • FII Outflows Persist: On Friday, May 22, FIIs were net sellers of Rs. 4,440.47 Cr while DIIs remained net buyers of Rs. 6,003.53 Cr, reflecting divergent institutional sentiment; MTD May FII outflows stand at Rs. 32,228.65 Cr against DII inflows of Rs. 56,865.48 Cr, with domestic funds consistently absorbing the FII selling pressure. • Global Cues Mixed-Positive: US markets closed mildly higher Thursday — S&P; 500 +0.17%, DJIA +0.55%, Nasdaq +0.09%; Asian markets followed suit on Friday — Japan's Nikkei 225 surged 1.83% on softer-than-expected core inflation data, South Korea Kospi +0.38%, Hong Kong Hang Seng +0.68%. • US-Iran Talks Key Macro Driver: Brent crude futures surged to $104.86/bbl (+2.22%) on May 22 as Iran clarified its intent to retain its enriched uranium stockpile domestically, complicating US-led peace negotiations; Rapidan Energy Group cautioned that a Strait of Hormuz closure through August could trigger a recession rivalling the 2008 Great Recession in severity. • Foreign Selloff Warning: BofA Global Research warned that foreign institutional selling in Indian equities may extend into 2027, as Asia's AI-driven technology winners offer stronger earnings prospects at cheaper valuations; cumulative FPI outflows from Indian equities have exceeded $22 billion in under three months, exceeding last year's record annual total.
2. Domestic & Global Macro and Broader Economy • Flash PMI Signals Expansion: India's flash composite PMI held at 58.1 for May, signalling robust private sector activity despite geopolitical headwinds; manufacturing PMI softened modestly while services remained resilient, suggesting consumption-driven growth momentum persists even as oil prices weigh on household budgets. • CAD Pressure Widens Sharply: HSBC estimates India's current account deficit (CAD) could widen to 2.3% of GDP in FY27 from 0.9% in FY26; Crisil projects the oil trade deficit to balloon with Brent averaging $90-95/bbl; India's copper import bill alone crossed Rs. 1 trillion, driven by EV, renewable energy and electronics demand. • Fuel Hike Cycle Continues: Oil marketing companies hiked petrol by Rs. 0.87/litre and diesel by Rs. 0.91/litre on May 23, the third round since May 15, bringing cumulative increases close to Rs. 5/litre; CNG prices also rose Rs. 1/kg in the third hike in 10 days, intensifying household inflation concerns and dampening consumer sentiment. • Rupee at Record Low: The rupee touched an all-time low of 96.96 against the dollar during the week before RBI intervened with a $5 billion buy-sell swap to inject durable liquidity; cumulative rupee depreciation since early 2025 now exceeds 10% versus the US dollar, raising import cost concerns across energy, electronics and pharma sectors. • India Growth Forecast Trimmed: The UN cut India's 2026 GDP growth forecast to 6.4%, citing global uncertainty and elevated energy costs; India's exports rose 13.8% in April and FDI hit a record $95 billion per Commerce Minister Piyush Goyal, providing partial macro support even as domestic consumption faces headwinds from fuel price hikes.
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JRL Research