Opening Bell - Morning Commentary

Trade war truce between USA & China lifts sentiments across the globe, lower inflation print will propel the RBI to cut rates in the forthcoming policy

The S&P 500 and the Nasdaq closed higher on Tuesday for a second straight day after softer-than-expected inflation numbers added to investor optimism after the U.S. and China announced a trade truce on Monday.

The Dow fell, however, with its biggest drag a 17.8% slide in shares of UnitedHealth after the insurance bellwether suspended its annual forecast and its CEO stepped down.

Stocks, oil and bond yields rose, lifted by the optimism surging through markets that the worst of the global trade crisis is past and that the growth outlook is much brighter than it looked only a few days ago.

U.S. stock futures were largely unchanged Tuesday evening after the S&P 500 and Nasdaq closed higher on optimism around the U.S.-China trade deal, and a softer-than-expected consumer inflation print.

NVIDIA Corporation shares closed 5.6% higher on Tuesday after the company announced the sale of 18,000 AI chips to a Saudi Arabian company, Humain. The Saudi-based company intends to use the chips to build its 500 megawatt data centre.

Bond yields finished the day modestly higher, with the 2-year Treasury yield rising to just above the 4% mark while the 10-year Treasury yield climbed to 4.48%.

Headline CPI rose by 0.2% for the month and 2.3% on an annual basis, while core CPI rose by 0.2% in April and 2.8%. The modest increase in core CPI brought the three-month annualised change in core CPI down to 2.1%, the lowest reading since July 2024.

Results have been broadly positive, with roughly 78% of companies announcing better-than-expected earnings with an average upside surprise of 8.6%. Earnings growth is on pace to rise by 13% for the quarter, up from estimates of only 7% at the beginning of April.

India's headline inflation slowed to 3.16% YoY—the lowest since July 2019. With crude oil prices sharply easing, domestic demand softer, and food prices contained, we expect the RBI to cut rates aggressively.

Nifty witnessed profit booking in yesterday's session, falling more than 400 points from intraday highs and closing near the session's low.

As anticipated, Nifty Midcap and Small Cap indices outperformed the Benchmark Indices. We expect this trend to continue as we approach the end of the earnings season, which has been primarily in line with expectations.

Foreign investors have turned aggressive sellers in the cash and derivative markets, which will likely keep markets in check at higher levels.

Nifty is still above its 5 and 10-day EMAs, which indicates a continuation of a positional uptrend. On the downside, strong support for Nifty is placed at 24500 and 24378, while on the upside, 24850 and 24975 could offer resistance.