This week in a nutshell (4th – 8th October)

Technical talks

NIFTY opened the week on 4th October at 17,616 and closed on 8th October at 17,895. It made a weekly gain of ~1.6%. On the upside, 17,948 might act as a resistance. On the downside, 20DMA of 17,648 might act as a support. RSI (14 days) of 66 is indicating the index is in an overbought zone.

Weekly highlights

• Auto companies released the monthly volume data for September-21. Domestic CV volumes were robust, aided by healthy freight availability and better freight rates. Tractor sales reported a strong MoM growth albeit on a low base due to good rainfall. Supply issues and an inauspicious period led to subdued volumes for other segments. Companies suggest an inability to cater to demand due to supply chain challenges. This has led to lower inventory build-up before the festive season. This might lead to longer waiting periods or postponement of festival purchases by customers.
• Media reports suggest the government may abandon its demand for spectrum charges of Rs 400 bn from telecom operators to support companies. This latest move may provide another ray of hope to companies such as Vodafone Idea Ltd and Bharti Airtel Ltd after the government’s decision to offer a 4-year moratorium on dues.
• The Organisation of the Petroleum Exporting Countries, Russia, and their allies (OPEC+) said it would stick to its existing plan for a gradual increase in oil output, which sent crude prices to three-year highs. West Texas Intermediate reached USD$ 78 a barrel while Brent Crude rose 3% to ~US$ 82 a barrel. The OPEC+ ignored calls from big consumers such as the USA and India for extra supplies after oil prices surged over 50% this year.
• The US indices (Dow Jones Industrial Average, S&P 500, and Nasdaq) held on to weekly gains. Throughout the week, investors’ attention has been on rising energy prices, concerns about inflation, and negotiations on the debt ceiling. On Thursday, the US Senate has voted to extend the debt ceiling until December 3. This provides some relief to investors worried about the government default this month.
• The Indian equity markets remained volatile during the week ended October 8. The key positives were RBI maintaining its stance with no rate change, and Moody’s upgrading India’s outlook to stable from negative. Rising bond yield, and crude oil prices, Fitch cutting India’s FY22 GDP growth forecast (to 8.7% from 10% in June) worried investors.
• The government of India has sold the national carrier, Air India to the Tata Group. Tata Sons submitted a winning bid of Rs 180bn as the Enterprise value. The conclusion of this sale indicates the government is serious about its ambitions of privatisation.
• Though the foreign institutional investors (FII) selling continued this week, the quantum was much lower at Rs 36,857mn vs Rs 61,520mn last week. Domestic institutional investors (DII) buying reduced to Rs 34,581mn from the Rs 75,030 mn in the previous week.

Things to watch out for next week

• The 2QFY22 result season has started with TCS reporting earnings this week. The result season takes centre stage next week with other IT companies such as Infosys, Mindtree, and Wipro set to announce their earnings. While the street is estimating sequential revenue growth for the companies, commentary on deal wins and margin pressures due to rising employee costs & attrition would be critical.

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