This Week in a Nutshell (4-8th April)

This Week in a Nutshell (4-8th April)

Technical talks

NIFTY opened the week on 4th April at 17,809 and closed on 8th April at 17,784. After moving in the range of 500 points, it finally made a Doji candle which suggests indecisiveness in the market. The index is trading below the upper Bollinger Band level of 18,175 which might act as a resistance. On the downside, the 16,370 level might act as a support. The RSI (57) and MACD turning upward suggests a further although limited possible upside.

Among the sectoral indices, FMCG (+4.4%), METAL (+4.3%), and PSU BANK (+3.9%) were the gainers during the week. IT (-2.6%), MEDIA (-0.3%) were the week’s losers.

Weekly highlights

  • The US indices closed the week with the tech-heavy Nasdaq index falling 3.9%, S&P 500 fell by 1.3%, and Dow Jones was down by 0.3%.
  • The inflation in the US is at a 40-year high on the back of higher fuel and commodity prices. The minutes of the Federal Open Market Committee meeting in March revealed that several members had called for an aggressive 50 bps hike in interest rates. Still, the FED Chair, Jerome Powell chose to go for a 25 bps hike due to concerns over Russia’s invasion of Ukraine and its effects on the economy.
  • Closer home, the Reserve Bank of India also has the same worry about inflation. On Friday, the monetary policy committee concluded its bi-monthly meeting by keeping the repo rate unchanged at 4%. The rate at which RBI borrows money from banks to suck excess liquidity now stands at 3.75%.
  • A big, breaking newsworthy event occurred with HDFC Ltd., the housing finance giant and HDFC Bank, the largest private sector bank (by market cap) announcing their merger on Monday. An HDFC Ltd. shareholder with 25 shares will get 42 shares of HDFC bank. A lot is going on here from changing fundamentals to a rejig in mutual fund portfolio weights. The merger is expected to be over in the next 18 months subject to multiple regulatory approvals. There will be no dearth of updates and announcements. Worry not, we will be covering everything for you.
  • The long-awaited and recurringly delayed IPO of The Life Insurance Corporation of India is likely to conclude by May 12. A delay beyond that will require the government to issue a fresh filing with the market regulator. During the roadshows, the Centre has declared that it would not look for further equity dilution to prevent any downward pressure on the stock price.
  • The mutual fund industry AUM clocked in a 19.5% year on year growth and the average AUM stands at ₹38.4 trillion during the March 2022 quarter. The inflows through systematic investment plans (SIP) stood at nearly ₹230 bn for January and February 2022. SIPs inflows are largely driven by retail investors. Among the top 10 fund houses, five managed to clock industry-beating growth.
  • GST collections hit an all-time high in March at ₹1.42 trillion. The revenues for March 2022 are 15% higher than the GST revenues in the same month last year. The collections have stayed above the ₹ 1.10 trillion mark since July last year.
  • Since this was a week full of FY22 annual data points, an interesting piece of information is that the draft red herring prospectus (DRHP) filed with SEBI jumped nearly fivefold to 145 in FY22 compared to just 30 in the last financial year. FY22 saw the highest filings since 2007-08. Companies from new-age sectors such as fintech, online e-commerce and food delivery tapped the market for the first time. The year saw companies from several unique sectors as well as traditional businesses file their offer documents. A large number of filings was on account of the push from private equity and venture capital (PE/VC) investors looking to exit their investments.
  • FII (Foreign Institutional Investors) net sold ₹ 63,375 mn, and DII (Domestic Institutional Investors) were net buyers this week. DIIs bought shares worth ₹ 41,615 mn.

Things to watch out for next week

  • The 4QFY22 earnings season kicks off from Monday with IT giants TCS and Infosys publishing their quarterly and full year FY22 earnings. Management commentary on attrition, FY23 outlook and guidance will be key variables for the IT industry.
  • A quarter largely impacted by the Russia-Ukraine war, barring IT companies, which escaped from the brunt of the war, market will keenly look for those that got beaten up and others which have shown enough resilience this quarter.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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