This Week in a nutshell (July 4th to July 8th)

Technical talks

NIFTY opened the week on 4^th July at 15,727 and closed on 8^th July at 16,220. During the week, NIFTY was up 3.1%. The index has breached the 100-week moving average on the weekly chart with RSI at 46. Immediate support for the index stands at 15,881 and resistance at 16,308.

Among the sectoral indices, PSU Bank (+6.6%), FMCG (+5.7%), and Realty (+5.0%) were the gainers during the week with no sector in the red.

Weekly highlights

• Wall Street started the week on a positive note as investors kept their focus on the growth trajectory of the US economy. US Markets were subdued for a day as investors awaited minutes from the Federal Reserve’s meeting.
• However, Wall Street ended higher after the release of the Fed minutes, which showed officials agreeing that the inflation outlook had deteriorated and expressed concern over lost faith in the Fed’s ability to stem it. The Fed at that meeting hiked rates by 0.75 percent for the first time since 1994.
• Fed officials also indicated that a hike of 50-75 bps would be likely at the July meeting to control inflation.
• US markets ended the week flat as Treasury yields jumped following a stronger-than-expected U.S. jobs report, which suggested the Federal Reserve may push further interest rate hikes to cool the economy and slow inflation.
• Strong data from the U.S. Labor Department, which reported the United States added more jobs than expected in June, indicated a recession was not yet imminent amid persistent job growth and gives the Fed scope to deliver another large interest rate increase later this month.
• Coming to the Indian market, the Nifty gained ~3% this week as Indian stocks witnessed buying interest during the week supported by positive cues from global peers, declining FIIs selling, falling commodities, and crude oil prices. However, depreciation in the Indian rupee remained a concern for the investors.
• Government officials stated that they are trying to address volatility in the Indian rupee that has tumbled to record lows against the dollar in recent weeks. The rising trade deficit and investors retreating from the domestic share markets led to a fall in rupee value.
• Even RBI announced several measures to improve foreign flows into the country to support the rupee.
• The monthly trade deficit has been rising for the past few months. The trade deficit was up 62% YoY in the month of Jun-22.
• Brent crude futures extended gains at the start of the week as a strike in Norway is expected to disrupt oil and gas output, fanning tight supply worries. The prices slipped later as fears of a potential global recession spurred concerns about oil demand.
• The government is taking steps to curb inflation. It directed edible oil manufacturers to cut prices of imported cooking oils by up to Rs 10 per liter within a week and maintain a uniform MRP of the same brand of oil across the country. As the global prices have declined by 10 percent in the last week the price cuts should be passed on to consumers.
• Cooling Oil prices coupled with the progress made by the Monsoon has now set the stage for the first-quarter earnings.
• The foreign institutional investors (FIIs) remained net sellers for the week as they offloaded equities worth Rs 22,184 mn. However, domestic institutional investors (DIIs) purchased equities worth Rs 39103 mn during the week gone by.

Things to watch out for next week

• The Indian Inflation data along with the result season will set the tone for the market in the upcoming week. D-Street will be interested to hear the management commentary about the future earnings growth trajectory.
• The markets globally will be majorly influenced by the inflation numbers of the USA which hasn’t shown any signs of deceleration. Further, the USA’s Producer Price Index (PPI) and jobless claims are something the global markets will keep a track of.

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.”