#WeekInANutshell

This week in a nutshell (April 26th to April 30th)

Technical talks

NIFTY opened the week on 26th April at 14,449 and closed on 30th April at 14,631. It made a weekly gain of 1%. The index is trading above its 20DMA of 14,618 which might act as a support. On the upside 50DMA of 14,783 might act as a resistance. The RSI (50), and MACD turning downwards suggests a further possible decline.

Weekly highlights

  • The Reserve Bank of India (RBI) capped the tenure of MDs and CEOs of private banks at 15years. Promoters can hold this post for a maximum of 12 years but the RBI can choose to give them a 3-year extension under extraordinary circumstances. These rules apply to private banks, small finance banks, and wholly-owned subsidiaries of foreign banks. These new rules will apply once the tenure of existing MDs/CEOs for which approvals have been taken is completed. This will impact banks such as Kotak Mahindra Bank, where Mr. Uday Kotak has been the head of the institution for 17 years and there could be a change in the management once his term is completed in 2024.
  • The Securities and Exchange Board of India (SEBI) has directed the mutual fund (MF) industry that a fifth of the salary of top executives is to be paid in the form of mutual fund schemes they oversee. The allotment of MF units will be done every month and will be subject to a 3-year lock-in. The industry welcomed the move as it increases accountability and would ensure a better selection of securities.
  • Several automobile manufacturing companies have announced plans to shut down plants for up to a fortnight from May 1. The surge in Covid-19 cases and scattered lockdowns across states and cities are the reasons attributed to the temporary shutdown. This will impact production and sales in the June-21 quarter.
  • FII (Foreign Institutional Investors) selling and DII (Domestic Institutional Investors) buying trend continued this week as well. There was a net outflow of Rs 44571mn from the FII kitty while DII invested Rs 52833 mn.

Things to watch out for next week

  • The Automobile companies will report monthly volume data for April-21. The data will be important to ascertain the impact of the second Covid-19 wave and lockdowns on the demand.
  • The 4QFY21 result season continues in the next week as well. The Commentary from biggies such as Hero MotoCorp and HDFC will be critical.

This week in a nutshell (April 19th to April 23rd)

Technical talks

NIFTY opened the week on 19thApril at 14,307and closed on 23rd April at 14,341, a marginal increase of 0.2%.NIFTY has been hovering around the 100 DMA of 14,374 throughout the week. This remains the crucial level to watch out for before moving in either direction.

Weekly highlights

  • FIIs continued their selling spree with a net outflow of Rs 49,870 mn during the week. DIIs continued to be net buyers as they pumped in Rs 62,250 mn in the week.
  • The daily rise in covid-19 cases in India reached a record on 22ndApril when the number crossed 0.33 mn. This is the highest number of new cases recorded in a single day in the world. Several Indian states have imposed stricter restrictions or lockdowns in response. The worsening conditions have led to volatility in the equity markets.
  • Government of India announced the next phase of Covid-19 vaccination drive will start from 1st May 2021. Everyone above the age of 18 will be eligible to get vaccinated. Amidst concerns over shortage of vaccines, producers have been asked to ramp up production. This is a developing scenario as there are also concerns regarding raw material procurement from the US.
  • US Equity indices came off from their record highs oflast week. The indices ended the week on a lower note as reports indicated that President Biden will propose to significantly increase capital gains tax for wealthy individuals.
  • Insurance Regulatory and Development Authority of India (IRDAI) reported March monthly business figures for life insurers. The industry New Business Premium (NBP) grew by 71% YoY. Mar-20 was a low base due to Covid-19 led disruption. For the quarter 4QFY21, the NBP growth was 35% YoY.

Things to watch out for next week

  • The ongoing 4QFY21 result season will gain traction next week as several big companies across sectors start to report quarterly numbers. Managements’ comments over the business impact of second wave of Covid-19 will be important.

The week in a nutshell (April 12th to 16th)

 

Technical talks

  • NIFTY opened the week on 12th April at 14,645 and closed on 16th April at 14,617. After beginning the week with major losses, the index rebounded to close flat for the week. The index is trading below its 20DMA of 14,661, which may act as resistance. The next level being 50DMA at 14,863. The Index breached its 100DMA at 14,316 during the week where it may find support.

Weekly highlights

  • The week began with major indices in red due to the rising Covid-19 cases and lockdown-like conditions imposed across major areas in the country.  Indices recovered during the week to end flat. Gains were seen in pharma, IT, metals, and auto stocks, while bank and realty indices ended in the red.
  • Due to the increasing number of COVID-19 cases in India, Foreign Institutional Investors (FII) turned net sellers this week,  at  Rs 10,590 mn. Domestic Institutional Investors (DII) were net buyers and pumped in Rs 6,080 mn.
  • Q4FY21 result earnings season started this week with the big 3 tech companies -TCS, Infosys, and  Wipro. All reported good revenue growth on the expected lines. Their comments for upcoming quarters suggest promising growth. On the back of a strong earnings show, Infosys has announced a buyback of Rs.92 bn, at an upper price limit of Rs. 1750/share.
  • The US Equity markets hit a record high during the week. The Dow Jones Industrial Average hit the historic milestone of 34,000 for the first time owing to economic recovery and stimulus package announced by President Joe Biden and reducing unemployment.
  • American banking major Citibank on Thursday announced that it will exit from the consumer banking business in India and 13 countries. This is a part of a global strategy of CEO Jane Fraser attributing the decision to an absence of scale to compete in these geographies. The bank has 35 branches in India and employs approximately 4,000 people in the consumer banking business. 
  • India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 5.52 percent in March. Separately, the country’s factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a contraction of 3.6 percent in February. The retail inflation during February was at 5.03 per cent.

Things to watch out 

  • Q4FY21 result season to continue with HDFC Bank and Nestle reporting their earnings. India’s COVID patient numbers will drive the sentiment of the market in the near term. Some economists are already reducing India’s GDP growth forecast for FY22 due to the second wave. We expect investors to focus back on cash flow creators – pharma, consumer, and software services. This is a holiday-shortened week due to a break on Wednesday. 

The Week in a nutshell (5th April- 9th April)

Technical Talks

NIFTY opened the week on 5th April at 14,778 and closed on 9th April at 14,835, a muted weekly gain of 0.4%. On the upside, 15,336 could be a resistance to watch out for. On the downside, 100DMA of 14,249 might act as a support. The flat trending RSI of 52 and reducing negativity in MACD indicates that the market might see some uptrend in the coming days.

Weekly Highlights

  • The Reserve Bank of India (RBI) maintained the status quo for the fifth time in a row on policy rate. The repo rate is kept unchanged at 4 percent. The RBI expects economic growth for FY22E to be at 10.5 percent. The Governor said that the recent surge in COVID-19 infections has created uncertainty over economic growth recovery.
  • SEBI: Capital markets regulator SEBI asked institutional investors like banks, insurance companies, and pension funds to follow the ’transparent’ Stewardship Code in order to be truly accountable to their clients and beneficiaries.
  • The country’s foreign exchange reserves declined by USD 2.99 billion to reach USD 579.29 billion in the week ended March 26, RBI data showed. The fall in reserves was on account of a decrease in foreign currency assets (FCA), a major component of the overall reserves. FCA declined by USD 3.2 billion to USD 538 billion. In the previous week ended March 19, the forex kitty had increased by USD 233 million to USD 582 billion.
  • According to AMFI, the equity mutual funds saw a net inflow of Rs 91,150mn in Mar-2021 as compared to an outflow of Rs 44,970mn in the previous month (Feb-2021). 
  • INR saw its worst one-day fall in nearly 20 months on Wednesday on the fears of another lockdown hitting economic recovery. INR closed 1.5% down on Wednesday and closed the week at 74.76INR/ USD.
  • Foreign Institutional Investors (FII) were net sellers worth Rs 23,410mn in Indian equities, against net buying worth Rs 26,044mn in the previous week. Domestic Institutional Investors (DII) continued to be net buyers worth Rs 11,550mn, lower than last week’s buying of Rs 39,660mn.

Things to watch out 

  • The 4QFY21 result season will kick-off on Monday with the biggie, TCS announcing its FY21 audited result. During the week, Infosys and Wipro will announce results. Investors will keep an eye on dollar revenue growth and EBIT margin delivered by IT companies during the result season. Apart from the IT sector, the rising raw material prices are expected to affect the profitability and margins of industrial companies.
  • The key macro numbers like inflation data, Industrial production, Wholesale Price Index (WPI), export and import data are to be announced during the week.

The week in a nutshell (22nd-26th March)

Technical Talks

 NIFTY opened the week on 22nd March at 14,736 and closed on 26th March at 14,507, it made a weekly loss of 1.5%. The index is trading below its 10DMA of 14,680, which might act as a resistance. On the downside, 100DMA of 14,053 might act as a support. The short-term moving average is cutting longer-term moving from above which might lead to further correction in the index.                                                           

Weekly highlights

  • Loan moratorium case: The Supreme Court directed that no compound or penal interest shall be charged from borrowers for the six-month loan moratorium period, which was announced last year amid the COVID19 pandemic. The amount already charged shall be refunded, credited, or adjusted. The apex court refused to interfere with the Centre’s and Reserve Bank of India’s (RBI’s) decision to not extend the loan moratorium beyond August 31 last year. Banks can start declaring their bad loans (loans which have not been repaid for 90 days or more), with the Supreme Court vacating the relief granted earlier not to declare the accounts of borrowers as NPA.
  • SEBI on AT-1 Bonds: The Securities and Exchange Board of India (SEBI) amended the norms for valuing perpetual bonds. Now the maturity would be 10 years until March 31, 2022, and would be increased to 20 and 30 years over the subsequent 6-month period. From April 2023 onwards, the residual maturity of AT1 bonds will be 100 years from the date of issuance of the bond. As per estimates, banks have issued AT1 and tier 2 bonds worth ₹ 3.5 tn. A fifth of these bonds are held by Mutual funds. This move by SEBI provides much-needed relief to the MF industry. (Source- Business Standard edition 23 March 21)
  • Oil: A container ship blocking the Suez Canal created a new setback for global trade as officials stopped all ships entering the channel. A ship ran aground in the Suez Canal is blocking transit in both directions through one of the world’s busiest shipping channels for oil and grain and other trade linking Asia and Europe. Officials suggest it might take weeks to clear the blockage, which will impact ~30 percent of the world’s shipping container volume daily and ~12 percent of the total global trade of all goods. Oil prices jumped about 6 percent on Wednesday after this incident.
  • The Insolvency and Bankruptcy Code (IBC) suspension which ended on Wednesday, March 24 has not been extended by the Government. This is a welcome move by the banking sector as it will help reduce the burden of Non-Performing Assets (NPAs) on their balance sheets.
  • The institutions swapped their strategy from the last week, with FIIs outflow for the week totaling Rs 67,013 mn. The DIIs turned net buyers to the tune of Rs 50,181 mn.

                        Things to watch out

  • The Auto Companies will be reporting their monthly volume data for March. The non-availability of chips may impact sales this month. A Business Standard report suggested an average delay of ~6months for Maruti Suzuki’s Ertiga CNG variant delivery and 1.5-2 months for all other models. The delay could be as long as 8-10 months for Mahindra & Mahindra’s All-New Thar and 1.5-2 months for its Scorpio, and Bolero. This suggests that despite the demand, Companies are facing problems with supplying sufficient stocks due to the global semiconductor shortage.

 

This week in a nutshell (March 15th to March 19th)

This week in a nutshell (March 15th to March 19th)

Technical talks

  • NIFTY opened the week starting 15th  March at 15,048 and closed on 19th March at 14,744, declining 2% in the 5 trading sessions. 
  • The index broke its support of 50 DMA on Thursday and rebounded back to almost the same level on Friday. Now 50 DMA at 14,748 will be the crucial resistance level to watch out for. On the downside, the index may find support at 100 DMA of 13,909. 

Weekly highlights

  • This week, FII buying intensity increased as they pumped in Rs 58,929 mn in the Indian equity market. DIIs turned net sellers with Rs 30,366 mn net outflow from equities.
  • The Consumer Price Index (CPI) inflation for the month of February came in at 5.03% against 4.06% in January 2021. An increase in inflation reduces the scope for a further repo rate cut by the Monetary Policy Committee. Repo rate cuts are a monetary measure of boosting economic growth.
  • India’s trade data for the month of February was released this week. Exports saw a YoY growth of 0.7% to USD 27.9 bn, while imports saw a YoY jump of 7.0% to USD 40.5 bn. The trade deficit for February 2021 was USD 12.6 bn vs USD 10.2 bn for the same month last year.
  • For the month of January 2021, the Index of Industrial Production (IIP) declined 1.6%. YoY decline in IIP suggests that the economy is still not entirely out of the shadow of covid-19 issues.
  • GOI announced its much-anticipated vehicle scrappage policy this week. Under this policy, Commercial Vehicles (CVs) aged 20+ years and Passenger Vehicles (PVs) aged 15+ years will be de-registered in absence of a fitness certificate. The policy also includes incentives to vehicle owners for scrapping old vehicles including scrap value, road tax rebate, discount on new vehicles, and waiver of registration fees for new vehicles. This policy is expected to boost auto demand in an environment where auto sales have been suffering for the past several quarters.
  • The US Fed reiterated its stance on keeping the interest rates near zero in the next few years. This announcement acted as a reassurance to the market that the US central bank will continue to remain pro-growth.

Things to watch out for next week

  • The yearlong suspension of the Insolvency and Bankruptcy Board of India (IBC) is coming to an end on 25th March 2021. The suspension was implemented to protect the corporate debtors from defaulting due to the Covid-19 impact. If there is no further extension of the suspension, it will open up an important avenue for creditors to resolve bad assets.

 

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.”

 

This week in a nutshell (March 8th to March 12th)

Technical talks

  • NIFTY opened the week on 8th March at 15,002 and closed on 12th March at 15,031. As expected the index traded in a range with no clear trend. The index is trading above its 20DMA of 15,015, which might act as a support. On the upside, the recent all-time of 15,432 might act as resistance. The index might trade in the range of the above-mentioned levels before making a strong move on either side.

Weekly highlights

  • Markets continued to rise for the first three days of the week before falling off to end the holiday-shortened week on a flat note. IT (2.6%) and Bank (0.6%) led the indices higher while Realty (-2.3%), Auto (-1.3%) and Bank (-1.2%) ended the week with most losses.
  • India’s life insurance sector registered a strong new business premium (NBP) growth of 21% in February, bucking its recent trend where it registered either tepid growth or a decline since November. The latest data from the Insurance & Regulatory Development Authority of India (IRDAI) indicated that the NBP, which is a key metric to gauge the performance of life insurers grew to Rs 224 bn in February for India’s 24 life insurers, compared with Rs 185 bn a year ago. 
  • The US markets hit a new closing high as investors cheered on the passage of the $1.9 trillion American Rescue Plan. President Biden signed the bill and the IRS will begin sending payments out as soon as 14th March. 
  • Brent crude futures jumped above $70 a barrel during the week for the first time since the COVID-19 pandemic began; while WTI crude touched its highest in more than two years, following reports of attacks on Saudi Arabian oil facilities. The front-month WTI price touched $67.86 a barrel earlier, the highest since October 2018.
  • The government, which owns 54% in BEML, invited expressions of interest for the stake sale in the defense equipment maker, along with the transfer of management control. At least six companies, including Tata Motors, Mahindra and Mahindra, and Ashok Leyland, are looking to buy a 26% stake in BEML Ltd. 
  • Wholesale dispatches from auto OEMs reported mixed volume performance in February 2021. Dispatches of passenger vehicles (PV) increased by 17.9% YoY in February 2021, according to the data released by SIAM (Society of Indian Automobile Manufacturers) on 10th March 2021. This is the seventh time in a row that PV wholesale dispatches were positive. Total sales in the two-wheelers segment witnessed a YoY growth of 10.2%. 
  • The trend in FII flows continued as they pumped in Rs 11280 mn while DIIs turned net buyers with Rs 12,390 mn purchases during the week.

Things to watch out

  • The Wholesale Price Index (WPI) inflation and Manufacturing data along with Export-Import data for the month of February are expected to be released in the next week. 

This week in a nutshell (March 1st to March 5th)

Technical Talks

NIFTY opened the week on 1st March at 14,703 and closed on 5th March at 14,938, it made a weekly gain of 1.6%. The index is trading below its 20DMA of 15,027, which might act as a resistance. On the downside, 10DMA of 14,894 might act as a support. The index might trade in the range of the above-mentioned levels before making a strong move on either side.

Weekly highlights

  • After three sessions of gains, the Market snapped for the last 2 days of the week as Nifty ended below 15,100, dragged by losses in metal, financial stocks amid weak global cues as bond yields rose again.
  • The NITI Aayog, which is in the process of selecting public sector units for privatisation, is likely to put out its first list, focusing on companies in non-strategic sectors, along with those that have got Cabinet approval for stake sale or are in the final stage of due diligence.
  • Saudi Arabia had decided to maintain its voluntary cut of 1 million barrels per day through April even after oil prices rallied over the past two months.
  • U.S. West Texas Intermediate (WTI) crude futures climbed 17 cents, or 0.3%, to $64.00. Brent crude rose 10 cents, or 0.2%, to $66.84 a barrel, but down from a high of $67.75 hit on Thursday. 
  • Foreign Institutional Investors (FIIs) continued to be net buyers in Indian equity of Rs 22,000 mn, but the quantum of inflows declined from the previous week of Rs 1,81,700 mn, which was due to the bulk deal of Bosch. Conversely, Domestic Institutional Investors (DIIs) continued to be net sellers with an increased net outflow of Rs 26,350 mn.

                                                                       Things to watch out

  • With the quarterly result season out of the way, market moves are reliant on macroeconomic developments & global markets.  
  • On March 10, RBI will purchase four government securities of different maturity dates aggregating to Rs 20,000 crore and sell three securities aggregating to Rs 15,000 using the multiple price auction method. The decision was taken after a review of current liquidity and financial conditions