#WeekInANutshell

This week in a nutshell (26th September- 30th September)

Technical talks

NIFTY opened the week on 26th September at 17,165 and closed on 30th September at 17,094 after declining to 16,750. The 50WMA of 17,100 may act as a key support level, while the recent weekly high of 18,320 may act as key resistance for the index.

Among the sectoral indices, Pharma (+2.9%) and IT (+1.5%) were the top gainers while Energy (-3.5%), Auto (-3%), and Realty (-3.0%) were the losers in the week.

Weekly highlights

  • On 30th September, in its ongoing attempts to control inflation in the economy, India’s Monetary Policy Committee increased the benchmark repo rate by 50 basis points to 5.9%, marking its fourth straight increase. The Monetary Policy Committee maintained its stance of focusing on removing accommodative measures in order to keep inflation within target while fostering growth in the upcoming years. At an unanticipated meeting in May, the committee raised rates for the first time by 40 basis points. Then, by 50 basis points in June and 50 basis points in August
  • The majority of the drop in India’s foreign exchange reserves is due to the shift in valuation as the dollar rose. India’s foreign exchange reserves stood at $537.5 billion, Das said in his monetary policy speech on Friday. About 67% of the decline in forex reserves in FY23 was due to valuation changes resulting from dollar appreciation, he said.
  • The year’s best market for car sales is still India. Sales have been consistent thus far in 2022, and with the festive season commencing at the end of September, we anticipate a higher fourth quarter, according to a note written by Moody’s Investor Service. India will beat its regional and international competitors thanks to a more improved macroeconomic climate, the reduction of semiconductor shortages, and dealer restocking, it added.
  • According to the Swedish news agency, a fourth leak on the Nord Stream pipeline has been discovered off the coast of southern Sweden. All four leaks that have been found are in international seas; two are close to Sweden and two to Denmark. Since Russian President Vladimir Putin invaded Ukraine seven months ago, Europe and, by extension, the rest of the world, have been dealing with an energy crisis.  The pipeline leaks have added to Europe’s existing economic woes.
  • Concerns about historically high inflation and future monetary tightening by central banks, particularly the Federal Reserve, would probably temper any sustained rally. BOE’s sudden intervention to buy an unlimited amount of long-dated bonds sparked record gains for gilts. Last Friday’s announcement of significant tax cuts by UK Chancellor of the Exchequer Kwasi Kwarteng led to a run on British assets due to worries about the government’s ability to pay for the change and its potential to further accelerate inflation.
  • US markets plummeted repeatedly by the Federal Reserve’s resolve to keep raising interest rates until inflation eases. Wall Street indices were volatile during the week with Nasdaq and S&P ending 1.7% and 1.5% lower respectively on Friday.
  • As concerns about restricted oil supplies were overshadowed by growing worries about a global recession and a rising dollar, oil is anticipated to post its first quarterly loss in more than two years. West Texas Intermediate prices, which have fallen by almost 24% this quarter, were trading close to $80 a barrel on Friday. The dollar’s recent record-high rise has rattled crude as aggressive central bank rate hikes cloud the outlook for global growth.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 1,59,900 mn. DII (Domestic Institutional Investors) were net buyers, buying shares worth Rs 1,37,440 mn.

Things to watch out for next week

  • Auto companies are expected to release their September volumes of sales. The early festive season this year, which started on 26 September versus 7 October last year, is expected to brighten the outlook for the passenger vehicle (PV) segment. However, the two-wheeler (2W) segment is expected to be muted given the weak rural demand.
  • Quarterly updates by FMCG companies like Marico and banks are expected to drive the markets in the coming week.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (19th September- 23rd September)

 

Technical talks

NIFTY opened the week on 19th September at 17,540 and closed on 23rd September at 17,327. The index lost 1.2% during the week. The index has managed to sustain above the 50DMA of 17,327 level, which is acting as a support. On the upside, the recent high of 18,114 might act as a resistance.

Among the sectoral indices, FMCG (+3.9%), PHARMA (+2.1%), and AUTO (+1.1%) were the top gainers while REALTY (-3.9%), PSU BANK (-3.1%), BANK (-3.0%) were the losers in the week.

Weekly highlights

  • Wall Street indices were volatile and reacted to because of the Fed’s interest rate decision on 21st September. Nasdaq and S&P ended 1.6% and 1.7% lower respectively.
  • Oil prices during the week reacted to supply concerns ahead of the European Union embargo on Russian oil which offset fears of a global recession that could dampen fuel demand, stalled Iran nuclear agreement, and Fed interest rate hike. Brent oil futures and WTI futures ended lower wherein the former settled at USD 85/ barrel and the latter 5% lower at USD 79/barrel. 
  • The Federal Reserve raised its key interest rate by 0.75% on Wednesday, bringing the target range to between 3% and 3.25%. According to the Fed’s forecasts, interest rates will reach 4.4% by FY23E.
  • On September 22nd, the Bank of England raised its key interest rate by 0.5% to 2.25% from 1.75%, which is its biggest rate hike in 27 years. 
  • According to a circular issued by the Ministry of Finance on September 16, the government of India reduced the windfall tax on locally produced crude oil to Rs 10,500 from Rs 13,000 per tonne, easing the burden on consumers.
  • The RBI is depleting its foreign exchange reserves at a faster rate than during the taper-tantrum period in 2013, in order to prevent the rupee from overshooting. The country’s foreign exchange reserves fell by USD 2.2 bn for the week ended September 9 to USD 550.8 bn due to a drop in foreign currency assets (FCAs), a major component of overall reserves. Between January and July 2022, the RBI sold a net of USD 38.8 bn from its forex reserves. In July alone, a net of USD 19 bn was sold, and intervention remained intense in August when the rupee fell below 80 against the dollar.
  • The Asian Development Bank cut its growth forecasts for Asia, which includes India and China, for 2022 and 2023 on September 21 due to mounting risks from increased monetary tightening, the fallout from Ukraine’s war, and Covid-19 lockdowns in China. The ADB forecasts a 4.9% growth in the region’s economy in 2023.
  • On September 20, Yes Bank announced that its board of directors had approved the sale of USD 6 bn (approximately Rs 480 bn) in stressed debt to private equity firm JC Flowers after the bank received no challenger bids to JC Flowers’ base bid for the Rs 48,000 crore NPA portfolio.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 43,620 mn. DII (Domestic Institutional Investors) were net buyers, buying shares worth Rs 11,380 mn.

Things to watch out for next week

  • Fed’s 75 basis point rate hike is expected to have a ripple effect which will weigh on MPC’s monetary agenda when it meets on 28th September. Investors will be looking forward to the comments from RBI regarding inflation and interest rate hikes.
  • Various economic data points are set to be released next week starting from Japan’s PMI and policy meet, China’s industrial profits and manufacturing PMI, US 2QFY22 GDP data, and jobless claims for the week.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (12th – 16th September)

Technical talks

NIFTY opened the week on 12th September at 17,891 and ended in the red at 17,531 on 16th September, after high volatility during the week. The index lost 2% during the week. The next support and resistance levels for the index would be 17,497 and 17,636 respectively. It broke its 20 DMA levels and closed below that.

Among the sectoral indices, METAL (+1.9%), PRIVATE BANK (+1.3%), and BANK (+0.9%) were the gainers during the week while IT (-7%), REALTY (-3.3%) and OIL & GAS (-3.2%) led the losers.

Weekly highlights

  • US major indices witnessed huge volatility during the week and closed the week in the red, inflation data and the federal reserve’s announcement in the next week regarding interest rate dragged down the investors’ sentiments the S&P 500, Nasdaq, and Dow Jones closed the week with heavy loss of 5%, 6%, and 4% respectively.
  • Oil prices fell for a third straight week, the Brent crude and WTI crude closed with a loss of 1% and 1.3% respectively during the week.
  • India’s retail inflation based on Consumer Price Index (CPI) surged to 7% in Aug-22 and burst the downward trend of the last 3 months. The surge was mainly led by higher food prices, as it accounts for nearly half of the CPI basket. The inflation remains above the RBI’s tolerance level of 6% for the last 8 months in a row. Along with CPI India’s Wholsale Price Index (WPI) data was also released. India’s WPI inflation stood at 12.4% in Aug-22, a decline from 13.9% in Jul-22, drop in fuel prices dragged down the WPI inflation below the previous month.
  • US CPI data was released during the week ahead of the Federal Open Market Committee (FOMC) meeting in next week, US CPI inflation stood above the expectation at 8.3% for Aug-22. The decline in gasoline prices helped to cool down the rate compared to the previous two months’ rate but the cost of food, housing, and autos remains elevated.
  • Mining conglomerate Vedanta and Taiwanese electronic manufacturer Foxconn announced an investment of Rs 1,540 Bn for India’s first semiconductor plant in Gujrat through a 60:40 joint venture. The plant is expected to start production in two years. Local manufacturing of chips is expected to bring affordability to manufacturing electronic devices and it will reduce the dependency on other countries.
  • Union health and family welfare ministry of India released the National List of Essential Medicines 2022 (NLEM 2022) on Tuesday. The NLEM 2022 consists of 384 drugs vs 376 drugs in 2015. New 34 drugs were added and dropped 26 drugs in the new list. The National Pharmaceuticals Pricing Authority (NPPA) fixes the prices for these drugs. The government said several important medicines will become more affordable and reduce patients’ out-of-the-pocket expenditure.
  • On Thursday, IMF spokesperson stated that the global economic outlook continues to be dominated by downside risk and in CY23 some countries are expected to fall into recessions, but it is too early to say if there will be a widespread global recession. IMF revised down the CY22 and CY23 global growth to 3.2% and 2.9% respectively in Jul-22.
  • Data released by the commerce ministry of India shows India’s merchandise export stood at USD 33.9 bn and trade deficit stood at USD 27.9 bn for the month of Aug-22. Electronic goods, rice, oil meals, tea, coffee, and chemicals witnessed positive growth.
  • Foreign investors invested ~ Rs 56 bn into the domestic equity markets in September so far in the anticipation of growth in consumer spending on account of the upcoming festive season and stronger macro fundamentals than other emerging markets.
  • The foreign institutional investors (FIIs) and Domestic institutional investors (DIIs)  both were the net sellers during the week. FIIs sold equities worth Rs 19,216mn and DIIs sold equities worth Rs 29,368mn.

Things to watch out for next week

  • Next week will be very crucial for the global financial markets as the investors will closely watch the Federal reserve’s FOMC interest rate decision on Wednesday and the Bank of England MPC meeting on Thursday as well as initial jobless claims in the US.
  • The investors might ride a rollercoaster in the next as volatility will likely persist in the next week amidst central banks’ stance on interest rates, heated inflation, and raw material and supply chain uncertainties on account of geopolitical tensions and elevated commodity prices.

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 (5th – 9th September)

Technical talks

NIFTY opened the week on 5th September at 17,546 and closed at 17,833 on 9th September.  The index made a weekly gain of 1.7% during the week. On the upside, the upper Bollinger band level of 18,199 might act as a resistance. On the downside, it can take support at the 50-week moving average near 17,137. Even though the RSI of 60 does suggest some caution, in the recent past NIFTY has comfortably traded at a 60+ RSI level.

Among the sectoral indices, PSU BANK (+4.3%), IT (3.5%), and MEDIA (3.2%) led the gainers during the week. AUTO was the only sector that ended marginally in the red.

Weekly highlights

  • The US indices snapped a three-week losing streak despite remarks from the Federal Reserve officials on rising treasury yields. Geopolitical tensions and the US central bank’s aggressive tightening may tip the US economy into recessions were on investors’ minds during the volatile week. The US markets had a truncated week due to Labor Day weekend with the tech stocks and blue chips leading the rally. NASDAQ closed up 4.1%, S&P 500 up ~3.7%, and Dow Jones Industrial Average up ~2.7%.
  • Crude oil prices also remained volatile during the week with the OPEC+ meeting on Monday 5th. To support oil prices, which have fallen due to concerns about an economic downturn, OPEC and its partners, led by Russia, decided on a modest reduction in production. For October, the oil producers will reduce their output by 100,000 barrels per day (bpd), or just 0.1% of the world’s demand. They also concurred that Saudi Arabia, the organization’s dominant member, could call an emergency meeting at any time if volatility continues. Price hikes due to the output reduction would worsen India’s current account deficit.
  • The volatility in crude prices continued after reports that the Biden administration might stop releasing barrels from the US Strategic Petroleum Reserve on the market after October, in an attempt to keep energy prices down that have led to unprecedented inflation. Brent Oil ended the week at USD 92.4/barrel (-0.7%) while Crude Oil WTI (West Texas Intermediate) ended the week down 2.4% at USD 86.1/barrel.
  • After Russia announced that one of its key gas supply pipelines to Europe will remain closed indefinitely, gas prices in Europe increased by 30% on Monday. A leak in the Nord Stream 1 pipeline, according to Russia, will cause it to remain closed beyond the three days of scheduled repair last week.
  • In India, FADA released the data for retail sales of automobiles for August-22. The sales grew 8.3% YoY driven by an increase in vehicle registrations across all major segments. Two-wheeler retail sales grew 8.5% YoY while passenger vehicle sales grew ~6.5% YoY.
  • The National Company Law Tribunal (NCLT) Mumbai panel directed Zee Entertainment to call a shareholders’ meeting on October 14 to approve the merger with Culver Max Entertainment on Wednesday (formerly Sony Pictures Network).
  • To increase domestic supply in response to a decline in the area under the paddy crop in the current Kharif season, the Indian Government implemented a 20 percent export levy on all non-Basmati rice, with the exception of parboiled rice.
  • The Foreign Institutional Investors (FII) purchased equities worth Rs 61,367mn. Domestic Institutional Investors (DII) sold shares worth Rs 3,521 mn.

 Things to watch out for next week

  • Global markets will watch out for the US inflation numbers expected to be released on Tuesday 13th, ahead of the Federal Reserve policy meeting on September 20-21.
  • Indian investors’ attention would be on the consumer price index (CPI) inflation numbers for August, before the monetary policy meeting scheduled to be held towards the end of September. The industrial production data for July and wholesale price index (WPI) inflation for August is also expected to be released in week starting 12th. 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (Aug 29th to Sep 2nd)

Technical talks

NIFTY opened the week on 29th August at 17,189 and closed on 2nd Sep at 17,540. During the week, NIFTY was up 2.0%. Index has breached 50-week moving average on the weekly chart with RSI at 58. Immediate support for the index stands at 17,137 and resistance at 17,559.

Among the sectoral indices, Realty (+3.0%), Auto (+2.2%), and FMCG (+2.1%) were the top gainers during the week.  IT (-3.4%), Pharma (-0.7%) and Metal (-0.3%) were the top losers in during the week.

Weekly highlights

  • Wall Street was bleeding this week. The downfall started as investors were worried about the Federal Reserve’s determination to aggressively hike interest rates to fight inflation even as the economy slows.
  • Fed Chair Jerome Powell told the Jackson Hole central banking conference in Wyoming the Fed would raise rates as high as needed to restrict growth and keep them there “for some time” to lower inflation running at more than three times the Fed’s 2 percent goal.
  • The Fed’s stance worsened concerns about an economic slowdown and caused a significant selloff in the US market with the spillover roiling markets around the world.
  • The downwards rally continued as a rise in job openings fuelled fears the U.S. Federal Reserve has another reason to maintain its aggressive path of interest rate hikes to combat inflation.
  • On Thursday, US investor focus turned to a key report on the labor market. The weekly jobless claims fell more than expected to a two-month low last week and layoffs dropped in Aug-22, giving the Fed a cushion to continue raising rates to slow the labor market.
  • The S&P 500 ended the week with a loss of 3.3%. The index fell 1.1% on Friday after early gains from a U.S. jobs report as worries about the European gas crisis began.
  • The global markets continued to be in red as weak Chinese data and new Covid-19 lockdowns in China weighed on sentiments and on deepening worries about aggressive rate hikes and record-high inflation in the Euro region.
  • Japan’s jobless rate was steady at 2.6 percent in July, while the availability of jobs grew for the seventh straight month to a more than two-year high, government data showed on Tuesday.
  • Back home, the Indian market remained volatile during the week. It had a gap up opening and recovered quickly due to weak global cues, spooked by the aggressive stance taken by the US Fed to tame inflation that triggered fresh worries about interest rate hikes. This also increased the concerns over the possible withdrawal of foreign funds from Indian markets.
  • Auto stock gave positive returns this week amid reporting of Aug-22 sales volumes by auto companies. New product launches and shortage of semiconductors easing helped companies to step up production ahead of the festive season that kicked in with Ganesh Chaturthi on Wednesday. In domestic retail, Passenger Vehicles sales were up ~7% MoM and 2W sales rose ~3% MoM. On commercial side, 3W sales grew ~11% MoM with CV sales flat MoM.
  • India’s GDP growth rate was 13.5 percent in April-June as compared to 4.1 percent the previous quarter, data released on 31st Aug-22 by the Ministry of Statistics and Programme Implementation showed. The growth was pulled down by the poor show of the manufacturing sector, which reported a paltry 4.8 percent expansion in 1QFY23, negating the robust show by the services sector.
  • Oil prices tumbled below USD 100 per barrel on fears over slower economic growth due to renewed restrictions to curb COVID-19 in China and tighter monetary policy in US. West Texas Intermediate futures dropped 6.7% for the week and settled at USD 88 per barrel and Brent crude was at USD 93.95 a barrel.
  • Reliance Industries Ltd (RIL) held its 45th annual general meeting where it announced the plans to invest Rs 2 tn to set up a 5G network across India and has ear marked Rs 750 bn to expand its petrochemical capacity.
  • The foreign institutional investors (FIIs) were net buyers for the week as they purchased equities worth Rs 13,062 mn. Domestic institutional investors (DIIs) were net sellers as they offloaded equities worth of Rs 2,307 mn during the week gone by.

Things to watch out for next week

  • For the energy sector, a crucial OPEC+ meeting at the start of the week could decide the near-term fate of oil prices, while the global gas industry gathers in Milan to weigh the enormous pressures caused by Russia’s invasion of Ukraine and soaring fuel costs.
  • India’s bank deposit growth and foreign exchange reserves would be the key data points to track. IPOs and The European Central Bank policymakers meet to take a call on interest rates would set the mood for the market.​

 

This week in a nutshell (16th August- 19th August)

 

Technical talks

NIFTY opened the week on 16th August at 17,797; with a holiday on Monday, the four-day work week ended with NIFTY closing at 17,758 (-0.2%). The index is trading above all the moving averages on a daily as well as weekly timeframe. On the upside, the upper Bollinger band level of 18,123 might act as a resistance. On the downside, it can take support at the 50-week moving average near 17,134. Even though the RSI of 61 does suggest some caution, in the recent past NIFTY has comfortably traded at a 60+ RSI level.

Among the sectoral indices, REALTY (+1.6%), INFRASTRUCTURE (+1.5%), and FMCG (+1.2%) led the gainers, whereas PSU BANK (-1.1%), PHARMA (-0.5%), and BANK (-0.1%) were the losers this week.

Weekly highlights

  • September 1, 2022, has been fixed as the Demerger Record Date for the purpose of confirming the names of shareholders of the company who would be entitled to receive equity shares of Piramal Pharma (PPL). A shareholder with 1 share of Piramal Enterprises (PEL) is entitled to get 4 shares of PPL.
  • Auto manufacturer Mahindra & Mahindra announced that it would introduce five new electric Sports Utility Vehicles (SUVs) for both domestic and foreign markets. The first four of these vehicles are scheduled to go on sale between CY24 and CY26.
  • For the first time, large quantities of petroleum coke are being imported by Indian businesses from Venezuela. India’s increasing demand for Venezuela’s petcoke, an oil refining byproduct and coal substitute, is being driven by a race for low-cost fuel to power factories as the price of coal has skyrocketed globally. Petcoke is mainly used as a fuel source in power plants.
  • As vegetables, milk, and fuel became less expensive, India’s wholesale inflation decreased sequentially in July to 13.93%, but it stayed above 10% for the 16th consecutive month. The WPI inflation moderated as a result of a decrease in the inflation for food goods, core-WPI, crude oil and natural gas, and major non-food items.
  • The government on Thursday increased the windfall profit tax on diesel export to Rs 7 per litre from Rs 5 per litre earlier. The government again imposed Rs 2 per litre tax on the export of aviation turbine fuel after scrapping it earlier this month. While introducing the new levies, the government had said that it will review exports and imports of these items every fortnight to amend its decision.
  • Gold dropped to a 3-week low on last Friday due to fears of the US dollar strengthening, and an interest rate hike.
  • US stocks closed lower on Friday, with indexes volatile after minutes from the Federal Reserve’s meeting in July suggested policymakers may be less aggressive than previously thought when they raise interest rates in September. The S&P 500 was down 1.2%, Nasdaq 100 was down 2.3%, and Dow Jones was down by 0.1% respectively.
  • FII (Foreign Institutional Investors) were net buyers of shares worth Rs 31,290 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 18,089 mn this week.

Things to watch out for next week

  • The corporate results season for the April-June quarter of FY23 has come to an end. Market movements are likely to be company specific. As the result season ends, investors’ attention will now be on management comments at the AGM (Annual General Meeting).
  • Federal Reserve Chair Jerome Powell will address the annual global central banking conference in Jackson Hole, Wyoming, on 26th It’s a highly anticipated speech that could signal how interest rate hikes will pan out and how long they will need to stay there to bring down soaring inflation.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (August 8-12)

Happy 76th Independence Day to all our readers!

Technical talks

NIFTY opened the week on 8th August at 17,401; with a holiday on Tuesday, the four-day work week ended with NIFTY closing at 17,698 (+1.7%). The index is trading above all the moving averages on a daily as well as weekly timeframe. On the upside, the upper Bollinger band level of 18,100 might act as a resistance. On the downside, it can take support at the 50 week moving average near 17,100. Even though, the RSI of 60 does suggest some caution, in the recent past NIFTY has comfortably traded at 60+ RSI level.

Among the sectoral indices, METAL (+4.6%), PRIVATE BANK (+3.6%), and FINANCIAL SERVICES (+3.0%) led the gainers, whereas MEDIA (-2.0%), FMCG (-1.1%), and PHARMA (-0.6%) were the losers this week.

Weekly highlights

  • The US market closed the week in green as Dow Jones continued its streak with 6th consecutive week of positive returns. During the week, the US declared its July CPI inflation. At 8.5%, it is lower than the previous month, but still on the higher side from an absolute point of view.
  • Coming to the Indian markets, our market cap to gross domestic product ratio (Mcap/GDP) has crossed 100 percent. With a positive move in markets since July, we currently stand at 102 percent against a long-term average of 81 percent. India’s GDP is estimated at nearly USD 3 trillion.
  • The Mcap/GDP ratio is also known as the Buffett Indicator, as Warren Buffett considers it to gauge the mood of the market. Too high a number suggests that the market seems to be overvalued and the opposite on the other side.
  • However, this can be applicable to a developed market like the US. In a developing market like India, with a gradual move towards formalization of the economy, the market capitalization will inch up higher as more and more companies get listed and this will eventually reflect in the GDP.
  • The civil aviation ministry has removed the lower and upper caps on airline fares from 31st The caps were imposed in May 2020 to regulate airfares in times of the pandemic. Especially with the removal of the lower cap, it is more likely that airfares for short-distance domestic flights will come down as airlines compete with each other for passengers.
  • China’s trade surplus stood at USD 101 billion in July. It is the highest since 1987. The trade surplus is the excess of exports over imports. Despite political tensions between India and China, in a globalized world, where there is interdependency on each other when it comes to the manufacturing of goods, Chinese exports doing well translates positively for the world economy as well as for India.
  • FII (Foreign Institutional Investors) were net buyers of shares worth Rs 78,499 mn and DII (Domestic Institutional Investors) were net sellers of shares worth Rs 24,780 mn this week.

 

Things to watch out for next week

  • The corporate results season for the April-June quarter of FY2023 comes to an end as we approach 15th As we celebrate the 76th Independence Day of India, we enter into another four-day work week on Tuesday. Going forward, company-specific developments will be keenly watched.
  • Just like this week, during which we saw a few new 2-wheeler launches from Honda and Royal Enfield and a Hyundai car, next week is also lined up with new cars from Toyota, Maruti-Suzuki, and an EV from Mahindra. As we approach the festive season, we are expecting many more such launches.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (1st August- 5th August)

Technical talks

NIFTY opened the week on 1st August at 17,243 and closed on 5th August at 17,397. The index gained 1.4% during the week. The index has managed to sustain above the 50DMA of 17,105 level, which acts as a support. On the upside, the recent high of 18,114 might act as a resistance.

Among the sectoral indices, IT (+2.8%), AUTO (+2.1%), and METAL (+2.1%) were the top gainers while REALTY (-2.9%) was the only loser in the week.

Weekly highlights

  • Wall Street indices fluctuated throughout the week due to better than anticipated corporate earnings, economic data, and US-China tensions following Speaker of the US House of Representatives Nancy Pelosi’s visit to Taiwan, which led to China conducting military exercises near Taiwan.
  • China’s factory activity contracted in July after rebounding from COVID-19 lockdowns as new virus outbreaks and a bleak global outlook weighed on demand. 
  • Oil prices fell ahead of the OPEC+ meeting on August 3rd. In the meeting, it was decided that the cartel will add only 100,000 barrels a day of oil in September. Consumers feeling the inflationary squeeze due to higher oil prices won’t find much relief from the increase. Brent oil futures and WTI futures were mixed wherein the former settled 0.6% up at USD 94/ barrel and the latter 0.01% lower at USD 89/barrel. 
  • The 5G spectrum auction concluded on August 2nd, with bids exceeding Rs 1.5 bn. Approximately 71% of the total spectrum was sold in the auction held through 40 rounds of bidding. The government has received bids totaling Rs 1,501,730 mn. 
  • Reliance Jio was the highest bidder at the 5G spectrum auction, with bids of over Rs 880,000 mn. Bharti Airtel took 19,867 MHz for Rs 430,840 mn, while Vodafone Idea acquired the spectrum worth Rs 187,990 mn.
  • Bank of England raised the interest rate by 50 bps to 1.75% despite warning that recession is on its way, even as inflation is now expected to top 13%.
  • RBI in its policy meeting on Friday raised the repo rate by 50 bps. It now stands at 5.4%. The MPC also decided to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
  • After nine months of relentless selling, foreign investors turned net buyers in July, investing Rs 49,890 mn in Indian equities as the dollar index fell and corporate earnings improved. This is in stark contrast to the stock market’s net withdrawal of Rs 501,450 mn in June. 
  • FII (Foreign Institutional Investors) turned net buyers this week, buying shares worth Rs 54,620 mn. DII (Domestic Institutional Investors) turned net sellers by selling shares worth Rs 17,650 mn.

Things to watch out for next week

  • India’s largest lender, State Bank of India (SBI), will report earnings on August 6. SBI is expected to report robust balance sheet growth, improvement in asset quality, and improved interest income.
  • Investors and traders are focused on corporate earnings and announcements. The earnings of companies such as SBI, Tata Consumer, HAL, Eicher, Hero Moto, and Aurobindo may cause volatility in Indian markets. Share price moments would be driven by management comments on the impact of inflation on demand and the supply chain challenges, particularly chip shortages for 2W companies.
  • With result season coming to an end next week, investors’ attention would be focused on company-specific news.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (25th July- 29th July)

Technical talks

NIFTY opened the week on 25th July at 16,663 and closed on 29th July at 17,158. It made a weekly gain of 3%. The index has managed to sustain above the 50DMA of 17,087 level, which might act as a support. On the upside, the recent high of 18,115 might act as a resistance.

Among the sectoral indices, METAL (+7.7%), MEDIA (+5.2%), and IT (+3.5%) were the top gainers while AUTO (-0.7%), PSU BANK (-0.1%), and FMCG (-0.04%) led the losers in the week.

Weekly highlights

  • After upbeat forecasts from Apple and Amazon.com, the US indices closed the week in the green. Tech-heavy NASDAQ was up 4.5%, S&P 500 up 4.3%, and Dow Jones Industrial Average was up ~3% for the week. The earnings season continued to cause volatility in US markets. A profit warning from Walmart dragged down retail shares during the week. Exceptionally weak consumer confidence data added to investors’ worries.
  • The US Commerce Department said the American economy contracted in the second quarter of CY22. This was the second straight quarterly decline in gross decline profit (GDP) reported by the government. This news increased the chances of a recession in the US which impacted investor sentiments.
  • The Federal Reserve increased the interest rates for a second consecutive quarter by 0.75 percentage points, in line with expectations. Elevated inflation has been attributed to supply chain issues and higher prices for food and energy along with broader price pressures.
  • The Reserve Bank of India (RBI) said on July 22 that India’s foreign exchange reserves dropped to $572.71 billion. This was the lowest level in more than 20 months, after declining by $7.54 billion in the week ending July 15. As of November 6, 2020, foreign exchange reserves were last as low.
  • Brent Oil settled 5.4% up at USD 104/barrel. Crude Oil WTI was up 3.6% at USD 98/barrel. Supply concerns and a weaker US dollar lifted oil prices this week. Investors’ attention is on OPEC and allies meeting to discuss production quotas for September. This meeting is expected to have a significant impact on the oil markets because OPEC+ has reached the end of its plan to gradually unwind its production cuts from May 2020 and there is no clear roadmap of predetermined quotas.
  • Due to price erosion pressure, Indian pharmaceutical companies are likely to experience reduced revenue growth from the US generics market in FY23, according to rating agency Icra. The US has always been a significant market for Indian pharmaceutical companies. ICRA says that in recent years, revenues from there have grown relatively slowly because of persistent pricing pressure, the absence of significant generic product launches, and increased regulatory scrutiny. ICRA says high single-digit to low-teens price erosion caused the revenues from the US pharmaceutical market for its sample of eight top Indian pharmaceutical companies to drop by 0.2% in FY22.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 1,460mn. DII (Domestic Institutional Investors) continued to be net buyers and purchased shares worth Rs 23,835mn.

Things to watch out for next week

  • According to Financial Express, the RBI is expected to hike interest rates by 35-50bps in the monetary policy meeting to be held between August 3-5. The interest rate differential between US and India should be kept minimal to avoid depreciation of the Indian Rupee.
  • Investors’ attention would be on company-specific news as the earnings season has picked up momentum. There could be volatility in Indian markets post earnings of companies like M&M, UPL, SBI, Varun Beverages, and consumer companies Dabur, Godrej Consumer, and ITC. Comments on the impact of inflation on demand, and easing of supply chain challenges would drive the share price.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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 (18th July- 22nd July)

Technical talks

NIFTY opened the week on 18th July at 16,183 and closed on 15th July at 16,719 (+3.3%). The index is trading above the 20DMA level of 16,580. On the upside, the 50DMA level of 17,073 might act as a resistance. The RSI (52), and MACD turning upwards suggests a positive sentiment ahead.

Among the sectoral indices, PSU BANK (+7.7%), Private Bank (+6.6%), and IT (+6.4%) led the gainers, whereas Pharma (-1%) was the only loser this week.

Weekly highlights

  • IMF chief Kristalina Georgieva cautioned policymakers from the Group of 20 major nations on Saturday to take immediate measures to tackle inflation, saying that the “exceptionally uncertain” global economic outlook may worsen if higher prices persisted.
  • Sula Vineyards has filed papers with the market regulator Securities and Exchange Board of India (SEBI) to raise capital through an initial public offering ( IPO). If the plans go forward, it will be the first IPO in India by a pure-play wine company, and the second in recent weeks by a player in the alcohol and spirits sector.
  • India’s foreign exchange reserves plunged by US$8 billion in the week ended July 8 to US$580.25 billion, the lowest in more than 15 months, data released on July 15 by the Reserve Bank of India (RBI) showed. The decline in reserves was driven by a US$6.66 billion drop in the RBI’s foreign currency assets, which fell to US$518.09 billion from US$524.75 billion as of July 1.
  • GDP growth predictions for 2022 remain the highest among developing market peers for India. Passenger vehicle sales, two-wheeler sales, electricity generation, and bank credit all increased in June for the second month in a row. The June unemployment rate (7.8 percent, according to CMIE) is higher than in May but significantly lower than it was in February (8.11 percent).
  • Less than three weeks after they were implemented, the government lifted duty on gasoline exports and reduced windfall levies on other fuels.
  • Reliance Industries Ltd reported a 7.9% increase in profit QoQ for 1QFY23 on the back of improved performance of oil-to-chemicals, retail and telecom businesses. However, it failed to meet expectations. The profit was impacted by higher finance costs as a result of rising interest rates, rupee devaluation, and lower other income.
  • The Down Jones Industrial Average, NASDAQ and S&P500 opened the week in red. However, positive earnings release resulted in a three-day winning streak for the indices. The NASDAQ and S&P500 fell 1.7 percent and 1%, respectively, on Friday, as disappointing earnings from social media companies and poor economic data stoked recession fears.
  • The ECB boosts interest rates by 50 basis points, the first increase since 2011. On Thursday, the European Central Bank raised interest rates more than anticipated, showing that concerns over runaway inflation now outweigh growth considerations, even as the eurozone economy struggles to recover from Russia’s war in Ukraine.
  • FII (Foreign Institutional Investors) were net buyers of shares worth Rs 40,380 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 9,380 mn this week.

Things to watch out for next week

  • With results season picking up, quarterly numbers are to be watched out for. Auto companies like Bajaj Auto, Maruti Suzuki, and Tata Motors are set to report earnings next week. Commentaries about the semi-conductor shortage situation and demand sentiments from auto companies are expected to give some color about the economic recovery.
  • We expect markets to continue volatile as a result of investor reactions to earnings releases and macroeconomic news such as supply-related constraints, interest rate hikes, and rising inflation.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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.”