#WeekInANutshell

This Week in a nutshell (18th Oct to 22nd Oct)

Technical talks

NIFTY opened the week on 18th October at 18,500 and closed on 22nd October at 18,114 during the week, the index lost -2%. Nifty is trading at an RSI of 72, with support at 18,095 and resistance at 18,602.

Weekly highlights

  • China Evergrande Group pulled back from the edge of default by paying a bond coupon of $83.5 million before Saturday’s deadline. This came as a surprise as Evergrande was expected to make payments to local creditors and suppliers first who are waiting for the company to make due payments.
  • Applications for unemployment benefits in the US have dropped by 6,000 to 2,90,000 this week. Layoff levels have become normal but hiring by companies has been slow. It is observed that people who were laid off have stopped looking for new jobs.
  • India is going through a coal crisis which has coincided with an increase in demand for electricity. The Centre is planning to maintain sufficient reserves of coal and natural gas to tackle future shortage of coal.
  • India’s top private banks including HDFC Bank, Kotak Mahindra Bank, Axis Bank and IndusInd Bank are bidding for Citi’s consumer banking business after it announced exit from consumer banking in 13 countries including India.
  • Maharashtra is witnessing a declining trend in its covid cases and hence the Government eased restrictions starting 22nd October by reopening amusement parks and cinemas. Restaurants and shops are also allowed relaxed timings. This will have a positive impact on the restaurant and entertainment industry.
  • Federal Reserve Chair Jerome Powell indicated that the central bank would begin winding down its bond purchases but remain patient on raising interest rates.
  • US markets continued their rally this week but fell on Friday as the Fed warned about concerns about inflation.
  • The foreign institutional investors (FII )sold equities worth of Rs 73,530 mn, while domestic institutional investors (DIIs) sold equities worth of Rs 45,040 mn.

Things to watch out for next week:

  • Result season continues next week in the US, and India. Big IT companies such as Facebook, Microsoft, Alphabet are set to announce earnings next week. In India, banks like Kotak bank and IndusInd bank are set to report earnings. commentary from banks regarding loan book growth will be critical.
  • Pharma biggies such as Cipla, Lupin and Torrent will also report earnings next week.
  • Commentary regarding raw material inflation and logistical challenges would be critical.

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 (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.

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 (27th Sept to 01st Oct)

Technical talks

NIFTY opened the week on 27th September at 17,932 and closed on 01st October at 17,532 during the week, the index lost -2.23%. Nifty is trading at an RSI of 58, with support at 17336 and resistance at 18,138.

Weekly highlights

  • US President Joe Biden on Thursday signed a nine-week stopgap funding bill that averts a government shutdown but fails to resolve the threat of a US default linked to the debt limit.
  • US Treasury Secretary Janet Yellen has said that if lawmakers fail to raise the debt limit by about Oct. 18, the government may not be able to pay its bills, posing a dire risk to the US and World Economy with the US Treasury defaulting on its debt obligations.
  • Japan’s former foreign minister Fumio Kishida is set to replace Yoshihide Suga as prime minister after he won the ruling Liberal Democratic Party’s leadership vote on Wednesday. Kishida will succeed Prime Minister Suga, the world’s eyes will be on the third-largest economy in the world which is facing stagnant economic growth battered by the coronavirus pandemic, the remnants of an unprecedented public health crisis, and increased political manoeuvring by China.
  • Brent Crude is at its highest since October 2018 and heading for $80 per barrel, as investors fretted about tighter supplies because of rising demand in parts of the world. Brent crude was up $1.44, or 1.8%, to settle at $79.53 a barrel, having posted three straight weeks of gains. Global supplies have tightened due to the fast recovery of fuel demand from the outbreak of the Delta variant of the coronavirus and Hurricane Ida’s hit on U.S. production
  • China’s top state-owned energy companies have been ordered to ensure there are adequate fuel supplies for the approaching winter at all costs, a report said Friday, as the country battles a power crisis that threatens to hit growth in the world’s number two economy. The country has been hit by widespread power cuts that have closed or partially closed factories, hitting production and global supply chains. The crisis has been caused by a confluence of factors including rising overseas demand as economies reopen, record coal prices, state electricity price controls and tough emissions targets.
  • The country’s top carmaker Maruti Suzuki said that it will produce fewer cars in October due to the ongoing global chip crisis. It expects vehicle production at two of its plants to be around 60 per cent of normal levels. The chip shortage has emerged as a major crisis around the world since 2020 after a sharp rise in demand for consumer electronics and continued global supply chain disruptions.
  • During the week, the foreign institutional investors (FII) net sold equities worth Rs 61,520 mn, while domestic institutional investors (DIIs) bought equities worth Rs 75,030 mn.

Things to watch out for next week

  • Q2FY22 Result season to begin with software services leader TCS announcing its results.
  • Rising Oil Prices, US Treasury Yields, Evergrande’s default, and the uncertainty over the U.S default of its debt obligations will be the themes that are in focus this week.

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 (20th Sept to 24th Sept)

Technical talks

NIFTY opened the week on 20th September at 17,444 and closed on 24th September at 17,853. During the week, the index gaining 2.3% and touched a record high of 17,948 during the market hours on 24th September. Nifty is trading at an RSI of 78, with support at 10 DMA of 17565 and resistance at 18,095.

Weekly highlights

  • Evergrande, China’s second-biggest property developer, has US$83.5 million in dollar-bond interest payments due on a US$2 billion offshore bond and a US$47.5 million dollar-bond interest payment due next week. Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates. Chinese authorities are asking local governments to prepare for the potential downfall of the debt-ridden China Evergrande Group.
  • Federal Reserve Chairman Jerome Powell said the U.S. central bank could begin scaling back asset purchases in November 2021 and complete the process by mid-2022, after officials revealed a growing inclination to raise interest rates next year.
  • The Organisation for Economic Co-operation and Development (OECD) has marginally lowered India’s growth projection for the ongoing fiscal to 9.7%, a reduction of 20 basis points (bps), and to 7.9% for the next financial year, down 30 bps from its May-21 forecast, citing pandemic risks.
  • India is planning to set up around 14 gigawatt-hour (GWh) grid-scale battery storage system at the world’s largest renewable energy park at Khavda in Gujarat. This is in addition to a plan to invite bids for the largest global tender for setting up a 13GWh grid-scale battery storage system in Ladakh.
  • On 22nd Sept, the Tamil Nadu government signed a Memorandum of Understanding (MoU) for 24 projects worth ₹ 21.2 bn. M K Stalin, chief minister of Tamil Nadu said the government’s goal is to increase the state’s exports to USD 100 bn by 2030.
  • Tata and Airbus have signed a Rs 220 bn deal for the production of 56 C-295 transport aircraft for the air force. Under the deal, 40 of the 56 planes will be manufactured in India by a consortium of the Airbus Defence and Space and Tata Advanced Systems Limited (TASL) within 10 years of signing the contract, officials said.
  • India is considering an overhaul of its electricity transmission planning to give power companies nationwide unconditional access to the network. The government also proposes to allow states to trade their excess transmission capacities with other states, a senior government official said.
  • The foreign institutional investors (FII) net sold equities worth Rs 84 mn, while domestic institutional investors (DIIs) bought equities worth Rs 30,483 mn.

Things to watch out for next week

  • The stock markets around the globe may remain volatile next week as the investors remain worried that Evergrande’s downfall could affect the creditors such as banks in China and abroad.
  • News of the US Federal Reserve starting to withdraw the monetary stimulus by Nov ’21 and a start of rising interest rates could prove to be negative factors for the markets as it will increase the cost of borrowing for the corporates.

 

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 (Sep 13th to Sep 17th)

This Week in a nutshell (Sep 13th to Sep 17th)

Technical talks

NIFTY opened the week on 13th Sep at 17,365 and closed on 17th Sep at 17,585. During the week, the index hit record highs, gaining 1.2 percent and saw a bullish candle formation on the weekly scale. At the current juncture, support for Nifty is placed at 17,430 and 17,250 zone, while resistance can be seen around 18,111 levels.

On the sectoral front, Nifty Media index outperformed other indices with a gain of over 13 percent and PSU Bank index rose 5 percent. On the other hand, Nifty Metal and Realty indices fell 1 percent each.

Weekly highlights

  • The week started with economic data:
    • Consumer Price Index-based Inflation (CPI) for Aug-21 came in at 5.3 percent, compared with 5.6 percent in July-21.
    • Food prices cooled further, especially in the case of vegetable inflation; data released by the National Statistical Office (NSO) showed.
    • Consumer Food Price Inflation (CFPI) for Aug-21 stood at 3.1 percent compared to 3.9 percent in Jul-21. However, concerns remained with high edible oil prices, which registered an increase of 33 percent YoY.
    • The wholesale price-based inflation rose marginally to 11.4 percent in Aug-21, mainly due to higher prices of manufactured goods, even as prices of food articles softened.
    • India’s exports rose by ~45.8 percent YoY to $33.3 bn in August and imports increased by 51.7 percent YoY to $47.1 bn, according to commerce ministry data released on Tuesday.
  • An inter-ministerial task force comprising representatives from the Commerce, Railways and Shipping ministries looked to initiate several short-term actions to make more containers available to exporters and cushion prices that have gone up by 200-300 percent YoY.
  • With low number of cases and increasing vaccination drives, the economic activities normalised. Domestic air passenger traffic surged 33.8 percent MoM in Aug-21, more than doubled when compared to the same month in the past year, the aviation sector regulator said.
  • Finance Minister Nirmala Sitharaman on Thursday announced that the Cabinet has cleared the formation of a ‘bad bank’. The government will guarantee up to Rs 306 bn for security receipts issued by the National Asset Reconstruction Company (NARCL).
  • Inflation in India is likely to ease only gradually, Reserve Bank of India Deputy Governor Michael Patra said on Thursday, adding that the outlook on growth and inflation will help determine the future course of monetary policy.
  • Positive economic data and government reforms in telecom, banking and automobile sectors helped boost market sentiments. The banking sector, which underperformed till now, came into its own during the week.
  • Wall street on the other hand started strongly but lost ground later as economic uncertainties and the increasing likelihood of a corporate tax rate hike dampened investor sentiment and prompted a broad sell-off despite signs of easing inflation.
  • US consumer prices rose a lower-than-expected 0.3 percent in Aug-21, the smallest increase in seven months and a hopeful sign that inflation pressures may be cooling.
  • Oil prices steadied at the end of the week as the threat to US Gulf crude production from Hurricane Nicholas receded.
  • The foreign institutional investors (FII) bought equities worth of Rs 65,455 mn, while domestic institutional investors (DIIs) sold equities worth of Rs 22,925 mn.

Things to watch out for next week

  • Nervousness would be seen in the market next week ahead of Federal Reserve and ECB meeting, which could provide some indications on when the central banks will start withdrawing their monetary stimulus and start raising interest rates eventually.
  • With weak US job data and inflation increasing at a slower pace, Fed is not expected to hint on taper plans in the upcoming meeting.
  • The weak global cues on account of worry over slower economic growth and rising Delta variant cases globally would keep market oscillating between greed and fear.

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 (6th – 9th September)

Technical talks

NIFTY opened the week on 6th September at 17,399 and ended the truncated week at 17,369 on 9th September. The index made a weekly loss of 0.2%. On the upside, 17,378 might be a critical level to watch for. On the downside, 16,451 might act as a support. The RSI (82) indicates the index is in the overbought zone.

Weekly highlights

  • World stocks hit fresh record highs on Tuesday on growing bets that the U.S. Federal Reserve will push back tapering its bond purchases and keep its expansive policy for the near term. The latest rally, which started after Fed Chair Jerome Powell’s dovish speech at the Jackson Hole Symposium in August, received a further boost from a surprisingly soft U.S. payrolls report on Friday. The U.S. economy created 235,000 jobs in August, the fewest in seven months as hiring in the leisure and hospitality sectors stalled, reducing expectations that the Fed will opt for an early tapering of its monthly bond purchases.
  • Investors were caught by surprise by a sudden rally in the benchmark 10-year Indian bond yield. In the previous week (ended 3rd September), the yield had dropped ten basis points, the biggest weekly drop since April. There was a quick turn of sentiment after the benchmark 10-year bond yield rose to its highest since March. The sentiment change was aided by 1QFY22 GDP growth which grew ~20% YoY albeit on a low base and global market cues. The rally in the bond yield was led by mutual fund investors and overseas investors. The spike in overseas investors’ interest could be attributed to the appreciation of INR against USD. (Source: Bloomberg Quint Read more at: https://www.bloombergquint.com/business/a-surprise-bond-rally-sweeps-over-india-as-global-funds-pile-in )
  • The Securities and Exchange Board of India (SEBI) has introduced an optional T+1 settlement cycle for the market, which will come into effect from January 1, 2022. The T+1 cycle means settlements will have to be cleared within one day of the actual transactions taking place. A switch to the T+1 settlement cycle is expected to boost market liquidity and trading turnover while reducing settlement risk and broker defaults. While this move could be beneficial for the domestic investors, foreign investors may face challenges adjusting to this system due to time zone differences. While the regulator has come up with the new settlement cycle, the onus is on the exchanges if they want to opt for the shorter cycle.
  • The monthly data for life insurance premiums collected by companies was released by the Life Insurance Council. The industry reported a 3% YoY increase in the New Business Premiums (NBP) collected, led by private players. This growth comes after the NBP collected reported a decline of 11% YoY in July-21.
  • Stocks ended lower Friday, with major indexes booking weekly losses as the Dow Jones Industrial Average and the S&P 500 extended a losing streak to five sessions. Investors said uncertainty around the spread of the delta variant of the coronavirus that causes COVID-19 hung over markets this week as investors also weighed the timing of the Federal Reserve’s eventual tapering of its monthly bond purchases. The slide left the Dow down 2.2% for the week, while the S&P 500 suffered a 1.7% fall and the Nasdaq declined 1.6%.
  • Institutional activity trends reversed this week compared to last week. Foreign institutional investors (FII) turned sellers with an outflow of Rs 11,139mn. Domestic institutional investors (DII) tuned buyers with an inflow of Rs 11,160mn.

Things to watch out for next week

  • The Indian CPI and WPI data are expected next week. A key indicator for measuring the changes in purchasing trends and inflation.
  • As the result season has drawn to a close, the developments from Wall Street will be the guiding force for the Dalal Street.

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 (August 30th to September 3rd)

This week in a nutshell (August 30th to September 3rd)

Technical talks

NIFTY opened the week on 30th August at 16,776 and closed on 3rd September at 17,324. It made a weekly gain of 3.3%. The index is trading beyond all moving averages and at all-time high levels. 10DMA of 16,880 is the closest support. The RSI (83) suggests that the index is overbought.

Weekly highlights

  • Trends for FII and DII activity reversed compared to last week. FIIs were net buyers of Indian equities with an inflow of Rs 68,677 mn. DIIs turned bearish with a net outflow of Rs 14,211 mn.
  • As per data released by Ministry of Statistics and Programme Implementation, India’s GDP growth for 1QFY22 is estimated to be 20.1%. This growth is on low base of 1QFY21, where the GDP contraction was 24.4% YoY.
  • Ministry of Commerce and Industry released India’s preliminary foreign trade data for Aug-21. According to the press release, India’s merchandise exports for Aug-21 increased 45.2% over low base of Aug-20 and 27.5% over Aug-19. Merchandise imports for Aug-21 increased 51.5% over Aug-20 and 17.9% over Aug-19. The trade deficit widened at USD 13.87 bn in Aug-21 compared to USD 8.2 bn in Aug-20.
  • Indian Auto OEMs reported wholesale data for Aug-21. Carmakers were impacted by the global electronic component shortage, leading to production uncertainties. OEMs expect the pain to continue even in the upcoming crucial festive period. Some companies expect Sep-21 production volumes to be lower by as much as 60% of normal levels.
  • US jobs data for August came out on Friday and the numbers were lower than street forecasts. Lower job additions could mean that the US Fed may further delay any increase in interest rates.

Things to watch out for next week

  • Post the end of 1QFY22 result season, we are in a quiet period with relatively lesser market developments.

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 (August 16th to August 20th)

Technical talks

NIFTY opened the week on 16th August at 16,518 and closed on 20th August at 16,450. It made a weekly loss of 0.5%. The index is trading near the 10 DMA of 16,414 which might act as a support. On the upside 16,701 level might act as a resistance. The RSI (65), and MACD turning downwards suggests a further possible decline.

Weekly highlights

  • Tens of thousands of people have tried to flee Afghanistan since the Taliban militants entered into its capital Kabul, on Sunday, completing a defeat of government forces and ending two decades of war. On Thursday, the United States struggled to evacuate the Americans and Afghans at Kabul airport due to obstacles like armed Taliban checkpoints and paperwork problems. With a deadline of 31st August declared by the president of America, Joe Biden, thousands of people remain to be airlifted from the chaotic country.
  • PM Narendra Modi on 15th Aug announced a $ 1.35 trillion ‘Gatishakti’ initiative to bring employment opportunities for the youth and to help in infrastructure growth. He said that Gatishakti will help local manufacturers turn globally competitive and develop possibilities of new economic zones.
  • The RBI has partially lifted restrictions that it had imposed on HDFC Bank last December, allowing it to resume issuing credit cards. However, restrictions on new digital launches remain. Despite the ban, HDFC Bank remains the largest credit card issuer, with 14.8 million cards outstanding at the end of June, followed by SBI Card with 12 million and ICICI Bank with 11.03 million. (Source: Mint)
  • Federal Reserve officials made plans to pull back the pace of their monthly bond purchases likely before the end of the year, meeting minutes released on Wednesday indicated. The committee members broadly agreed that employment has not met the “substantial further progress” benchmark the Fed has set before it would consider raising rates.
  • Ola launched its first e-scooter with the Ola S1 series in India on 15th August 2021. The electric scooter was launched in two variants – Ola S1 and Ola S1 Pro. The company is officially opening Ola S1 for purchase from 8th September 2021 and will start delivering across 1,000 cities and towns in October this year. 
  • FII (Foreign Institutional Investors) were net sellers and DII (Domestic Institutional Investors) were net buyers this week. There was a net outflow of Rs 43,144 mn from the FII while DII invested Rs 1,224 mn.

Things to watch out for next week

  • As the world cautiously looks at the further developments in the Taliban-controlled Afghanistan, it may have a significant effect on the stock markets.
  • US employment data and the various economies getting back on track after the 2nd covid wave will be among the deciding factors that drive the stock markets.

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 (Aug 9 th to Aug 13 th )

Technical talks

NIFTY opened the week on 9th Aug at 16,223 and closed on 13th Aug at 16,529. This is the highest closing ever for the index. The index made a weekly gain of 1.8%. On the upside, the index might be headed to 17,110. The 16,590 and 16,700 levels will act as potential resistance points, while supports will come in at 16,300 and 16,210.

Weekly highlights

  • The market was volatile at the start of the week due to weak global cues however, the bulls managed to push the benchmark indices well in the green.
  • BSE announcing the rule regarding Add-on Price Band Framework caused selling pressures in mid and small cap stocks which were down 1% and 2% respectively this week.
  • The country’s exports rose by 50.5 percent during August 1-7, on account of healthy growth in the shipments of engineering goods, gems and jewellery as well as petroleum products, according to provisional commerce ministry data. Imports during the week too grew by about 70 percent, leaving a trade deficit of USD 3 bn.
  • Consumer Price Index-Based inflation (CPI) for July came in at 5.59 percent, back within the Monetary Policy Committee’s inflation targeting range of 4 (+/-2) percent, on the back of softening food prices. The Consumer Food Price Inflation (CFPI) for July cooled to 3.96 percent compared with 5.15 percent in June.
  • Finance Minister Nirmala Sitharaman said that the government is committed to the revival of the economy and will continue to undertake various steps to boost growth.
  • The market closed with Nifty posting a net gain of 291 points (1.8%), on a weekly basis mainly contributed by IT sector which is up 4.4% this week. Whereas, Pharma, PSU Banks and Auto sector underperformed.
  • US markets were weak at the beginning as a tumble in oil prices signalled investor unease about the Covid-19 pandemic and the strength of the economic recovery. However, the rising US Treasury bills uplifted the sentiments of the investors.
  • Fed at the start of the week said that the U.S. economy is growing rapidly and that while the labor market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.
  • USD 1 tn infrastructure bill was passed during the week which could provide the nation’s biggest investment in decades in roads, bridges, airports and waterways.
  • The US markets closed at all time high as investors warmed to jobs data showing a steady U.S. economic recovery.
  • According to economists polled by Reuters, Fed will announce a plan to taper its asset purchases in Sept-21 and the U.S. jobless rate would remain above its pre-pandemic level for at least a year.
  • Oil prices fell for a second day on Friday after the International Energy Agency warned that demand growth for crude and its products had slowed sharply as surging cases of COVID-19 worldwide has forced governments to revive restrictions on movement.
  • The foreign institutional investors (FII) bought Rs 8,790 mn worth of Indian equity shares last week. Domestic institutional investors (DII) undertook Rs 6,370 mn of net buying during this week.

 

Things to watch out for next week

  • The monthly U.S. retail sales report and earnings from retailers such as Walmart and Target could shed more light on the health of the U.S. consumer. Investors are also keeping a close eye on Treasury yields, with rising yields often viewed as a sign of economic optimism that could also boost value stocks.
  • Indian Markets – With 1QFY22 result season almost over, focus will be on the global cues, vaccination progress in India, IPO listings and FII buying that will steer market next week.

 

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 (2nd – 6th Aug)

Technical talks

NIFTY opened the week on 2nd August at 15,875 and closed on 6th August at 16,223. This is the highest closing ever for the index. The index made a weekly gain of 2%. On the upside, the index might be headed to 16,650. Based on Fibonacci levels, 16,150 could be an important level to watch on the downside. The next level of support may be at 20DMA of 15,880.

Weekly highlights

  • Indian benchmark indices hit record highs on Tuesday amid favorable global cues. Positive domestic macroeconomic data and easing of Covid-19 restrictions further boosted investor sentiment.
  • Manufacturing activity in India rebounded to a three-month high in July. The IHS Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 55.3 from 48.1 in June, back into the expansion zone.
  • Oil prices in Asia fell during the week as worries over China’s economy resurfaced. The rising number of Covid-19 cases in the US and China, the top two importers globally clouded the fuel demand outlook. On Thursday, there was an uptick in oil prices supported by tensions in the Middle East. As of Saturday, Crude Oil WTI was trading at USD 67.9/barrel and Brent Oil was trading at USD 70.3/barrel.
  • Auto OEMs reported monthly volume data for the month of July-21. With the gradual easing of lockdown restrictions, there was a pick-up in demand. Demand recovery is expected to accelerate in the coming months due to improving consumer sentiments, faster vaccine rollout, and traction in economic activity. The domestic PV industry volumes increased to 294000 units, representing a 21% CAGR over two years. Domestic 2W volumes were subdued but exports were robust due to healthy demand in geographies such as Africa, and Latin America. The slowdown in monsoon activity in July affected the sowing of Kharif crops led to subdued tractor volumes. Now with the prediction of a normal monsoon and pickup in the pace of sowing, the demand is expected to improve.
  • The RBI Monetary Policy Committee has decided to maintain the status quo and kept the interest rates unchanged with an accommodative stance. The repo rate is 4 percent and the reverse repo rate is 3.35 percent. The MPC has retained its GDP growth projection of 9.5 percent for FY22.
  • The government introduced a bill to amend the Income Tax Act and do away with the retrospective tax demands. Now no retro tax will be applicable for indirect tax transfer of Indian assets made before May 2012. Companies such as Cairn UK, and Vodafone are beneficiaries of this move. This is a step in the right direction to have a predictable tax regime that will attract foreign investors to India.

Things to watch out for next week

  • The quarterly result season continues with companies such as MRF, CAMS, Lupin, and Ashok Leyland reporting earnings next week.
  • Investors will get information about the pace of inflation in the US with the release of consumer price index reading and producer price index reading next week. A strong jobs report could put the Federal Reserve on track to announce a tapering of the bond-buying program as early as September.
  • The cues from Wall street tend to influence the sentiment on Dalal Street.