This Week in a nutshell (May 3rd to May 7th)Prashant Vaishampayan
This Week in a nutshell (May 3rd to May 7th)
NIFTY opened the week on 3rd May at 14,481 and closed on 7th May at 14,823, a weekly gain of 2%. The index is trading above its 50DMA of 14,730 which might act as a support. The short-term moving average (10 DMA) is turning up which suggests a possible rally going ahead. The RSI (55), and MACD turning upwards also indicates a positive momentum.
• The week opened on a positive note as investors cheered a strong dose of positive earnings reports as well as economic data that showed the US economy is growing. But the rally was short lived as coronavirus-induced lockdown worries weighed on investor sentiment on Tuesday.
• Reserve Bank of India (RBI) Governor Shaktikanta Das provided additional liquidity to banks for lending to vaccine makers, hospitals and providers of health services, as well as easing rules for small businesses to restructure loans which led to a rally in Pharma sector.
• The Dow Jones Industrial Average closed at a record high on Thursday, bolstered by an upbeat weekly jobless claims report, while vaccine makers dipped after US President Joe Biden backed plans to waive patents on COVID-19 shots.
• Credit Suisse has sharply lowered its real GDP growth forecast for FY22 to around 8.5-9 percent, citing economic disruptions in the country due to the raging second wave that is likely to shave 100-150 bps growth off the economy.
• April PMI data indicated a marked and unprecedented expansion in business activity across the U.S. service sector. Supporting the upturn in output was the fastest increase in new business on record. Pressure on capacity remained evident, as backlogs of work accumulated at a faster pace and employment rose at the second-sharpest rate on record. Some concerns regarding the sustainability of new order inflows weighed slightly on business confidence, although optimism remained relatively strong.
• FII (Foreign Institutional Investors) selling and DII (Domestic Institutional Investors) buying trend continued this week as well. There was a net outflow of Rs 50,920 mn from the FII kitty while DII invested Rs 21,340 mn.
Things to watch out for next week
• The 4QFY21 result season continues in the next week as well. The Commentary from biggies such as Asian Paints and Tata Power will be critical. Managements’ comments over the business impact of second wave of Covid-19 will be important. Please note that NSE will be closed on Thursday 13th May.