NIFTY opened the week on 17th Jan at 18,240 and closed on 21st Jan at 17,617. During the week, NIFTY declined by 3% and formed a doji candle on the daily chart on Friday, indicating indecision between buyers and sellers. At the current juncture, on the weekly chart, the index has breached the 20-weekly moving average while the RSI is at 47. Going ahead 17,505 and 17,776 would be the next support and resistance levels, respectively.
All the sectoral indices declined in the week with IT (-7.4%), Pharma (-5.2%), and Media (-3.8%) leading the losers.
- Equity markets in India witnessed volatility during the week ended Jan 21, 2022 due to the ongoing results season and mixed budget expectations.
- Companies in the auto and consumer sectors are facing margin pressures due to the on-going commodity inflation. Companies expect muted demand as affordability of consumers has become uncertain and they have signaled potential price hikes to pass on higher input costs.
- The RBI has announced two consecutive auctions to infuse funds of Rs 7,50,000 mn and Rs 5,00,000 mn into the banking system as the inter-bank rates rose.
- The RBI on January 20 permitted all existing non-deposit-taking NBFC-Investment and Credit Companies with asset size of Rs 10,000 mn and above to undertake factoring business subject to satisfaction of certain conditions.
- India Ratings and Research expects the India’s economy to grow at 7.6 percent YoY in FY23.
- Turkey opened a crucial crude pipeline that runs from Iraq after it blew up by an explosion. The explosion happened after a pylon fell on a pipeline due to bad weather, causing fire. Supply disruptions complemented by the shutdown risked tightening the energy markets. The sharp rise in the crude oil price dented investor sentiments in the last week
- China has lowered a set of key policy rates and lending benchmarks to boost its slowing economy.
- The U.S. Treasury Secretary Janet Yellen delivered a positive outlook for the US economy of substantial inflation slowdown and signaled a potential for long-term growth of the US economy.
- The U.S. stocks tumbled amid weak company earnings and prospects for higher U.S. interest rates. U.S. stocks closed in the red on Friday and all three major indices suffered weekly losses as the prospect of rising interest rates and shaky company earnings cast doubt on the strength of the recovery from the COVID-19 pandemic.
- The NASDAQ 100 tumbled 7.5% as result of aggressive sell-off on the back of disappointing results from Netflix and other tech companies. Investors have been anxious about tech’s growth as the economy recovers.
- The foreign institutional investors (FII) continued to be sellers and sold equities worth Rs 126,400 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 5,080 mn.
Things to watch out for next week
- The Federal Reserve’s meeting next week will be watched carefully, as investors’ hope for more guidance on the central bank’s plan to raise interest rates. The pace at which Fed tightens the monetary policy could be key. A steeper than expected trajectory of rate increases may hurt economic growth.
- The domestic market is expected to remain volatile next week ahead of the budget announcement on 1st February.
- Companies such as Axis bank, L&T, Marico, Cipla, Maruti Suzuki, Dr Reddy’s Labs, and Kotak Mahindra Bank are set to report earnings next week. Management commentary on provisioning, loan book growth will be key for banks while commentary on raw material inflation, rural demand will be key for consumer companies.
- Earnings release, risks in the global economy, expected rise in US interest rates, Budget and Geo-political events will continue to influence the market mood. Rising COVID-19 cases and threats to further curb movement and businesses and rising inflation might also set the direction of the markets.
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