#WeekInANutshell

Week in a nutshell (27June-1July)

Technical talks

NIFTY opened the week on 27th June at 15,926 and closed at 15,752 on 1st July. The lower Bollinger Band level of 15,370 might act as a support, while, on the upside, the 16,250 level might act as a resistance.

Among the sectoral indices, FMCG (+2.8%), REALTY (+1.6%), and HEALTHCARE (+1.1%) were the gainers during the week. OIL&GAS (-4.2%) was the only loser.

Weekly highlights

  • All of the major US indices ended the week on a volatile note as oil prices rose and fell throughout the week. S&P 500 closed the week marginally higher at 3,825 and Nasdaq at 11,129.
  • WTI crude oil and Brent crude closed flat at -0.3% after fears that the US economy would enter a recession, resulting in lower oil demand.
  • Accenture reported 3QFY22 earnings, with revenues exceeding expectations at US$16.2 billion. According to the leadership, cost optimization, along with growth, is now the focus area for clients. However, it lowered its fiscal forecast due to a negative foreign exchange impact and rising inflation.
  • According to official data released on June 30th, output in India’s eight core infrastructure sectors increased by 18.1% in May, compared to 16.4% the previous year. This suggests that the economy is gradually returning to normalcy.
  • Japan’s factory activity growth slowed in June, with the PMI falling from 53 to 52, as supply disruptions, exacerbated in part by China’s strict COVID-19 curbs, hurt manufacturers, keeping the economy underpowered and with few catalysts to spur a robust recovery in the short run.
  • US consumer spending data was released on June 30th, showing that US consumer spending rose less than expected in May as motor vehicles remained scarce and higher prices forced cutbacks on purchases of other goods, indicating that the early recovery in economic growth was a losings steam.
  • On June 29, India’s Cabinet approved a plan that would allow local crude producers to sell oil to private companies, boosting revenue for state-run producers such as ONGC and Oil India. The decision will take effect on Oct. 1, and existing conditions for selling crude oil to government-run companies will be waived, according to a government statement, adding that exports will be prohibited. Reliance Industries’ share price tanked more than 7% Friday after the government levied an additional tax on crude oil.
  • FII (Foreign Institutional Investors) net sold ₹ 68,350 mn and DII (Domestic Institutional Investors) were net buyers this week. DIIs bought shares worth ₹ 59,250 mn.

Things to watch out for the next week

  • On Monday the labor markets will be in the spotlight next week, with the June nonfarm payrolls report due on Friday.
  • The 1QFY23 result season kicks off with IT major TCS reporting earnings on Friday.
  • The International PMI surveys, which track business sentiment in the United Kingdom and the eurozone, will be released on Tuesday, while the meeting minutes from the FOMC’s most recent policy meeting, held in mid-June, will be available on Wednesday.

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.”

 

Week in a Nutshell (20-24 June)

Technical talks

NIFTY opened the week on 20th June at 15,334 and closed just below 15,700 on 24th June. The index is trading near the lower Bollinger Band level of 15,370 which might act as a support, although a weak one as the markets have been falling for the past three weeks. On the upside, the 16,200 level might act as a resistance, since a gap was made last week. The RSI (14) at 40 has been consistently coming down.

Among the sectoral indices, AUTO (+6.9%), CONSUMER DURABLES (+4.6%), and FMCG (+4.2%) were the gainers during the week. METAL (-2.7%) was the only loser.

Weekly highlights

  • All the major US indices have risen from 5.4% to 7.5%, a recovery after two weeks of continuous selling.
  • The WTI Crude oil fell 1.7% and Brent Crude closed flat for the week after worries about the US economy going into a recession, which means lower oil demand.
  • The minutes of the RBI MPC meeting got released this week. The rate-setting committee has indicated of further rate hikes are on their way as inflation has been consistently staying above the upper tolerance band of 6%. The RBI has the mandate to control inflation and let it stay at 4% +/- 2%. Hiking or lowering interest rates is one of the prominent tools to control inflation.
  • Another update related to RBI is the fall in forex reserves that the RBI maintains. The latest data released by the RBI report shows that the foreign currency reserves have fallen by USD 10 bn in the last two weeks as the RBI has stepped up intervention in the foreign exchange market. The RBI has been selling dollars to curb excessive volatility in the exchange rate and prevent runaway depreciation of the Indian rupee. The forex reserves with the RBI now stand at USD 590bn. The rupee has been depreciating against the dollar and now trades below ₹78.2/USD.
  • The government, from July 1 will ban 22 single-use plastic products such as plastic spoons, forks, plates, etc. Within that also falls plastic straws that come with tetra pack juices, milkshakes, and buttermilk. Manufacturers of such products including Amul, Parle Agro, Dabur, etc are pleading with the government to postpone the ban on straws as an alternative which is paper straws which are largely imported and they cannot be made available in a short span.
  • After a scare of a few electric two-wheelers catching fire, this week in Mumbai, a TATA Nexon EV car caught fire while parked. Now even though many EV manufacturers are saying that a small percentage of EVs catching fire is normal and is a global phenomenon, it will still create a negative sentiment in the minds of the prospective customers of electric vehicles.
  • However, good news for internal combustion engine (ICE) vehicles that run on traditional fuels like petrol, diesel, and CNG. Many manufacturers are about to launch their newer models and variants as we approach the monsoon and subsequently the festival season. Multiple test vehicles, covered in camouflage have been located by auto enthusiasts. This has always been a strong indication that upcoming launches are expected very soon.
  • FII (Foreign Institutional Investors) net sold ₹ 1,15,116 mn and DII (Domestic Institutional Investors) were net buyers this week. DIIs bought shares worth ₹ 1,16,704 mn.

Things to watch out for the next week

  • At the beginning of the month, economic data watchers will look for GST collection data, and in addition to that, stock market watchers will look for monthly automobile sales volume data. Automobile, a sector that contributes 7% to the GDP and creates big employment opportunities, a consecutive and steady recovery is essential for the economy.
  • The G7 Summit will be held in Germany on Monday. The leaders will likely discuss rising worldwide inflation and the post-war scenario in Russia, Ukraine, and the European Union.
  • The US economy had contracted 1.5% in the January to March 2022 quarter. A consecutive decline in the quarter ending June will officially make the US economy to enter into a recession. Hence, the quarterly GDP numbers to be released on June 29 will be keenly watched.

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.”

 

Week in a Nutshell (13-17 June)

Technical talks

NIFTY opened the week on 13th June at 15,878 and closed down 4% on 17th June at 15,294. The index is trading below the lower Bollinger band and the next support is likely at 15,183. The recent high of 16,794 might act as a resistance. The RSI (14) of 36 indicates the index is nearing the oversold levels.

During the week, METAL (-9.1%), IT (-8.2%), and PSU Bank (-7.7%) led the sectoral losers. There were no sectoral gainers.

Weekly highlights

  • High inflation has investors worried in recent weeks about a toll on corporate profits and economic growth. On Monday, the S&P 500 confirmed it’s in a bear market at is now down more than 20 percent from its most recent record closing high.
  • After a selloff triggered by a series of interest rate hikes by the Federal Reserve and other major central banks, all three US indices ended in the red this week. NASDAQ and Dow Jones were down 4.8% each while S&P 500 was down 5.8%. The cosmetics company Revlon Inc surged ~80% on Friday after reports suggested Reliance Industries may be considering buying out the company.
  • The Federal Reserve raised interest rates by three-quarters of a percentage point, the most since 1994. Officials have indicated that aggressive rate hikes will continue, with severe measures being used to combat rising inflation.
  • Crude oil prices were impacted as investors worried about the global economic outlook and markets were impacted post interest rate hikes around the world. Brent Oil was down 6.9% during the week and ended at USD 113.6/barrel while Crude oil ended 8.4% lower at USD 110.4/barrel on Friday.
  • The Indian Index of Industrial Production (IIP) climbed from 2.2% in March to 7.1% in April. The April industrial growth rate of 7.1 percent is the highest in eight months, notwithstanding the benefit of a favorable base effect.
  • Wholesale price inflation soared to a record high in May due to rising food and fuel prices, posing a challenge to authorities dealing with high inflation. Wholesale prices climbed to 15.9 percent in May vs 15.1 percent in April and was, according to economists, India’s highest since September 1991.
  • Retail inflation for May was 7.04% from April’s near-eight-year high of 7.79 percent due to a favorable base effect. The fall in inflation in May is unlikely to do much to slow down the Reserve Bank of India’s (RBI) rate hike cycle.
  • Foreign institutional investors (FIIs) continued to be sellers, selling equities worth Rs 232,740 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 172,270 mn.

Things to watch out for next week

  • Major central banks followed the US Federal Reserve in raising interest rates. Rising prices and tightening monetary policies have rattled investors which dragged the equities world over.
  • S&P Global will release the flash purchasing managers indices (PMI) data for June for major economies later next week. In addition, inflation, and consumer and business climate gauges will also be released. This will provide insights into the current state of the global economy.
  • With quarterly earnings season out of the way, investors will focus on macroeconomic activities and action would be stock specific. Indian investors’ attention will be on the progress of the monsoon across the country.

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 (06-10 June)

Technical talks

NIFTY opened the week on 06th June at 16,531 and closed on 10th June at 16,202. During the week, NIFTY was down 2.3%. The index has breached the 50-week moving average on the weekly chart with RSI at 43. The immediate support for the index stands at 15,845 and resistance at 16,793.

Financial Services (-3.0%), IT (-2.6%), and Media (-2.4%) were the top losers, and PSU (+1.0), and Auto (+1.0%) were the only sectoral gainers during the week.

Weekly highlights

  • US inflation accelerated to a fresh 40-year high in May, a sign that price pressures are becoming entrenched in the economy. That will likely push the Federal Reserve to extend an aggressive series of interest-rate hikes. The consumer price index increased 8.6% YoY resulting in all 3 broad-based US Indices ending in the red by 3%.
  • Despite a dip on Thursday, benchmark crude oil rates were near their 13-week highs. Brent and West Texas Intermediate futures traded above $120 a barrel each. High crude prices hurt markets such as India, which meets much of its oil demand through imports. Brent closed at $121/barrel.
  • Official data released last month showed India’s official GDP growth reading hit a four-quarter low of 1 percent on a year-on-year basis in the January-March period. Economic growth for the full year ended March 2022 came in at 8.7 percent due to a low base of the previous year, though lower than the statistics office’s estimate of 8.9 percent.
  • RBI Governor Shaktikanta Das on Wednesday announced the unanimous decision of the Monetary Policy Committee (MPC) to hike the repo rate — the key interest rate at which the central bank lends money to banks — by 50 basis points to 4.9 percent. The RBI MPC also decided to remain focused on withdrawing its ‘accommodative’ stance to ensure inflation stays within target levels while supporting growth.
  • The RBI MPC raised its forecast for retail inflation — gauged by the Consumer Price Index — by 100 basis points to 6.7 percent. The RBI Governor acknowledged that inflation has accelerated to a faster-than-estimated pace in April and May. It is expected to be higher than 6 percent by December 2022, mainly due to elevated food prices.
  • American employers added 390,000 jobs last month, the government reported Friday, a sign of a slowdown in hiring but still a better-than-expected result amid a shortage of workers. The jobless rate held steady at 3.6 percent for the third consecutive month, just a tenth of a point above the pre-pandemic level in February 2020, the Labor Department said.
  • A report showing stronger hiring last month than expected is good news for the US Economy amid worries about a possible recession. But many investors saw it keeping the Federal Reserve on its path to hiking interest rates aggressively, thereby causing weakness in US Equities, The US Federal Reserve is on track for half-point interest rate increases in June, and July, and last week’s jobs report boosted expectations of continued tightening by the US central bank.
  • Shanghai and Beijing are placed on new COVID-19 alerts. The cities imposed further lockdown restrictions on Thursday and announced a fresh round of mass testing for millions of their residents. India too reported a total of 7,584 new coronavirus infections on Friday, prompting health authorities to a high alert on a possible resurgence of a 4th Wave
  • Foreign institutional investors (FIIs) continued to be sellers, selling equities worth Rs 126,629 Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 96,100 mn.

Things to watch out for next week

  • Volatility is expected to remain high as rising global inflation forces investors to reconsider their expectations for strong earnings growth. Fears of a further rise in Interest rates by Central Banks across the world, geopolitical concerns, and oil price volatility will keep investors on edge.
  • With the inflation data released, investors are looking forward to Fed’s intended 50 bps interest rate hike in the next meeting. The United States housing market updates for May are expected next week. Consumer Price Index (CPI) inflation data will be released for key economies, indicating whether global inflation rates have peaked.
  • With Q4 earnings out of the way, stock-specific actions will be limited as indices would track macro developments and geopolitical 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 (May 30 to June 3)

Technical talks

NIFTY opened the week on 30th May at 16,527. After trading in a range of 350+ points, it finally ended with a gain of 1.4% and closed at 16,584. It closed just below the 50-week exponential moving average. With the weekly RSI at 46, the next support and resistance levels for the index would be 16,400 and 16,970 respectively.

Among the sectoral indices, REALTY (+4.9%), IT (+4.4%) and OIL & GAS (+3.9%) were the top gainers whereas, HEALTHCARE (-2.5%), PHARMA (-2%) and BANK (-1%) lost the most.

Weekly highlights

  • The US market had a 4 day trading week, as Monday was a holiday on account of The Memorial day. The major US indices had a sideways movement with a minor loss for the week.
  • The WTI Crude traded in a strict range of USD 111-120 per barrel. Same was the case with Brent which ended at USD 121 per barrel on Friday.
  • We know, like us, you are also suffering from frequent power cuts. The states and the centre continue to fight over whether to import the 5 times costlier coal in addition to using our domestic capacity. But why does India, the second-biggest coal producer import coal? Here’s a quick trivia. The calorific value, i.e., the heat produced by burning the Indian coal is only around 60% of the coal imported from Australia or America. Burning Indian coal also results in more pollution. And it’s just the way it is. Nature didn’t favor us with good coal!
  • The National Statistics Office on Tuesday released the Jan-March 2022 GDP figure. The 4.1% GDP growth couldn’t meet the NSO’s and RBI’s estimates. It also slowed sequentially for the third straight quarter. 20.9%, 8.5%, 5.4%, and 4.1% was the trajectory of the quarterly GDP growth with full-year FY22 growing at 8.7%.
  • The start of each month brings out two crucial data points; Monthly GST collection and Automobile sales numbers. The GST collection of ₹1.41 tn in May is 16% lower than the record high collection in April which was ₹1.68 tn. The collection in May pertains to the sales occurred in April. And yes, it is an anomaly, May collections are always lower than that of April.
  • Coming to the number of vehicles auto manufacturers sell to the auto dealers. Broadly speaking, the percentage growth was flattish to negative compared to the previous month across all segments as companies continue to face supply chain issues, a surge in raw material prices, and semiconductor shortages.
  • Amazon along with a group of investors are in talks with Vodafone Idea to invest up to ₹ 200 bn. Only time will tell if Amazon through Voda-Idea succeeds at giving a tough time to Jio in this concentrated three-player telecom market.
  • The foreign institutional investors (FII) net sold equities worth ₹ 66,539mn and domestic institutional investors (DII) were net buyers in equities with buying shares worth ₹ 68,448mn.

Things to watch out for next week

  • The RBI’s monetary policy committee commences its bi-monthly meeting on Monday and will conclude it on Tuesday. The MPC decides whether to increase interest rates or not. This time, the market consensus suggests that it is a question of how much will they be raised and not about raising or not. The committee’s stance and future outlook will also be a key factor to watch out for.
  • World over, the markets are convinced that Central banks have no other option than to raise interest rates to curb the surging inflation.
  • With the Mar-22 earnings season over, the focus will shift to how monsoon season plays out in India. A normal monsoon would boost demand for consumer goods, and automobiles (cars and farm equipment) and aid recovery in rural India.

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 (23rd May – 27th May)

Technical talks

NIFTY opened the week on 23rd May at 16,291 in the red and ended in the green at 16,352 on 27th May, after high volatility during the week. The index gained 0.4% during the week. The next support and resistance levels for the index would be 16,253 and 16,414 respectively. It breached its 20 DMA levels and closed above that. The RSI (14) of 48 indicates the index is moving towards the overbought zone.

Among the sectoral indices, FINANCIAL SERVICES (+4.3%), PRIVATE BANK (+4%), and BANK (+3.9%) were the gainers during the week while METAL (-8.7%), OIL AND GAS (-3.7%) and REALTY (-3.3%) led the losers.

Weekly highlights

  • US major indices closed the week in green after the 7 weeks of consecutive losses, the S&P 500, Nasdaq, and Dow Jones closed the week with gains of 6%, 7%, and 5% respectively. The rally was led by factors such as minutes from the federal reserve’s FOMC May meeting, a fall in weekly jobless claims, and inflation slowed slightly in April.
  • Oil prices settled higher on Friday supported by the demand will continue to be elevated, the Brent crude and WTI crude closed with a gain of 1% and 0.9% respectively.
  • The government of India has waived the customs duty on the import of some raw materials used by the steel industry and increased the tax on the exports of iron ore and concentrates to 50% from 30% earlier. This measure was taken to cool off the elevated steel prices in India. These duty changes in raw materials and intermediaries will lead to more availability of steel in the domestic market and reduce the elevated steel prices which give some relief to industries such as auto, construction, etc. who already struggling with supply challenges and input cost pressures.
  • On 25th May 2022, The power ministry said that they are working on a scheme to liquidate the past dues of power distribution companies (discoms). This scheme will provide relief to the entire chain in the power sector which is currently struggling under the pressure of non-payments. Delay of payments by discoms to power generating companies affects the cash flows and disrupts the provisions for the input supply such as coal. But this scheme will provide adequate liquidity and ensures that the discoms will pay their dues regularly.
  • Amidst retail inflation surging the government of India announced the reduction in excise duty on petrol and diesel by Rs 8 and Rs 6 per liter respectively, and effectively this will reduce the petrol and diesel price by Rs 9.5 and Rs 7 per liter respectively. Along with the central government, some state governments have also slashed the value-added tax (VAT) on petrol and diesel. This reduction in excise duty on fuel will help the consumers and corporates while battling inflation.
  • Department of promotion of industry and internal trade (DPIIT) said the total FDI equity inflows were at USD 58.77bn in FY22 vs USD 59.63bn in FY21 in India, a contraction of 1% in FY22. Although the total FDI into India stood at USD 83.57bn in FY22 and rose by 2%, Singapore, the US, and Mauritius remain the top 3 contributors to FDI while IT, Auto, construction, and pharma sectors attracted the highest inflows.
  • On 26th May 2022 ONGC said that they will invest Rs 310bn over the next 3 years to explore the basin for oil reserves, this will augment the production of the nation in its attempt to be self-reliant in the energy sector. In this program ONGC is trying to explore ~1700mn tonnes of oil and oil equivalent gas.
  • The foreign institutional investors (FII) continued to be sellers and sold equities worth Rs 96,890mn while Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 112,580mn during the week.

Things to watch out for next week

  • The report on India’s GDP growth, which is due on Tuesday, will be closely watched by investors. Aṣ India’s economic recovery from the Covid-19 pandemic is expected to have stumbled again in the Jan-Mar period.
  • On Monday the US indices are closed on account of the Memorial Day but in the truncated week investors will closely watch the May employment report, monthly vehicle sales, and Federal Reserve’s beige book.
  • The 4QFY22 earnings season is coming to an end. The Automobile companies are expected to release the monthly volume data for May, which will be closely watched. The volatility will likely continue next week amidst results, institutional activities, India’s GDP data, and global cues.

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 (16th May- 20th May)

Technical talks

NIFTY opened the week on 16th May at 15,845 and closed on 20th May at 16,266. It made a gain of 2.7% during the week. The index is trading below the 20DMA level of 16,514 which might act as a resistance. On the downside, the 10 DMA level of 16,072 might act as a support. The RSI (44), and MACD turning upward suggests a further possible upside.

Among the sectoral indices, AUTO (+4.8%), FMCG (+4.5%), and REALTY (+4.3%) led the gainers, whereas IT (-2.8%) was the only loser during the week.

Weekly highlights

  • The US indices closed the week in the red as investors worried that inflation and rising interest rates may adversely affect the overall demand and performance of businesses. Broad-based selling led to S&P 500 closing down 3%, Nasdaq 100 by 4.5%, and Dow Jones by 3%.
  • International Holding Company PJSC (IHC) announced the completion of Rs 154bn investment in Adani Group’s companies namely Adani Green Energy, Adani Transmission, and Adani Enterprises. IHC’s investment will support and accelerate Adani Group’s growth plan to supply the country with 45 gigawatts (9% of India’s non-fossil energy) by 2030.
  • The Adani Group has entered into agreements to acquire Swiss cement major Holcim Ltd.’s stake in Ambuja Cements and ACC Ltd as ~ USD 10.5 bn. After this deal, the Adani group will become the second-largest cement maker in the country with a capacity of about 70 Metric tons Per Annum.
  • Maruti Suzuki India has planned to invest Rs 180bn in its new manufacturing facility in Haryana to roll out 1 mn units per annum in 8 years. The first set of vehicles is expected to roll out of the facility in 2025.
  • Indonesia, the world’s largest supplier of palm oil said that it will lift a ban on exports from Monday (23rd May). Indonesian President Joko Widodo said that the decision will take place despite bulk cooking oil being at higher prices than the target, as the government considers the welfare of 17 million workers in the palm oil industry.
  • The Union Cabinet on Wednesday approved the National Biofuel Policy-2018 with several amendments, the major one on advancing the blending target of 20% blending of ethanol in petrol to 2025-26 from 2030 earlier. The policy is intended to help in meeting the target of reducing import dependence on fossil fuels.
  • India’s power ministry said that it would cut domestic fuel supply to state government-run utilities by 5% if they do not import coal for blending by June 15, as officials struggle to address rising power demand. A heatwave pushed power use to a record high and forced India to reverse a policy of slashing coal imports.
  • Data released on Tuesday showed that India’s wholesale price index (WPI) based inflation rose to 15% in April 2022, a double-digit figure for the 13th consecutive month. It has spiked further due to the Russia-Ukraine Conflict, and headwinds arising out of disruption in the global supply chain. Fuel Inflation rose to ~39%, and food inflation was ~8%.
  • FII (Foreign Institutional Investors) continued to be net sellers, selling of shares worth Rs 114,013 mn and DII (Domestic Institutional Investors) continued to be net buyers, buying of shares worth Rs 94,729 mn this week.

Things to watch out for next week

  • The next week’s focus will be on the world economic forum (WEF) to be held in Davos from 22nd May to 26th The key topics that would be addressed during the sessions at WEF include ease of doing business reforms, energy transition, digital economy, startups, emphasis on innovation, and research in the healthcare ecosystem.
  • We expect the markets to remain volatile as investors show the sentiments of fear guided by news related to the Ukraine-Russia war, supply-related constraints, 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.”

Week in a nutshell (9th May to 13th May)

Technical talks

NIFTY opened the week on 9th May at 16,227 and closed on 13th May at 15,782. During the week, NIFTY was down 3.8%. The index has breached the 50-week moving average on the weekly chart with RSI at 37. The immediate support for the index stands at 15,515 and resistance at 16,230.

PSU Bank (-8.8%), Realty (-5.8%), and Infrastructure (-5.3%) were the top losers and there were no sectoral gainers during the week.

Weekly highlights

  • The Life Insurance Corporation of India (LIC) public issue got bids for Rs 439,335 mn on the final day of bidding on May 9, more than double the issue size. According to subscription data available on markets, the offer was subscribed 2.95 times, with investors bidding for 478.2 mn equity shares versus an IPO size of 162 mn shares. Policyholder participation remained strong, with bids totalling 6.12 times the authorised quota and the value of shares subscribed was Rs 120,340 mn. Retail investors put in Rs 124,560 mn in the IPO, the most among investors from May 4 to 9. Employees’ reserved portion was subscribed 4.4 times.
  • Oil prices surged more than 5% on 11th May as Russian gas deliveries to Europe decreased and Russia sanctioned certain European gas businesses, adding to global energy market turmoil. On 13th May, Crude oil closed 4% higher at usd 110 and Brent crude oil closed 3.8% higher at usd 112.
  • According to the official data released on 11th May by the Labor Department of the US, the annual growth in the consumer price index (CPI) peaked in March at 8.5% but decreased in April to 8.3% due to lower energy expenses. After a 1.2% gain in March, the CPI rose only 0.3% in April, but excluding volatile food and energy commodities, the index increased 0.6%, double the rate in March, according to the study.
  • According to the data released on May 12, inflation for April in India was 7.77%, higher than the 7.5% consensus forecast driven by fuel items, with the CPI index for the ‘fuel and light’ group climbing 3.15% MoM in April. Higher-than-expected retail inflation in April has raised expectations of another repo rate hike at the Reserve Bank of India’s (RBI) Monetary Policy Committee meeting on June 6-8.
  • According to data released on May 12 by the Ministry of Statistics and Programme Implementation, India’s industrial growth, as per the Index of Industrial Production (IIP) increased to 1.9% in March from 1.5% in February.
  • America’s employers’ added 428,000 jobs in April, extending a streak of solid hiring that has defied punishing inflation, chronic supply shortages, the Russian war against Ukraine, and much higher borrowing costs. The unemployment rate was at 3.6%, just above the lowest level in a half-century. The economy’s hiring has been remarkably consistent in the face of the worst inflation in four decades. Employers have added at least 400,000 jobs for 12 straight months.
  • Foreign institutional investors (FIIs) continued to be sellers, selling equities worth Rs 163,583 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 182,020 mn.

Things to watch out for next week

  • Volatility is expected to remain high as rising global inflation forces investors to reconsider their expectations for strong earnings growth. Fears of a further rise in the US 10-year bond yield, geopolitical concerns, and oil price volatility will keep investors on edge.
  • With the inflation data released, investors are looking forward to Fed’s intended 50 bps interest rate hike in the next meeting. The United States housing market updates for April are expected on the 18th of May. Consumer Price Index (CPI) inflation for the Eurozone, the United Kingdom, and Canada will be released this week, indicating whether global inflation rates have peaked. We can also anticipate the release of the United States Census Bureau’s report on retail sales for April, as well as earnings from some major retailers, such as Walmart and Target.

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 (May 2nd to May 6th)

                                                                                       Technical talks

NIFTY opened the week on 2nd May at 16,924 and closed on 6th May at 16,411. During the week, NIFTY was down 1.63%. The index has breached the 50-week moving average on the weekly chart with RSI at 42. Immediate support for the index stands at 16,269 and resistance at 16,763.

Nifty Realty (-8.0%), Nifty Media (-6.0%), and Auto (-5.0%) were the top losers and there were no sectoral gainers during the week.

                                                                                     Weekly highlights

  • Wall Street had a very volatile week. At the start of the week, the stocks were trading higher on the back of news that the European Union is working on new sanctions against Russia for waging war on Ukraine that will target Moscow’s oil industry.
  • The rally continued after the Federal Reserve delivered a widely expected interest-rate hike of half a percentage point with another half-percentage-point rate hike expected at the upcoming policy meetings in June and July.
  • Bureau of Labor Statistics released data revealing a tight labor market that has emboldened millions of Americans to seek better-paying jobs, while also contributing to the biggest inflation surge in four decades.
  • Later in the week, US stocks ended sharply lower amid a broad sell-off, as investor sentiment cratered in the face of concerns that the Federal Reserve’s interest rate hike would not be enough to tame surging inflation. All three main Wall Street benchmarks erased gains made in the earlier rally.
  • The downward journey continued as stronger-than-expected jobs data amplified investor concerns over bigger interest rate hikes by the U.S. Federal Reserve to tame surging prices.
  • Indian markets also followed the lead and were no less volatile. Entirely unexpected – the Reserve Bank of India (RBI) on May 4 increased the repo rate by 40 basis points to 4.4 percent for the first time in almost two years since the start of the pandemic in 2020. This comes when inflation has been rising to an 18-month high amidst a rebound in domestic economic activity.
  • RBI Governor stated that India’s foreign exchange reserves are “sizeable” and the outlook for the country’s overall external sector is bright. Potential market opportunities have opened up due to geopolitical conditions and the recent trade agreements.
  • LIC launched its IPO on 4th May 2022. Through this IPO, the government of India will be liquidating its 3.5 percent stake in the corporation. The offer has garnered bids of 223.4 mn equity shares against the offered size of 162 mn shares, subscribing 1.38 times on Friday.
  • International Monetary Fund released data saying India’s GDP to hit USD 5 tn in FY29E and the Rupee at 94 a Dollar.
  • Oil prices dipped as worries about an economic downturn that could dampen demand for crude vied with concerns over new sanctions from the European Union against Russia, including an embargo on crude oil.
  • Larsen and Toubro Infotech (LTI) board approved amalgamation with Mindtree, creating a USD 3.5 bn IT service provider named LTIMindtree.
  • Axis AMC suspended two fund managers pending investigation of potential irregularities after conducting a suo moto investigation over the last two months and used reputed external advisors to aid the investigation.
  • Foreign institutional investors (FIIs) continued to be sellers, selling equities worth Rs 1,27,335 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 85,333 mn.

                                                                       Things to watch out for next week

  • The 4QFY22 earnings season so far has not succeeded to uplift the market sentiments. The commentary so far from companies on rising pressure on their margins and muted demand environment has tempered the enthusiasm of investors.
  • We expect volatility to remain high in the coming days as surging global inflation is forcing investors to reconsider their assumptions of strong earnings growth. Fear of further up move in the US 10-year bond yield, geopolitical concerns, fluctuations in oil prices, and earnings season will keep the investors on their toes.

 

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 (25th – 29th April)

Technical talks

NIFTY opened the week at 17,006 on 25th April. The index closed 0.8% lower at 17,102 on 29th April. RSI (14) of 49 and MACD are trending downwards. On the upside, the 20DMA weekly of 17,273 could act as resistance while 16,379 could act as support.

FMCG (+1.3%), Auto (+0.5%), and Private Bank (0.2%) were the sectoral gainers in the week. Media (-6%), PSE (-4.4%), and IT (-2.5%) led the laggards.

Weekly highlights

  • The US indices closed the week lower as the market priced in weak earnings from tech giants, inflation worries, and aggressive monetary policy tightening by the Federal Reserve. S&P 500 was down 3.6%, Nasdaq 100 4.5%, and Dow Jones was down 2.8%.
  • With the Q4 earnings season going in full swing, Indian indices are driven by rising input prices, margin pressures, and weak future expectations by companies.
  • Life Insurance Corporation of India, India’s largest life insurer, is set to launch its IPO on May 4. The IPO, according to its red herring prospectus, will comprise an offer for sale of 220 mn equity shares at Rs 902-949 apiece. How the IPO performs amidst uncertainties caused due to geopolitical tensions and foreign sell-offs remains to be seen.
  • The RBI is expected to raise policy rates among major central banks in Asia to tackle the surged inflation. Traders have been pricing a potential 25bps hike in repo rates in June. This has resulted in increased volatility in recent trading sessions.
  • For April 2021-February 2022, the Index of Industrial Production in India averaged 129.97 against 130.1 in the corresponding pre-pandemic period of FY20. Shortage of key raw materials, rising pricing pressures, and global geopolitical risks are some of the challenges faced by the manufacturing sector. Sectors such as chemicals, machinery, and electrical equipment logged an annual contraction in industrial output in February.
  • In light of the recent battery-related fires inside electric two-wheelers, the Union government has asked all-electric two-wheeler brands to refrain from launching new products in the market. The makers are free to sell current models in the market. This is expected to give the government more time to set up an authority for taking a closer look at the cause behind these fires.
  • Traders in the US are pricing a 50 bps interest rate hike when the Fed meets next on May 3rd. Traders are expecting a potential 75bps hike in June, following the meeting next week.
  • A mixed set of earnings from US tech giants has left investors feeling anxious. Investors expected healthy earnings to hold the markets up after a vicious sell-off caused due to an increasingly hawkish Fed and geopolitical tensions stemming from the Russia-Ukraine crisis.
  • FII (Foreign Institutional Investors) continued to be sellers this week and sold shares worth Rs 1,14,450 mn while DII (Domestic Institutional Investors) continued to be buyers and bought shares worth Rs 97,000 mn.

Things to watch out for next week

  • Continuing with the Q4 results season, management commentary about near-term economic recovery, rising cost inflation, and margin pressures are expected to drive the markets.
  • Rising Covid-19 cases in Shanghai, China, and subsequent lockdowns will continue to impact oil prices and equity markets globally. The supply chain disruption for key inputs coming from China is expected to continue to hurt investor sentiments.

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.”