#WeekInANutshell

This Week in a nutshell (July 19th to July 23rd)

Technical Talks

NIFTY opened the week on 19th July at 15,754 and closed on 23rd July at 15,851, it made a small weekly gain of 0.6%. The index is trading below its upper Bollinger band level of 15,952, which might act as a resistance. On the downside, 20 DMA of 15,788 might act as a support. The index might trade in the range of the above-mentioned levels before making a strong move on either side.

Weekly highlights

  • After two sessions of losses and Wednesday being a holiday, the Market recovered for the last 2 days of the week as Nifty ended below 15,900, led by gains in most of the sectoral indices including Realty, Bank, Pvt bank, etc.
  • Among the sectoral indices, NIFTY Private Bank was the top loser (-2.26%) this week followed by Nifty Auto (-2.18%) and NIFTY IT was the top gainer (+1.68%) as most of the IT companies came up with strong numbers and positive outlook. 
  • The Nifty Private Banks sector was impacted by the result of HDFC Bank where the earnings growth in the June quarter was the lowest seen in many years. The disruption caused by the second wave of COVID-19 impacted profitability as the bank shored up provisions. HDFC Bank was down by 5.2% this week. On monthly basis, the defensive sectors are again at the forefront. Pharma and IT are up by 4.5% and 2.9% respectively.
  • Zomato made a stellar debut on bourses on Friday, listing at Rs 116 apiece on the NSE, garnering a 53 percent premium over its issue price of Rs 76 per share. The valuation of the company soared to Rs 910 bn.
  • India continued to attract strong foreign direct investment inflows in the first two months of FY22.  Gross FDI inflows more than doubled to $18.3 billion in April-May this year compared to $8.5 billion in the same period a year ago, according to RBI data. Nearly a third of the inflows are in the form of acquisition of shares rather than investing in new projects.
  • Oil prices trimmed gains on Friday but were poised to end the week largely steady after rebounding from a sharp drop, underpinned by expectations supply will remain tight as demand recovers. Brent crude futures fell 7 cents, or 0.1%, to $73.72 a barrel at 0147 GMT, after jumping 2.2% on Thursday. For the week, Brent was headed for a 0.1% gain.
  • Foreign Institutional Investors (FIIs) continued to be net sellers in Indian equity of Rs 54,460 mn, and the quantum of outflows increased from the previous week of Rs 15,350 mn. Conversely, Domestic Institutional Investors (DIIs) continued to be net buyers with an increased net outflow of Rs 50,520 mn vs the previous week’s Rs 12,000 mn. 

                                                                       Things to watch out

  • With results season picking up, quarterly numbers are to be watched out.
  • With Covid third wave concerns hovering around, government restrictions & policies regarding full or partial lockdowns are to be watched out for.

This Week in a nutshell (July 12th to July 16th)

Technical talks

NIFTY opened the week on 12th July at 15,767 and closed on 16th July at 15,923. The index made a gain of 0.9% this week. On the downside, 10DMA of 15,816 might act as a support. Flat RSI (62) suggests a consolidation before making a strong move on either side.

Weekly highlights

  • The market started the week on a positive note but erased intraday gains as key inflation data was released.
  • Consumer Price Index-based inflation (CPI) for the month of June rose 6.3 percent, as food prices hardened further, and transportation costs rose due to higher petrol and diesel prices.
  • Food inflation (CFPI) came in at ~5.2 percent in June, compared with ~5.0 percent in May, as food prices continued to remain inflated, official data by the National Statistical Office showed on July 12.
  • Most of the IT companies reported this week with strong numbers and also increased the revenue guidance for FY22 leading Nifty to hit fresh highs. NIFTY IT was up 2.6% this week followed by NIFTY PHARMA (+1.9%) and NIFTY PRIVATE BANK (+1.8%).
  • Positive global cues, rally in IT stocks, comments from the US Federal Reserve and rally in banks pushed the benchmarks to record high. However, profit booking at all-time high levels pushed benchmark indices lower as they snapped the three-day winning run-on Friday. IT stocks saw intense selling while banks also contributed to the fall.
  • Nasdaq and the S&P 500 were hitting record highs at the beginning of the week as investors awaited the start of the second-quarter earnings season and a batch of economic data to gauge the next leg of the equity market. But the rally was short-lived as the biggest hike in U.S. inflation in 13 years rattled investors who fear rising interest rates could end a stock market rally that has doubled prices from 2020 lows.
  • Federal Reserve Chair Jerome Powell commented that US monetary policy will offer powerful support to the economy until the recovery is complete and the pace of price increases will likely remain elevated in coming months before moderating. The language indicated that he saw no need to rush the shift towards post-pandemic policy. Long-term inflation expectations, remained consistent with the Fed’s 2% inflation target.
  • Post comment the US indices fell as a rally in growth stocks ran out of steam even though US unemployment claims fell to 3,60,000 which is the its lowest level since the pandemic struck last year and strengthened views about a recovery in the labor market.
  • Late Thursday, Treasury Secretary Janet Yellen warned that prices could continue to rise for several more months, expects inflation to reach normal levels in medium term and to keep a careful eye on it.
  • The stock market was falling Friday following Yellen’s comments on inflation and snapped a three-week winning streak. All three major indexes notched weekly losses. The S&P 500 and Dow shed 1% and 0.5%, respectively. The Nasdaq fell 1.9%.
  • The foreign institutional investors (FII) sold Rs 15,350 mn worth of Indian equity shares in the week. Domestic institutional investors (DII) undertook Rs 21,000 mn of net buying during this week.

Things to watch out for next week

  • Next week, investors’ focus will largely be dominated by the quarterly results. As in half of the duration of the June quarter, the economy was in a lockdown, investors will look beyond the earnings print or just the quantitative number and focus on the qualitative commentary provided by management.

 

This week in a nutshell (5th – 9th July)

Technical talks

NIFTY opened the week on 5th July at 15,793 and closed on 9th July at 15,690. The index made a loss of 0.6% this week. On the upside, 20DMA of 15766 might act as a resistance and on the downside, 50DMA of 15,416 might act as a support. RSI (51) trending downwards suggests a further downside hereon.

Weekly highlights

  • The government’s GST collection for the month of June was Rs 928bn, below the Rs 1000bn for the first time in eight months as the Covid-19 second wave stalled the economic activities. With most of the country under partial/full lockdowns in May, a fewer number of e-way bills were generated. The GST data for June pertains to business transactions made in May. With the easing of restrictions, there could be an improvement in the GST collections for the month of July.
  • Post the Union Cabinet reshuffle on Wednesday, the new Health Minister, Mansukh Mandaviya announced a ₹ 231bn financial package for improving the health infrastructure in the country. Under the new package, the Centre would provide ₹ 150bn and the states ₹ 80bn. The plan would be implemented jointly by them to improve medical infrastructure at primary and district health centers. The plan aims to accelerate health system preparedness for immediate responsiveness for early prevention, detection, and management of Covid-19 with a focus on infrastructure development.
  • The Organization of the Petroleum Exporting Countries (OPEC) producers canceled a meeting when major players were unable to come to an agreement to increase supply. The producers abandoned talks after negotiations failed to close the division between Saudi Arabia, and United Arab Emirates. This news pushed Brent Oil and West Texas Intermediate oil prices to levels not seen since 2018 and 2014 respectively. After a volatile week, Brent Oil futures settled at US$ 75.6 per barrel and WTI futures settled at US$ 74.6 per barrel (As on 10-07-21).
  • The monthly life insurance premium data was released by the IRDAI. There was a pickup in the business acquisition in Jun-21 with the easing of lockdowns. The new business premium (NBP) which indicates premium acquired from new policies in a particular year rose ~4% YoY. Private insurers have led the growth in NBP, reporting ~34% growth YoY. The insurance companies have adapted to the changing needs of customers and improved their digital infrastructure which is a positive.
  • Though the foreign institutional investors’ (FII) selling continued this week, the quantum was much lower at Rs 20,277mn vs Rs 54,168mn last week. Domestic institutional investors (DII) buying reduced to Rs 896mn from the Rs 64,174 mn in the previous week.

Things to watch out for next week

  • The 1QFY22 result season has already started with TCS being the first company that reported earnings this week. The result season continues next week with Mindtree, Infosys, and Wipro set to announce their earnings.

This week in a nutshell (June 28th to July 2nd)

Technical Talks

NIFTY opened the week on 28th June at 15,915 and closed on 2nd July at 15,725. It made a weekly loss of 1%. The 20DMA of 15,752 might as a resistance to the index and the 50DMA of 15,301 might act as a support. This suggests a net downside of 2.5% from hereon.

Weekly highlights

  • On 28th June 21, India’s finance minister Ms. Nirmala Sitharam addressed a press conference announcing economic relief measures. Rs 11.1 lakh mn of loan guarantee scheme was announced for Covid affected sectors. Few measures were also announced with a view to reviewing the tourism sector.
  • The GOI removed import restrictions on refined palm oil till December 21. India is the largest importer of vegetable oils with nearly 15mn tonne annually. The palm oil comprises 9mn tonnes out of the total 15mn tonne. The domestic edible oil prices have doubled in FY21. We believe this move might lead to better availability of the commodity in the domestic market which will further lead to lower prices.
  • The seasonally-adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 48.1 in June 21 from 50.8 in May. The index fell below the critical 50.0 mark for the first time since July 20. A level above 50 denotes expansion while a score below 50 denotes contraction. The manufacturing sector activities contracted as a rise in coronavirus cases led to strict containment measures which adversely impacted demand.
  •   The Indian Meteorological Department (IMD) forecasted a normal monsoon rainfall over the country as a whole in July 21. However, prevailing conditions suggest that no favorable conditions may develop for further advance of southwest monsoon in Rajasthan, Western UP, Haryana, Chandigarh, Delhi, and Punjab. The availability of good monsoon leads to better agricultural output, which in turn further leads to a boost in the agriculture sector.
  •  The foreign institutional investors (FII) sold Rs 54,168 mn worth of Indian equity shares last week. Domestic institutional investors (DII) undertook Rs 64,174mn of net buying during this week.

Things to watch out for this week

  • The 1QFY22 result season will start next week, with TCS reporting results on July 8, 2021.
  • Auto OEM’s announced June monthly volume data, with a rebound over the previous month’s volume across the board. Further easing of state specific restrictions might drive the share price of auto OEM’s.

This week in a nutshell (June 21st to June 25th)

Technical talks

NIFTY opened the week on 21st June at 15,526 and closed on 25th June at 15,860. The index made a gain of 2% this week. The index has taken support of its 10DMA of 15,768 which might act as a support. RSI (65) and MACD trending upwards suggests an up move from hereon.

Weekly highlights

  • The state of Gujarat has announced a new Electric Vehicle Policy 2021, which will provide a subsidy worth Rs 8,700mn for electric vehicles and for setting up charging infrastructure in the State. EV buyers will get a subsidy up to Rs 20,000 for electric two-wheelers, up to Rs 50,000 for electric three-wheelers and up to Rs 150,000 for 4- wheelers.
  • NBFCs are facing a sudden increase in loan recast, about a tenth of their loan book could be recast due to the pandemic stress. Many NBFCs are seeing recast in the June quarter, which will be implemented in the next few months. The recasts are also to be seen across the June and September quarters. (Source: The Economic Times)
  • On 23 June, banks recovered Rs 58 Bn by selling Vijay Mallya’s shares in United Breweries to Heineken international, which was a 15% stake in the company. So far, banks have recovered Rs 71.8 bn through the share sales, which is a little over 70 percent of the amount that Vijay Mallya owes to the lenders.
  • Reliance Industries Limited (RIL) in its AGM, has announced a Rs 750 Bn capital investment plan towards a clean energy push. RIL’s deal with Aramco is expected to conclude this year, where the latter will buy a 20% stake in RIL’s oil-to-chemical (O2C) unit. The Retail business is expected to create 1 Mn new jobs and add 10 Mn new vendors in next 3 years to the business.
  • FII (Foreign Institutional Investors) selling and DII (Domestic Institutional Investors) buying trend continued this week as well. There was a net outflow of Rs 44571mn from the FII kitty while DII invested Rs 52833 mn.

 

Things to watch out for next week

  • As the country gradually recovers from the 2nd wave of covid 19 supplemented by a strong vaccine drive, the stock market will be driven by these and global factors.

This Week in a nutshell (June 14th to June 19th)

This Week in a nutshell (June 14th to June 19th)

Technical talks

NIFTY opened the week on 14th June at 15,812 and closed 1% lower on 18th June at 15,683. The index came off from it’s all-time high levels as indicated by last week’s RSI and MACD trends. The index has broken past 10DMA of 15,749 but seems to have found support at 20DMA of 15,603. These two levels on either side will be crucial indicators to understand the index movement hereon. 

Weekly highlights

  • In response to the improving economic indicators and rising inflation, the US Federal Reserve indicated that fed interest rate hikes could start in 2023. The earlier indication was for the interest rates to remain near zero throughout 2023 and only start increasing in 2024. Rising interest rates would mean funds flowing away from equities and into the debt market as well as out of emerging markets and into the US. This development led to some consolidation in broader equity indices in the US as well as India. 
  • In it’s monthly bulletin, RBI said that the impact of the covid-19 second wave led lockdowns has impacted the FY22E output by Rs 2 lakh crore. The report also said that unlike the first wave, the second wave has impacted rural India and in turn, the rural demand scenario.
  • Shares of Adani group companies tumbled in response to a report stating that National Securities Depository Ltd. (NSDL) had frozen accounts of 3 foreign funds who are among top investors of Adani group companies. Despite clarifications from the group, the stocks continued to decline for most of the week- some declining as much as 18%. 
  • Foreign Institutional Investors (FII) continued to be net buyers of Indian equities of Rs 10,596  mn. Domestic Institutional Investors (DII) continued their selling spree, with a net outflow of Rs 4,878 mn.

Things to watch out for next week

  • As the result season is now well behind us, the stock markets will be driven by macro developments. The covid-19 situation as well as vaccination drive will continue to be important metrics to be tracked. 

 

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 (June 7th to June 11th)

Technical talks

NIFTY opened the week on 7th June at 15,725 and closed on 11th June at 15,799. The index closed this week on a flat note. The index is trading at its all-time high levels. Indicators like RSI (14) 70 and downward turning MACD suggest a downward correction is likely. The index may take support of its 10DMA of 15,676 before making a strong move on either side.

Weekly highlights

  • The week opened on a positive note as declining COVID-19 cases and positive global stocks boosted sentiment. Later the market traded lower as profit booking was witnessed in major financial stocks. The week ended on a positive note as NIFTY registered their longest stretch of weekly gains since January as new coronavirus cases slow.
  • The latest World Bank report on global economic recovery post the COVID-19 pandemic predicted India’s GDP growth at 8.3 percent for the FY22. The growth projection was slashed from 10.1 percent predicted in April due to the second wave of the COVID-19 in the country.
  • The US S&P 500 was weak, with investors standing by for news of a global minimum corporate tax rate, lingering inflation fears, and a lack of market-moving economic news. It continued to be weak as US CPI release was awaited.
  • China’s PPI (Producer Price Index) came out. It jumped 9.0% from a year ago in May, accelerating from April’s 6.8% increase according to the National Bureau of Statistics. The result topped the 8.6% increase expected by economists polled by The Wall Street Journal, and marked the fastest YoY rise since Sep-08, when producer prices rose 9.1%. The statistics bureau said that soaring crude-oil, iron-ore and metals prices boosted factory-gate prices last month, and drove China’s imports to the fastest increase in over a decade.
  • The outlook for Indian economic activity is brightening as pandemic restrictions ease and vaccinations increase. Government and central bank stimulus will continue to help. The central bank now holds more than half of the 10-year bond because of its purchases of government debt.
  • Foreign Institutional Investors (FII) continued to be net buyers of Indian equities of Rs 17,410 mn. Domestic Institutional Investors (DII) continued their selling spree, with a net outflow of Rs 8,240 mn.

Things to watch out for next week

  • Next week, investors’ focus will largely be dominated by economic data as the country reports official data on retail and wholesale inflation. A persistent higher print may put more pressure on RBI’s Monetary Policy Committee to start thinking about the policy normalisation.
  • On the global front, investors will keenly look for data on industrial production and retail sales from US and China on June 15 and June 16, respectively, which may set the tone for world equities for the 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 (31st May – 4th June)

Technical talks

NIFTY opened the week on 31st May at 15,438 and closed on 4th June at 15,670. It made a weekly gain of 2%. The index is trading at its all-time high level. Indicators like RSI (14) 70 and downward turning MACD suggest a downward correction. The index might take support of its 10DMA of 15,458 before making a strong move on either side.

Weekly highlights

  • The Ministry of Defence (MoD) announced a list of 108 items of defence equipment that must be compulsorily procured from indigenous sources. The list includes items that will be banned for import in a staggered manner from December 2021 to December 2025. There is a special focus on weapons/systems which are currently under development/trials (in India). This embargo is expected to benefit Bharat Electronics Ltd, Solar Industries India Ltd, and other PSU which have a presence in the defence sector.
  • Automobile companies reported the monthly sales volume for May-21. The lockdowns in states such as Maharashtra, Haryana, Karnataka, and Tamil Nadu (key automotive hubs) forced carmakers to halt production. The impact of lockdowns was visible with companies reporting high double-digit month-on-month (MoM) decline across segments (Source- Business Standard). While a pickup in vaccination is expected to be a positive development for the sector, the semiconductor shortage remains a key issue to meeting the pent-up demand.
  • The Monetary Policy Committee (MPC) of RBI decided to keep the repo rate unchanged at 4 percent. The stance remains accommodative for as long as necessary to revive and sustain growth on a durable basis. The Committee lowered the GDP projection for FY22 from 10.5% (April-21) to 9.5%. The RBI also announced government securities acquisition programme worth Rs 1.2 tn in second quarter. The 10-year bond yield closed at 6.03% vs 5.99% on Friday.
  • The RBI has announced a Rs. 150 bn package for contact intensive sectors like hotels, restaurants, tourism, aviation, and ancillary services. These industries which have been hit hard due to the virus outbreak, have been provided a much-needed liquidity dose.
  • Foreign Institutional Investors (FII) continued to be net buyers of Indian equities of Rs 54,618mn, an increase from the previous week’s Rs 20,400mn purchase. Domestic Institutional Investors (DII) continued their selling spree, with a net outflow of Rs 2,442 mn which is lower compared to last week’s selling of Rs 3,240 mn.

Things to watch out for next week

  • With the result season almost over, companies have started publishing annual reports. Management commentary on the future outlook and strategy to mitigate the impact of 2nd wave is something to watch for. Vaccination progress and unlock process across India may be the catalysts for the market movement.

This Week in a Nutshell (May 24 to May 28th)

Technical Talks

NIFTY opened the week on 24th May at 15,211 and closed on 28th May at 15,453 just shy of the record high of 15,469. It made a weekly gain of 1.6%. The index is trading above all DMAs of 14,913 which might act as a support. RSI (14) 66 indicates the index may face resistance going ahead from these levels.

Weekly highlights

  • Indian equity bourses ended with strong gains as encouraging quarterly earnings and positive global cues boosted investors’ sentiment. The moderation in daily new COVID-19 cases in India also improved risk sentiments. The Nifty index settled at a record-closing high. Broader markets underperformed key benchmarks during the week.
  • Domestic rating agency ICRA on Monday, 24 May 2021, forecasted a 2% GDP growth in the fourth quarter of 2020-21, and a 7.3% contraction for the full fiscal year. According to the agency, the 2% projected GDP growth will help the economy avoid a double-dip recession as indicated by the National Statistical Office (NSO) for the fourth quarter. 
  • The Commerce and Industry Ministry said that Foreign Direct Investments (FDI) in India grew 19% to $59.64 billion during 2020-21 on account of measures taken by the government on the fronts of policy reforms, investment facilitation and ease of doing business. The total FDI, including equity, reinvested earnings and capital, rose 10% to the “highest ever” of $81.72 billion during 2020-21 as against $74.39 billion in 2019-20.
  • The balance sheet size of RBI increased by ~7% for the year ended 31 March 2021, mainly reflecting its liquidity and foreign exchange operations. From this year onwards, RBI has changed the accounting year to April – March from July-June earlier. RBI transferred Rs 99,122 crore as surplus to the central government for the nine months ended March 31.
  • A gauge for U.S. manufacturing activity that surged to a record high this month along with the number of Americans filing new claims for unemployment benefits dropped more than expected last week as layoffs subsided. Initial claims for state unemployment benefits fell 38,000 to a seasonally adjusted 406,000 for the week lowest since March 2020.
  • Foreign Institutional Investors (FIIs) were net buyers of Indian equities of Rs. 20,400 mn, against net selling of Rs 17,540 mn in the previous week. Domestic Institutional Investors (DIIs) were net sellers of Rs 3,240 mn, as compared to last week’s selling of Rs. 13,180 mn.

  Things to watch out

  • India Reported its 45 day low of daily covid cases at 1.73 Lakh, Reduction in cases and hope of lockdown ease pushed the market to record highs this week. It will be interesting to see if this momentum drives the indices upward or if any correction is imminent.
  • The monthly volume data for Auto companies will be released next week. This will be critical to gauge the impact of lockdowns imposed in certain states in India.    

This week in a nutshell (May 10th to May 14th)

                                                                              Technical Talks

NIFTY opened the week on 10th May at 14,928 and closed on 14th May at 14,678. It made a weekly loss of 2%. The index is trading above its 100DMA of 14,576 which might act as a support. On the upside 50DMA of 14,724 might act as a resistance. The index might trade range-bound before making a strong move on either side.                                                 

                                                                                Weekly highlights

  • Moody’s Investor services reduced its FY22E economic growth forecast for India to 9.3% from 13.7% estimated earlier. Investment banks like credit Suisse have also lowered India’s real GDP forecast as mentioned in the previous note.
  • US drugmaker Eli Lilly and Co has issued royalty-free, non-exclusive voluntary licenses to produce its Baricitnib drug to Cipla, Lupin, and Sun Pharma. The drug is used with a combination of Remdesivir for the treatment of Covid-19. This will ensure improvement in the local treatment options available to the infected patients in India.
  • The Federation of Automobile Dealers Association (FADA) expects sales to return to their peak levels of March 2019 only by FY23E. FADA said registrations of new vehicles, including cars, SUVs, motorbikes, and trucks, for April 21 were 28% lower than March 21.
  • During this week, Oil prices were lifted by fears of a gasoline (petrol) shortage after a cyber-attack caused an outage at the largest US fuel pipeline system. The fuel pipeline in the U.S. restarted now, but it will take several days for the supply chain to return to normal.
  • The foreign institutional investors (FII) Sold Rs 36,199 mn worth Indian equity shares last week. Domestic institutional investors (DII) were also net sellers during this week with Rs 1,817mn of outflow.

                                                             Things to watch out for this week

  • The 4QFY21 result season will continue in the next week as well. The commentary from companies’ management will be key to access the medium/long-term outlook on markets. The current situation is dynamic and changing very rapidly.

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.”