Technical talks

NIFTY opened the week on 31^st January at 17,301 and closed on 4^th February at 17,516. It made a gain of 1.2% during the week. The index is trading below its 100DMA of 17,649 which might act as a resistance. On the downside, the 17,438 level might act as a support. The RSI (48), and MACD turning downward suggests a further possible decline.

Weekly highlights

• The US indices closed the week in green as US state employment data was released which showed a drop in claims for unemployment benefits. During the week, the stocks buying picked up again. S&P 500 was up by 6%, Nasdaq 100 by 1.7%, and Dow Jones by 1.1%.
• Adani Total Gas Ltd (ATGL), the joint venture between Adani Group and Total Energies of France, said that it will invest Rs 200 bn in setting up city gas infrastructure across the country over the next 8 years, with 60 percent of the money being used towards 14 licenses it won recently. With the addition of 14 geographical areas, it won in the latest bid round for city gas distribution (CGD) licences, Adani Total Gas now has a footprint in 95 districts spread across 12 states, catering to more than 9 mn households.
• Bengaluru-based electric vehicle company Ather Energy will set up 1,000 fast charging stations for electric two-wheelers across Karnataka. The company plans to keep charging at these stations to be free of cost for everyone for first 1 or 2 years.
• Meta’s (Facebook’s parent company) stock price fell by 26 percent on 3^rd February after the company issued a weak forecast, citing Apple’s privacy changes and increased competition. The huge drop erased over $200 bn from Meta’s market capitalisation.
• According to the commerce ministry, India’s eight core infrastructure sectors grew by 3.8 % in Dec-21, compared to 3.4 % in Nov-21. Natural gas and Cement were the largest contributors to an increased output in Dec-21 with 19.5% and 12.9% increase respectively.
• The Centre’s fiscal deficit rose to 50.4% of the FY22 target in April-December 2021, with a huge increase seen in tax collections as well as capital expenditure for the month of December 2021, data released by the Controller General of Accounts showed. The Economic Survey for FY22, tabled on 31^st January, said the Centre was well on track to meet its fiscal deficit target of 6.8 % of the Gross Domestic Product (GDP).
• The ADP National Employment report showed that the private payrolls decreased by 301,000 jobs in Jan-22 after increasing by 776,000 in Dec-21. This was the first drop in private payrolls since Dec-20. The initial claims for state unemployment benefits dropped 23,000 to 238,000, suggesting that the slowdown in job growth in January was likely temporary.
• FII (Foreign Institutional Investors) were net sellers of shares worth Rs 76,953 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 59,237 mn in this week.

Things to watch out for next week

• As the budget 2022 announcement is behind us, we expect the budget-related volatility in the stock market to reduce in the next week.
• With the announcement of government’s increased borrowing, and rising inflation, the monetary policy committee (MPC) meeting of RBI will be a key event to watch for the 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.”

Technical talks

NIFTY opened the week on 24^th January at 17,572 and ended at 17,102 on 28^th January. NIFTY fell 2.9% throughout the week, forming a bearish engulfing candle on the weekly chart. The next support and resistance levels for the index would be 16,840 and 17,635 respectively.

Except for PSU BANK (+6.9%), and Bank (+0.3%), all the sectoral indices fell this week, with IT (-6.1%), Realty (-5.2%), and Infra (-2.4%) being the biggest losers.

Weekly highlights

• Financial markets started the week on a volatile note on the back of fears of monetary tightening as the Fed announced that they would start raising interest rates. Nevertheless, volatility intensified with erratic stock movements amid shaky company earnings cast doubt on the strength of the recovery from the COVID-19 pandemic. The US stocks closed the week in the green, S&P up 0.8% and Nasdaq up 0.1%.
• Equity markets in India also witnessed volatility during the week due to the ongoing results season, the Fed meeting, and mixed budget expectations.
• Continual commodity cost rise is creating pressure on margins across the board especially FMCG, consumer, and chemical companies. To sustain margins and maintain topline growth, companies have implemented price increases in conjunction with cost-cutting strategies.
• On 26^th January, US Federal Reserve Chairman Jerome Powell announced that the US job market was robust enough to absorb rate rises and that the current tightening cycle would be different from previous ones. The Federal Reserve is expected to raise interest rates in March-22 and maintain plans to conclude its bond-buying program that month to keep inflation under control.

• Oil prices on 27^th January hit a seven-year high, Brent crude was above $90 a barrel, as the market balanced concerns about tight worldwide supply amid Russia- Ukraine tensions and the expectations that the US Federal Reserve will soon tighten monetary policy. Closing prices of Brent crude futures and WTI crude futures were $89 and $87.3 per barrel respectively as on 29th January 2022.
• The US gross domestic product (GDP) grew at 6.9% higher than the Dow Jones estimate of 5.5%, coming back from a brief but severe coronavirus recession in 2020. It was the best calendar-year growth rate since 1984.
• The Tata group formally took over Air India on January 27th, 67 years after the group founded the airline in 1932.
• The foreign institutional investors (FII) continued to be sellers and sold equities worth Rs 202,640 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 77,600 mn.

Things to watch out for next week

• Market participants expect the Union Budget would not throw any surprises at investors, sticking to the expected narrative of fiscal restraint and growth as the fiscal deficit is expected to fall below pre-covid levels, and the government’s push for infrastructure capex and privatization. Analysts at Morgan Stanley anticipate the government will focus on gradual fiscal consolidation while driving public capex, fostering a favorable climate for private capex, and generating resources through selective divestments.
• Contrary to international investors, retail customers are entering the Union Budget with net long holdings on the Nifty 50’s February futures of 68,592 contracts.
• Markets will react to earnings reported by consumer companies like Marico and Britannia. Companies such as Tech Mahindra, Dabur, HDFC, Tata Motors, Cadila Healthcare, and Lupin are set to report earnings next week. The management commentary on price erosion in the US market will be key for pharma companies. Comments on raw material inflation and logistical challenges will be key for consumer companies.
• Capital goods, infrastructure, housing, real estate, public sector banks are likely to be in the spotlight ahead of the Budget.

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.”