Tag - week in a nutshell

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 (14-18 Feb)

Technical talks

NIFTY opened the week on 14 th February at 17,076 and ended at 17,276 on 18 th February. NIFTY gained 1.2% throughout the week after a gap-down opening. The next support and resistance levels for the index would be 17,185 and 17,315 respectively.
Except for IT (+0.3%), all the sectoral indices fell this week, with PSUBANK (-4.7%), REALTY (-2.8%), and MEDIA (-2.6%) being the biggest losers.

Weekly highlights

  • Indian equity markets remained volatile throughout the week due to rising inflation worries, the anticipation of Interest Rate hikes, and Geopolitical tensions between Ukraine and Russia.
  • The uncertainty around the Russia-Ukraine situation at the start of the week was enough to deal another blow to global markets that were already skittish about high inflation and the prospect of aggressive U.S. Federal Reserve interest rate hikes to tame it. Markets have been rattled by a rates outlook that could hold as many as seven Federal Reserve increases in the year ahead. St. Louis Fed president James Bullard on Thursday reiterated his call for the Fed funds rate to be raised to 1 percent by July to combat stubbornly high inflation.
  • Oil prices remained majorly volatile throughout the week as oil reached a 7 year high of $95/Barrel due to rising concerns over Russian oil supply on the back of impending invasion of Ukraine but cooled off as Russia actions were not considered as threatening during the start of the week, Oil was also dragged down by a possibility of an Iran Nuclear Deal, that could add Iranian Oil supply to the world.
  • The Life Insurance Corporation of India filed its IPO papers with the SEBI on Sunday. As per the DRHP, LIC's offer is entirely an offer for sale of 316,249,885 by the shareholder valued at $8 Billion, by the Government of India. This means the government would sell a 5 percent stake via the IPO. The much-awaited IPO of LIC is India’s biggest share sale of all time.
  • Retail inflation rose to 6.01 percent in January on an annual basis and breached the RBI’s upper tolerance level, mainly due to higher prices of certain food items, as per government data released on Monday. The Consumer Price Index (CPI) based retail inflation was 5.66 percent in December 2021 and 4.06 percent in January 2021.
  • IT services giant Tata Consultancy Services (TCS) on Sunday said the members of the company have approved the buyback of shares worth up to ₹18,000 crores by passing a special resolution through postal ballot.
  • The foreign institutional investors (FII) continued to be sellers and sold equities worth Rs  10,885 mn while Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 10,163 mn.

Things to watch out for next week

  • Investors will be busy with increased volatility amidst Russia-Ukraine Standoff and the geopolitical tensions as a result of that.
  • US Markets will be jittery as the end date of the US Fed’s Asset Purchase scheme in March draws near, persistent inflation and any indication regarding rate hikes will be closely monitored.
  • Equity markets in India are likely to see decreased volumes due to increased volatility and decreased participation in anticipation of Insurance Behemoth LIC’s $8 Billion IPO next month.

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 (27-31 Dec)

Technical talks

NIFTY opened the week on 27th December at 17,004 and ended the week on 31st December at 17,354. The index made a weekly gain of 2.1%. On the upside, 17,400 could act as resistance while 17,166 could act as a support. RSI (14) of 53 and a positive divergence on MACD (26,12) indicates further upside in the index.

Among the indices, MEDIA was the only sector that ended the week with a loss of -1.0%. HEALTHCARE (5.5%), PHARMA (5.4%), and CONSUMER DURABLES (4.4%) led the gainers.

Weekly highlights

  • The US indices closed the curtailed week in the red, affected by low volumes due to the festive season and increasing worries of the Omicron variant of the COVID-19 virus. These factors combined with muted institutional activity and retail buying led the Indian markets higher, as Indian equities bounced back from last week’s losses Nifty50 ended ~2% higher.
  • The Central Government earned Rs 1.29 tn in gross Goods and Services Tax (GST) revenue for December. The Ministry of Finance said the average monthly gross GST collection for the third quarter of the ongoing fiscal was higher than the average monthly collection of Rs 1.10 lakh crore and Rs 1.15 lakh crore, recorded in the first and second quarters respectively.
  • India’s current account slipped into a deficit of $9.6 billion, or 1.3 percent of the gross domestic product (GDP) in the second quarter of the ongoing fiscal, the Reserve Bank of India reported. For the reporting quarter, the deficit was mainly due to the widening of the trade deficit to $44.4 billion from $30.7 billion in the preceding quarter, and an increase in net outgo of investment income.
  • The Central Board of Indirect Taxes and Customs (CBIC) stated that the GST rate on any worth of clothes will be 12% beginning next year. Currently, a 5% tax on sales up to Rs 1000 per piece is charged. Further, the GST rates on some synthetic fibres and yarn have been reduced from 18 to 12%, putting rates in line with the rest of the textiles sector, this was done to address anomalies caused by an inverted duty structure, which occurs when the tax rate on inputs is greater than the tax on the finished product.
  • Reserve Bank of India’s (RBI) financial stability report suggests stress for banks would rise in 2022, especially in the retail and MSME segment, but banks most are well-capitalized to deal with it. The report showed while bad loans may rise, they won’t hit double digits by September 2022. In the worst-case scenario, gross NPAs may rise to 9.5 percent due to all the benefits of moratoriums expiring, we might see short-term stress in the provisioning.
  • Fears over the impact of the Omicron variant of the COVID-19 virus resulted in Oil remaining volatile throughout the week. With the number of cases doubling, several countries have announced restrictions, there’s an anticipation of demand reduction and Brent Crude ended the week lower at $77.8 per barrel.
  • Foreign Institutional Investors (FII) continued to be net sellers this week, selling shares worth Rs 35,070 mn. Domestic Institutional Investors (DII) continued to be buyers and invested Rs 31,300 mn in Indian equities this week. The month of December ended with net FII outflows of Rs 4,55,790 Mn and net DII Inflows of Rs 4,02,490 Mn.

Things to watch out for next week

  • Rising cases of the Omicron variant of COVID-19 will be on investors’ minds this week. It’ll be interesting to see how India and other Emerging Markets respond to the anticipation of lockdown-like restrictions.
  • The U.S. Jobs non-farms payrolls report comes out Friday. Expectations are for growth of 400,000 jobs, vs. 210K last month and an average of 494K jobs added in the last six months. The key thing to watch out for would be the commentary of voluntary unemployment as the labour participation rate continues to fall post-pandemic.
  • The Organization of the Petroleum Exporting Countries (OPEC) meets on 04th At their previous meeting, OPEC reaffirmed their decision to increase oil production in 2022 and said that they expected a low impact from Omicron on demand for oil. With various industries reporting inflationary headwinds due to oil prices increasing, a lot of eyes will be waiting to see how OPEC responds to demands of output increase amid Omicron fears.
  • The Indian equity market is likely to see more selling pressure next week amid the concern over the spread of omicron variant and FIIs returning after a week of muted action due to the holiday season. Action is likely to be broad index specific until Q3FY22 result season beginning 12th

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 (20th-24th December)

Technical talks

NIFTY opened the week on 20th December at 16,824 and closed on 24th December at 17,004. It gained  1.1% during the week. The index is trading below its 10DMA of 17,057 which might act as a resistance. On the downside, the 16,971 level might act as a support. The RSI (44), and MACD turning downward suggests a possible decline.

Weekly highlights

  • The US indices closed the week in green as investors speculated that the spreading Covid Omicron variant may not adversely affect human health, businesses and lockdown-like situations might not arise, and hence the stock buying picked up. S&P 500 was up by 2.3%, Nasdaq 100 by 3.2%, and Dow Jones by 1.7%.
  • The Turkish currency lira tumbled to a record low after its President Recep Tayyip Erdogan pledged to continue cutting interest rates, referring to the Islamic ban of high-interest rates as a basis of his policy. The president feels that Turkey can free itself from reliance on foreign capital flows by abandoning policies that prioritized higher interest rates and strong inflows.
  • The Indian government reduced the import tax on refined palm oil to 12.5%, from earlier 17.5%, in an effort to cool near-record high vegetable oil prices. This would make refined palm oil more attractive than crude palm oil for Indian buyers.
  • Sebi suspended futures and options trading for one year in chana, mustard seed, crude palm oil, moong, paddy (basmati), wheat and soybean and its derivatives. This has not only led to a fall in prices of these commodities, but also to scaling back of inventories by traders, who say the flow of imports will slow down since they do not have a hedging platform.
  • Zee Entertainment Enterprises (Zee) and Sony Pictures Networks India (SPNI) signed a definitive agreement that will let the two merge their networks, digital assets, production operations and programme libraries. The merged entity will have a 27% market share of the general entertainment space. After the completion of the deal, Sony Sony Pictures Entertainment will hold a 50.86% stake in the combined entity, the promoters of Zee will hold a 3.99% stake and the remaining shareholders of Zee will hold a 45.15% in the merged entity.
  • Tata Motors has incorporated Tata Passenger Electric Mobility Limited (TPEML), a wholly-owned subsidiary that is involved in the manufacturing of electric motor vehicles, with an initial capital of Rs 7000 mn.
  • FII (Foreign Institutional Investors) were net sellers of shares worth Rs 65890 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 69156 mn this week.

 

Things to watch out for next week

  • As investors around the world seem to be cautious about the Fed’s announcement of three 25 bps increase in interest rates in CY 2022, we may see a further sell-off in Indian stocks next week by the FIIs.We may see a reduction in the level of activity as most investors in the US and Europe are away on holidays. 

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 (15th – 18th November)

Technical talks

NIFTY opened the week on 15th November at 18,141 and ended the truncated week on 18th November at 17,765. The index made a weekly loss of 2.1%. On the upside, 17,993 could act as resistance while 100DMA of 17,020 could act as a support. RSI (14) of 44 indicates the index is nearing the oversold zone.

Among the indices, AUTO was the only sector that ended the week with gains of 0.4%. METAL (-5.3%), PSU BANK (-3.4%), and REALTY (-3.3%) led the laggards.

Weekly highlights

  • Raring agency Fitch Ratings affirmed India’s long-term foreign currency Issuer Default Rating (IDR) at ‘BBB’- with a negative outlook. The negative outlook reflects lingering uncertainty around the debt trajectory. The Agency has suggested wider fiscal deficits and government plans for only a gradual narrowing of the deficit, putting a greater onus on India’s ability to return to high levels of economic growth over the medium term to stabilize and bring down the debt ratio.
  • S&P Global Ratings has predicted that the Indian economy will likely grow at 11 percent in FY22 but flagged the ‘substantial’ impact of broader lockdowns on the economy. S&P said the control of Covid-19 remains a key risk for the economy.
  • The Nasdaq Composite Index closed above 16,000 points for the first time, while the Dow Jones Industrial Average had a second successive weekly loss (-1.4%). The S&P 500 ended higher following strong retail earnings and positive signs for holiday shopping.
  • Over 4.4mn Americans left their jobs in September-21, according to the Labor Department’s Job Openings and Labor Turnover Survey. Incentivized by wage gains and other attractive terms offered by employers desperate for talent, several Americans are leaving their jobs. This has made it challenging for employers to fill positions while driving up compensation and inflation.
  • Crude oil prices fell to a six-week low following news of Australia’s lockdowns and surging Covid-19 cases in Europe threatened to slow down the economic recovery. Investors weighed a potential release of crude oil reserves by major economies for a fall in prices. Crude Oil futures settled at USD 75.7 a barrel while Brent Oil futures closed at USD 78.5 a barrel.
  • India’s wholesale price inflation (WPI) jumped to a five-month high at 12.5% in October. This month’s WPI broke the 5-month downward trend as prices of manufactured items and fuel have increased. High petrol, diesel, and cooking prices drove fuel inflation to 37.2%. high prices of basic metals, textiles, plastics, and edible oil drove inflation for manufactured items to 12%.
  • Prime Minister Narendra Modi announced that the three farm acts would be repealed in the upcoming session of the Parliament. The Prime Minister said a committee would be set up to make the minimum support price mechanism more transparent and effective.
  • Foreign Institutional Investors (FII) continued to be net sellers this week, selling shares worth Rs 44,109 mn. Domestic Institutional Investors (DII) continued to be buyers and invested Rs 39,265mn in Indian equities this week.

Things to watch out for next week

  • US markets are waiting for President Biden to nominate who will head the central bank after Jerome Powell’s term finishes in February-2022. The US markets have a truncated week next week as markets will remain shut on Thursday and Friday on account of Thanksgiving.
  • The Indian equity market is likely to see more selling pressure next week amid the rising US dollar, and the beginning of the Fed Reserve’s bond-buying program. Results for September-21 have been announced by most companies. Action is likely to be stock-specific till the end of December.

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 (4th – 8th October)

Technical talks

NIFTY opened the week on 4th October at 17,616 and closed on 8th October at 17,895. It made a weekly gain of ~1.6%. On the upside, 17,948 might act as a resistance. On the downside, 20DMA of 17,648 might act as a support. RSI (14 days) of 66 is indicating the index is in an overbought zone.

Weekly highlights

  • Auto companies released the monthly volume data for September-21. Domestic CV volumes were robust, aided by healthy freight availability and better freight rates. Tractor sales reported a strong MoM growth albeit on a low base due to good rainfall. Supply issues and an inauspicious period led to subdued volumes for other segments. Companies suggest an inability to cater to demand due to supply chain challenges. This has led to lower inventory build-up before the festive season. This might lead to longer waiting periods or postponement of festival purchases by customers.
  • Media reports suggest the government may abandon its demand for spectrum charges of Rs 400 bn from telecom operators to support companies. This latest move may provide another ray of hope to companies such as Vodafone Idea Ltd and Bharti Airtel Ltd after the government’s decision to offer a 4-year moratorium on dues.
  • The Organisation of the Petroleum Exporting Countries, Russia, and their allies (OPEC+) said it would stick to its existing plan for a gradual increase in oil output, which sent crude prices to three-year highs. West Texas Intermediate reached USD$ 78 a barrel while Brent Crude rose 3% to ~US$ 82 a barrel. The OPEC+ ignored calls from big consumers such as the USA and India for extra supplies after oil prices surged over 50% this year.
  • The US indices (Dow Jones Industrial Average, S&P 500, and Nasdaq) held on to weekly gains. Throughout the week, investors’ attention has been on rising energy prices, concerns about inflation, and negotiations on the debt ceiling. On Thursday, the US Senate has voted to extend the debt ceiling until December 3. This provides some relief to investors worried about the government default this month.
  • The Indian equity markets remained volatile during the week ended October 8. The key positives were RBI maintaining its stance with no rate change, and Moody’s upgrading India’s outlook to stable from negative. Rising bond yield, and crude oil prices, Fitch cutting India’s FY22 GDP growth forecast (to 8.7% from 10% in June) worried investors.
  • The government of India has sold the national carrier, Air India to the Tata Group. Tata Sons submitted a winning bid of Rs 180bn as the Enterprise value. The conclusion of this sale indicates the government is serious about its ambitions of privatisation.
  • Though the foreign institutional investors (FII) selling continued this week, the quantum was much lower at Rs 36,857mn vs Rs 61,520mn last week. Domestic institutional investors (DII) buying reduced to Rs 34,581mn from the Rs 75,030 mn in the previous week.

Things to watch out for next week

  • The 2QFY22 result season has started with TCS reporting earnings this week. The result season takes centre stage next week with other IT companies such as Infosys, Mindtree, and Wipro set to announce their earnings. While the street is estimating sequential revenue growth for the companies, commentary on deal wins and margin pressures due to rising employee costs & attrition would be critical.

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 (27th Sept to 01st Oct)

Technical talks

NIFTY opened the week on 27th September at 17,932 and closed on 01st October at 17,532 during the week, the index lost -2.23%. Nifty is trading at an RSI of 58, with support at 17336 and resistance at 18,138.

Weekly highlights

  • US President Joe Biden on Thursday signed a nine-week stopgap funding bill that averts a government shutdown but fails to resolve the threat of a US default linked to the debt limit.
  • US Treasury Secretary Janet Yellen has said that if lawmakers fail to raise the debt limit by about Oct. 18, the government may not be able to pay its bills, posing a dire risk to the US and World Economy with the US Treasury defaulting on its debt obligations.
  • Japan’s former foreign minister Fumio Kishida is set to replace Yoshihide Suga as prime minister after he won the ruling Liberal Democratic Party’s leadership vote on Wednesday. Kishida will succeed Prime Minister Suga, the world’s eyes will be on the third-largest economy in the world which is facing stagnant economic growth battered by the coronavirus pandemic, the remnants of an unprecedented public health crisis, and increased political manoeuvring by China.
  • Brent Crude is at its highest since October 2018 and heading for $80 per barrel, as investors fretted about tighter supplies because of rising demand in parts of the world. Brent crude was up $1.44, or 1.8%, to settle at $79.53 a barrel, having posted three straight weeks of gains. Global supplies have tightened due to the fast recovery of fuel demand from the outbreak of the Delta variant of the coronavirus and Hurricane Ida’s hit on U.S. production
  • China’s top state-owned energy companies have been ordered to ensure there are adequate fuel supplies for the approaching winter at all costs, a report said Friday, as the country battles a power crisis that threatens to hit growth in the world’s number two economy. The country has been hit by widespread power cuts that have closed or partially closed factories, hitting production and global supply chains. The crisis has been caused by a confluence of factors including rising overseas demand as economies reopen, record coal prices, state electricity price controls and tough emissions targets.
  • The country’s top carmaker Maruti Suzuki said that it will produce fewer cars in October due to the ongoing global chip crisis. It expects vehicle production at two of its plants to be around 60 per cent of normal levels. The chip shortage has emerged as a major crisis around the world since 2020 after a sharp rise in demand for consumer electronics and continued global supply chain disruptions.
  • During the week, the foreign institutional investors (FII) net sold equities worth Rs 61,520 mn, while domestic institutional investors (DIIs) bought equities worth Rs 75,030 mn.

Things to watch out for next week

  • Q2FY22 Result season to begin with software services leader TCS announcing its results.
  • Rising Oil Prices, US Treasury Yields, Evergrande’s default, and the uncertainty over the U.S default of its debt obligations will be the themes that are in focus this 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 (6th – 9th September)

Technical talks

NIFTY opened the week on 6th September at 17,399 and ended the truncated week at 17,369 on 9th September. The index made a weekly loss of 0.2%. On the upside, 17,378 might be a critical level to watch for. On the downside, 16,451 might act as a support. The RSI (82) indicates the index is in the overbought zone.

Weekly highlights

  • World stocks hit fresh record highs on Tuesday on growing bets that the U.S. Federal Reserve will push back tapering its bond purchases and keep its expansive policy for the near term. The latest rally, which started after Fed Chair Jerome Powell’s dovish speech at the Jackson Hole Symposium in August, received a further boost from a surprisingly soft U.S. payrolls report on Friday. The U.S. economy created 235,000 jobs in August, the fewest in seven months as hiring in the leisure and hospitality sectors stalled, reducing expectations that the Fed will opt for an early tapering of its monthly bond purchases.
  • Investors were caught by surprise by a sudden rally in the benchmark 10-year Indian bond yield. In the previous week (ended 3rd September), the yield had dropped ten basis points, the biggest weekly drop since April. There was a quick turn of sentiment after the benchmark 10-year bond yield rose to its highest since March. The sentiment change was aided by 1QFY22 GDP growth which grew ~20% YoY albeit on a low base and global market cues. The rally in the bond yield was led by mutual fund investors and overseas investors. The spike in overseas investors’ interest could be attributed to the appreciation of INR against USD. (Source: Bloomberg Quint Read more at: https://www.bloombergquint.com/business/a-surprise-bond-rally-sweeps-over-india-as-global-funds-pile-in )
  • The Securities and Exchange Board of India (SEBI) has introduced an optional T+1 settlement cycle for the market, which will come into effect from January 1, 2022. The T+1 cycle means settlements will have to be cleared within one day of the actual transactions taking place. A switch to the T+1 settlement cycle is expected to boost market liquidity and trading turnover while reducing settlement risk and broker defaults. While this move could be beneficial for the domestic investors, foreign investors may face challenges adjusting to this system due to time zone differences. While the regulator has come up with the new settlement cycle, the onus is on the exchanges if they want to opt for the shorter cycle.
  • The monthly data for life insurance premiums collected by companies was released by the Life Insurance Council. The industry reported a 3% YoY increase in the New Business Premiums (NBP) collected, led by private players. This growth comes after the NBP collected reported a decline of 11% YoY in July-21.
  • Stocks ended lower Friday, with major indexes booking weekly losses as the Dow Jones Industrial Average and the S&P 500 extended a losing streak to five sessions. Investors said uncertainty around the spread of the delta variant of the coronavirus that causes COVID-19 hung over markets this week as investors also weighed the timing of the Federal Reserve’s eventual tapering of its monthly bond purchases. The slide left the Dow down 2.2% for the week, while the S&P 500 suffered a 1.7% fall and the Nasdaq declined 1.6%.
  • Institutional activity trends reversed this week compared to last week. Foreign institutional investors (FII) turned sellers with an outflow of Rs 11,139mn. Domestic institutional investors (DII) tuned buyers with an inflow of Rs 11,160mn.

Things to watch out for next week

  • The Indian CPI and WPI data are expected next week. A key indicator for measuring the changes in purchasing trends and inflation.
  • As the result season has drawn to a close, the developments from Wall Street will be the guiding force for the Dalal Street.

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 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.    

The week in a nutshell (April 12th to 16th)

 

Technical talks

  • NIFTY opened the week on 12th April at 14,645 and closed on 16th April at 14,617. After beginning the week with major losses, the index rebounded to close flat for the week. The index is trading below its 20DMA of 14,661, which may act as resistance. The next level being 50DMA at 14,863. The Index breached its 100DMA at 14,316 during the week where it may find support.

Weekly highlights

  • The week began with major indices in red due to the rising Covid-19 cases and lockdown-like conditions imposed across major areas in the country.  Indices recovered during the week to end flat. Gains were seen in pharma, IT, metals, and auto stocks, while bank and realty indices ended in the red.
  • Due to the increasing number of COVID-19 cases in India, Foreign Institutional Investors (FII) turned net sellers this week,  at  Rs 10,590 mn. Domestic Institutional Investors (DII) were net buyers and pumped in Rs 6,080 mn.
  • Q4FY21 result earnings season started this week with the big 3 tech companies -TCS, Infosys, and  Wipro. All reported good revenue growth on the expected lines. Their comments for upcoming quarters suggest promising growth. On the back of a strong earnings show, Infosys has announced a buyback of Rs.92 bn, at an upper price limit of Rs. 1750/share.
  • The US Equity markets hit a record high during the week. The Dow Jones Industrial Average hit the historic milestone of 34,000 for the first time owing to economic recovery and stimulus package announced by President Joe Biden and reducing unemployment.
  • American banking major Citibank on Thursday announced that it will exit from the consumer banking business in India and 13 countries. This is a part of a global strategy of CEO Jane Fraser attributing the decision to an absence of scale to compete in these geographies. The bank has 35 branches in India and employs approximately 4,000 people in the consumer banking business. 
  • India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 5.52 percent in March. Separately, the country’s factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a contraction of 3.6 percent in February. The retail inflation during February was at 5.03 per cent.

Things to watch out 

  • Q4FY21 result season to continue with HDFC Bank and Nestle reporting their earnings. India’s COVID patient numbers will drive the sentiment of the market in the near term. Some economists are already reducing India’s GDP growth forecast for FY22 due to the second wave. We expect investors to focus back on cash flow creators – pharma, consumer, and software services. This is a holiday-shortened week due to a break on Wednesday.