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.