This week in a nutshell (13-17 Dec)

Technical talks

NIFTY opened the week on 13^thDecember at 17,619 and ended the week on 17^thDecember at16,985. The index made a weekly loss of 3.6%. On the upside, 17,125 could act a resistance while 16,807 could act as a support. RSI (14) of 39 indicates the index is nearing the oversold zone.

Among the indices, IT was the only sector which ended the week with gains of 2%. REALTY (-8.4%), MEDIA (-8%), and PSU BANK (-7.8%) led the laggards.

Weekly highlights

• The US indices closed the week in the red, dragged by the hawkish stance of the Federal Reserve, and increasing worries of the Omicron variant of the COVID-19 virus. These factors combined with continued FII selling led the Indian markets lower, as Indian equities wiped out previous week’s gains and the Nifty50 ended ~4% lower.
• Federal Reserve officials have indicated they favor raising interest rates in 2022 at a rate faster than expected. The Fed chair, Jerome Powell announced the doubling in the pace of monthly bond purchases. The Federal will be buying USD 60bn of bonds each month from Jan-22, half the level prior to the Nov-21 taper, and USD 30bn less than it purchased in Dec-21.Fed presented aschedule of rate hikes, there will be three rate hikes in 2022, two in 2023 and two more in 2024.
• Union Cabinet approved Rs 760bn incentive plan for semiconductor and display board production in the country, the investment of will be spend over the next 5 to 6 years period. PLI scheme boost India’s semiconductor and display manufacturing ecosystem.
• Wholesale price inflation rose to a record high of 14.2% in Nov-21 due to the increased manufacturing and food prices, inflation in fuel prices and global supply chain issues.
• The Bank of England increased its interest rates for the first time since the starting of COVID-19pandemic. BOE increased its main interest rates from a historic low of 0.1% to 0.25% as the inflation pressure rises. In November-21,the Consumer Price Index hit a 10-year high and was above the central bank’s target. Bank expects that in April-2022 inflation will be around 6%.
• Fears over the impact of Omicron variant of the COVID-19 virus led a fall in the oil prices on Friday.With the number of cases doubling, several countries have announced restrictions. The OPEC+ said in their last meeting held in early December that they could meet ahead of their scheduled meeting on 4^th Jan 2022, if the oil demand is impacted severely due to the Omicron variant.
• Foreign Institutional Investors (FII) continued to be net sellers this week, selling shares worth Rs 104,620 mn. Domestic Institutional Investors (DII) continued to be buyers, and invested Rs 67,400 mn in Indian equities this week.

Things to watch out for next week

• In the next week investors will be watching US Consumer confidence numbers to understand if purchasers are switchingtheir habits due to theconcernsof Omicron variant and high inflation. The US markets have a truncated next week as markets will remain shut on Friday on account of Christmas Day.
• The Indian equity market is likely to see more selling pressure next week amid US dollar appreciation and the concern over the spread of omicron variant. Action is likely to be stock specific till end of December-21.

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