This week in a nutshell (12th – 16th September)

Technical talks

NIFTY opened the week on 12^th September at 17,891 and ended in the red at 17,531 on 16^th September, after high volatility during the week. The index lost 2% during the week. The next support and resistance levels for the index would be 17,497 and 17,636 respectively. It broke its 20 DMA levels and closed below that.

Among the sectoral indices, METAL (+1.9%), PRIVATE BANK (+1.3%), and BANK (+0.9%) were the gainers during the week while IT (-7%), REALTY (-3.3%) and OIL & GAS (-3.2%) led the losers.

Weekly highlights

• US major indices witnessed huge volatility during the week and closed the week in the red, inflation data and the federal reserve’s announcement in the next week regarding interest rate dragged down the investors’ sentiments the S&P 500, Nasdaq, and Dow Jones closed the week with heavy loss of 5%, 6%, and 4% respectively.
• Oil prices fell for a third straight week, the Brent crude and WTI crude closed with a loss of 1% and 1.3% respectively during the week.
• India’s retail inflation based on Consumer Price Index (CPI) surged to 7% in Aug-22 and burst the downward trend of the last 3 months. The surge was mainly led by higher food prices, as it accounts for nearly half of the CPI basket. The inflation remains above the RBI’s tolerance level of 6% for the last 8 months in a row. Along with CPI India’s Wholsale Price Index (WPI) data was also released. India’s WPI inflation stood at 12.4% in Aug-22, a decline from 13.9% in Jul-22, drop in fuel prices dragged down the WPI inflation below the previous month.
• US CPI data was released during the week ahead of the Federal Open Market Committee (FOMC) meeting in next week, US CPI inflation stood above the expectation at 8.3% for Aug-22. The decline in gasoline prices helped to cool down the rate compared to the previous two months’ rate but the cost of food, housing, and autos remains elevated.
• Mining conglomerate Vedanta and Taiwanese electronic manufacturer Foxconn announced an investment of Rs 1,540 Bn for India’s first semiconductor plant in Gujrat through a 60:40 joint venture. The plant is expected to start production in two years. Local manufacturing of chips is expected to bring affordability to manufacturing electronic devices and it will reduce the dependency on other countries.
• Union health and family welfare ministry of India released the National List of Essential Medicines 2022 (NLEM 2022) on Tuesday. The NLEM 2022 consists of 384 drugs vs 376 drugs in 2015. New 34 drugs were added and dropped 26 drugs in the new list. The National Pharmaceuticals Pricing Authority (NPPA) fixes the prices for these drugs. The government said several important medicines will become more affordable and reduce patients’ out-of-the-pocket expenditure.
• On Thursday, IMF spokesperson stated that the global economic outlook continues to be dominated by downside risk and in CY23 some countries are expected to fall into recessions, but it is too early to say if there will be a widespread global recession. IMF revised down the CY22 and CY23 global growth to 3.2% and 2.9% respectively in Jul-22.
• Data released by the commerce ministry of India shows India’s merchandise export stood at USD 33.9 bn and trade deficit stood at USD 27.9 bn for the month of Aug-22. Electronic goods, rice, oil meals, tea, coffee, and chemicals witnessed positive growth.
• Foreign investors invested ~ Rs 56 bn into the domestic equity markets in September so far in the anticipation of growth in consumer spending on account of the upcoming festive season and stronger macro fundamentals than other emerging markets.
• The foreign institutional investors (FIIs) and Domestic institutional investors (DIIs)  both were the net sellers during the week. FIIs sold equities worth Rs 19,216mn and DIIs sold equities worth Rs 29,368mn.

Things to watch out for next week

• Next week will be very crucial for the global financial markets as the investors will closely watch the Federal reserve’s FOMC interest rate decision on Wednesday and the Bank of England MPC meeting on Thursday as well as initial jobless claims in the US.
• The investors might ride a rollercoaster in the next as volatility will likely persist in the next week amidst central banks’ stance on interest rates, heated inflation, and raw material and supply chain uncertainties on account of geopolitical tensions and elevated commodity prices.

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