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13 Aug

This Week in a Nutshell (August 8-12)

Happy 76th Independence Day to all our readers!

Technical talks

NIFTY opened the week on 8th August at 17,401; with a holiday on Tuesday, the four-day work week ended with NIFTY closing at 17,698 (+1.7%). The index is trading above all the moving averages on a daily as well as weekly timeframe. On the upside, the upper Bollinger band level of 18,100 might act as a resistance. On the downside, it can take support at the 50 week moving average near 17,100. Even though, the RSI of 60 does suggest some caution, in the recent past NIFTY has comfortably traded at 60+ RSI level.

Among the sectoral indices, METAL (+4.6%), PRIVATE BANK (+3.6%), and FINANCIAL SERVICES (+3.0%) led the gainers, whereas MEDIA (-2.0%), FMCG (-1.1%), and PHARMA (-0.6%) were the losers this week.

Weekly highlights

  • The US market closed the week in green as Dow Jones continued its streak with 6th consecutive week of positive returns. During the week, the US declared its July CPI inflation. At 8.5%, it is lower than the previous month, but still on the higher side from an absolute point of view.
  • Coming to the Indian markets, our market cap to gross domestic product ratio (Mcap/GDP) has crossed 100 percent. With a positive move in markets since July, we currently stand at 102 percent against a long-term average of 81 percent. India’s GDP is estimated at nearly USD 3 trillion.
  • The Mcap/GDP ratio is also known as the Buffett Indicator, as Warren Buffett considers it to gauge the mood of the market. Too high a number suggests that the market seems to be overvalued and the opposite on the other side.
  • However, this can be applicable to a developed market like the US. In a developing market like India, with a gradual move towards formalization of the economy, the market capitalization will inch up higher as more and more companies get listed and this will eventually reflect in the GDP.
  • The civil aviation ministry has removed the lower and upper caps on airline fares from 31st The caps were imposed in May 2020 to regulate airfares in times of the pandemic. Especially with the removal of the lower cap, it is more likely that airfares for short-distance domestic flights will come down as airlines compete with each other for passengers.
  • China’s trade surplus stood at USD 101 billion in July. It is the highest since 1987. The trade surplus is the excess of exports over imports. Despite political tensions between India and China, in a globalized world, where there is interdependency on each other when it comes to the manufacturing of goods, Chinese exports doing well translates positively for the world economy as well as for India.
  • FII (Foreign Institutional Investors) were net buyers of shares worth Rs 78,499 mn and DII (Domestic Institutional Investors) were net sellers of shares worth Rs 24,780 mn this week.

 

Things to watch out for next week

  • The corporate results season for the April-June quarter of FY2023 comes to an end as we approach 15th As we celebrate the 76th Independence Day of India, we enter into another four-day work week on Tuesday. Going forward, company-specific developments will be keenly watched.
  • Just like this week, during which we saw a few new 2-wheeler launches from Honda and Royal Enfield and a Hyundai car, next week is also lined up with new cars from Toyota, Maruti-Suzuki, and an EV from Mahindra. As we approach the festive season, we are expecting many more such launches.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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.”

 

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07 Aug

This week in a nutshell (1st August- 5th August)

Technical talks

NIFTY opened the week on 1st August at 17,243 and closed on 5th August at 17,397. The index gained 1.4% during the week. The index has managed to sustain above the 50DMA of 17,105 level, which acts as a support. On the upside, the recent high of 18,114 might act as a resistance.

Among the sectoral indices, IT (+2.8%), AUTO (+2.1%), and METAL (+2.1%) were the top gainers while REALTY (-2.9%) was the only loser in the week.

Weekly highlights

  • Wall Street indices fluctuated throughout the week due to better than anticipated corporate earnings, economic data, and US-China tensions following Speaker of the US House of Representatives Nancy Pelosi’s visit to Taiwan, which led to China conducting military exercises near Taiwan.
  • China’s factory activity contracted in July after rebounding from COVID-19 lockdowns as new virus outbreaks and a bleak global outlook weighed on demand. 
  • Oil prices fell ahead of the OPEC+ meeting on August 3rd. In the meeting, it was decided that the cartel will add only 100,000 barrels a day of oil in September. Consumers feeling the inflationary squeeze due to higher oil prices won’t find much relief from the increase. Brent oil futures and WTI futures were mixed wherein the former settled 0.6% up at USD 94/ barrel and the latter 0.01% lower at USD 89/barrel. 
  • The 5G spectrum auction concluded on August 2nd, with bids exceeding Rs 1.5 bn. Approximately 71% of the total spectrum was sold in the auction held through 40 rounds of bidding. The government has received bids totaling Rs 1,501,730 mn. 
  • Reliance Jio was the highest bidder at the 5G spectrum auction, with bids of over Rs 880,000 mn. Bharti Airtel took 19,867 MHz for Rs 430,840 mn, while Vodafone Idea acquired the spectrum worth Rs 187,990 mn.
  • Bank of England raised the interest rate by 50 bps to 1.75% despite warning that recession is on its way, even as inflation is now expected to top 13%.
  • RBI in its policy meeting on Friday raised the repo rate by 50 bps. It now stands at 5.4%. The MPC also decided to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
  • After nine months of relentless selling, foreign investors turned net buyers in July, investing Rs 49,890 mn in Indian equities as the dollar index fell and corporate earnings improved. This is in stark contrast to the stock market’s net withdrawal of Rs 501,450 mn in June. 
  • FII (Foreign Institutional Investors) turned net buyers this week, buying shares worth Rs 54,620 mn. DII (Domestic Institutional Investors) turned net sellers by selling shares worth Rs 17,650 mn.

Things to watch out for next week

  • India’s largest lender, State Bank of India (SBI), will report earnings on August 6. SBI is expected to report robust balance sheet growth, improvement in asset quality, and improved interest income.
  • Investors and traders are focused on corporate earnings and announcements. The earnings of companies such as SBI, Tata Consumer, HAL, Eicher, Hero Moto, and Aurobindo may cause volatility in Indian markets. Share price moments would be driven by management comments on the impact of inflation on demand and the supply chain challenges, particularly chip shortages for 2W companies.
  • With result season coming to an end next week, investors’ attention would be focused on company-specific news.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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.”

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31 Jul

This week in a nutshell (25th July- 29th July)

Technical talks

NIFTY opened the week on 25th July at 16,663 and closed on 29th July at 17,158. It made a weekly gain of 3%. The index has managed to sustain above the 50DMA of 17,087 level, which might act as a support. On the upside, the recent high of 18,115 might act as a resistance.

Among the sectoral indices, METAL (+7.7%), MEDIA (+5.2%), and IT (+3.5%) were the top gainers while AUTO (-0.7%), PSU BANK (-0.1%), and FMCG (-0.04%) led the losers in the week.

Weekly highlights

  • After upbeat forecasts from Apple and Amazon.com, the US indices closed the week in the green. Tech-heavy NASDAQ was up 4.5%, S&P 500 up 4.3%, and Dow Jones Industrial Average was up ~3% for the week. The earnings season continued to cause volatility in US markets. A profit warning from Walmart dragged down retail shares during the week. Exceptionally weak consumer confidence data added to investors’ worries.
  • The US Commerce Department said the American economy contracted in the second quarter of CY22. This was the second straight quarterly decline in gross decline profit (GDP) reported by the government. This news increased the chances of a recession in the US which impacted investor sentiments.
  • The Federal Reserve increased the interest rates for a second consecutive quarter by 0.75 percentage points, in line with expectations. Elevated inflation has been attributed to supply chain issues and higher prices for food and energy along with broader price pressures.
  • The Reserve Bank of India (RBI) said on July 22 that India’s foreign exchange reserves dropped to $572.71 billion. This was the lowest level in more than 20 months, after declining by $7.54 billion in the week ending July 15. As of November 6, 2020, foreign exchange reserves were last as low.
  • Brent Oil settled 5.4% up at USD 104/barrel. Crude Oil WTI was up 3.6% at USD 98/barrel. Supply concerns and a weaker US dollar lifted oil prices this week. Investors’ attention is on OPEC and allies meeting to discuss production quotas for September. This meeting is expected to have a significant impact on the oil markets because OPEC+ has reached the end of its plan to gradually unwind its production cuts from May 2020 and there is no clear roadmap of predetermined quotas.
  • Due to price erosion pressure, Indian pharmaceutical companies are likely to experience reduced revenue growth from the US generics market in FY23, according to rating agency Icra. The US has always been a significant market for Indian pharmaceutical companies. ICRA says that in recent years, revenues from there have grown relatively slowly because of persistent pricing pressure, the absence of significant generic product launches, and increased regulatory scrutiny. ICRA says high single-digit to low-teens price erosion caused the revenues from the US pharmaceutical market for its sample of eight top Indian pharmaceutical companies to drop by 0.2% in FY22.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 1,460mn. DII (Domestic Institutional Investors) continued to be net buyers and purchased shares worth Rs 23,835mn.

Things to watch out for next week

  • According to Financial Express, the RBI is expected to hike interest rates by 35-50bps in the monetary policy meeting to be held between August 3-5. The interest rate differential between US and India should be kept minimal to avoid depreciation of the Indian Rupee.
  • Investors’ attention would be on company-specific news as the earnings season has picked up momentum. There could be volatility in Indian markets post earnings of companies like M&M, UPL, SBI, Varun Beverages, and consumer companies Dabur, Godrej Consumer, and ITC. Comments on the impact of inflation on demand, and easing of supply chain challenges would drive the share price.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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.”

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23 Jul

This week in a nutshell (18th July- 22nd July)

Technical talks

NIFTY opened the week on 18th July at 16,183 and closed on 15th July at 16,719 (+3.3%). The index is trading above the 20DMA level of 16,580. On the upside, the 50DMA level of 17,073 might act as a resistance. The RSI (52), and MACD turning upwards suggests a positive sentiment ahead.

Among the sectoral indices, PSU BANK (+7.7%), Private Bank (+6.6%), and IT (+6.4%) led the gainers, whereas Pharma (-1%) was the only loser this week.

Weekly highlights

  • IMF chief Kristalina Georgieva cautioned policymakers from the Group of 20 major nations on Saturday to take immediate measures to tackle inflation, saying that the “exceptionally uncertain” global economic outlook may worsen if higher prices persisted.
  • Sula Vineyards has filed papers with the market regulator Securities and Exchange Board of India (SEBI) to raise capital through an initial public offering ( IPO). If the plans go forward, it will be the first IPO in India by a pure-play wine company, and the second in recent weeks by a player in the alcohol and spirits sector.
  • India’s foreign exchange reserves plunged by US$8 billion in the week ended July 8 to US$580.25 billion, the lowest in more than 15 months, data released on July 15 by the Reserve Bank of India (RBI) showed. The decline in reserves was driven by a US$6.66 billion drop in the RBI’s foreign currency assets, which fell to US$518.09 billion from US$524.75 billion as of July 1.
  • GDP growth predictions for 2022 remain the highest among developing market peers for India. Passenger vehicle sales, two-wheeler sales, electricity generation, and bank credit all increased in June for the second month in a row. The June unemployment rate (7.8 percent, according to CMIE) is higher than in May but significantly lower than it was in February (8.11 percent).
  • Less than three weeks after they were implemented, the government lifted duty on gasoline exports and reduced windfall levies on other fuels.
  • Reliance Industries Ltd reported a 7.9% increase in profit QoQ for 1QFY23 on the back of improved performance of oil-to-chemicals, retail and telecom businesses. However, it failed to meet expectations. The profit was impacted by higher finance costs as a result of rising interest rates, rupee devaluation, and lower other income.
  • The Down Jones Industrial Average, NASDAQ and S&P500 opened the week in red. However, positive earnings release resulted in a three-day winning streak for the indices. The NASDAQ and S&P500 fell 1.7 percent and 1%, respectively, on Friday, as disappointing earnings from social media companies and poor economic data stoked recession fears.
  • The ECB boosts interest rates by 50 basis points, the first increase since 2011. On Thursday, the European Central Bank raised interest rates more than anticipated, showing that concerns over runaway inflation now outweigh growth considerations, even as the eurozone economy struggles to recover from Russia’s war in Ukraine.
  • FII (Foreign Institutional Investors) were net buyers of shares worth Rs 40,380 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 9,380 mn this week.

Things to watch out for next week

  • With results season picking up, quarterly numbers are to be watched out for. Auto companies like Bajaj Auto, Maruti Suzuki, and Tata Motors are set to report earnings next week. Commentaries about the semi-conductor shortage situation and demand sentiments from auto companies are expected to give some color about the economic recovery.
  • We expect markets to continue volatile as a result of investor reactions to earnings releases and macroeconomic news such as supply-related constraints, interest rate hikes, and rising inflation.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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.”

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16 Jul

This week in a nutshell (11th July- 15th July)

Technical talks

NIFTY opened the week on 11th July at 16,136 and closed on 15th July at 16,049. It made a loss of 0.5% during the week. The index is trading above the 10DMA level of 16,020 which might act as a support. On the upside, the 20DMA level of 16,557 might act as a resistance. The RSI (45), and MACD turning downward suggests a further possible downside.

Among the sectoral indices, ENERGY (+2.5%), Pharma (+2.3%), and REALTY (+2.2%) led the gainers, whereas IT (-6.3%), BANK (-1.3%), and FINANCIAL SERVICES (-0.9%) led the losers during the week.

Weekly highlights

  • The US indices closed the week in the red as investors worried that inflation and rising interest rates may adversely affect the overall demand and performance of businesses. The S&P 500 was down by 0.9%, Nasdaq 100 by 1.2%, and Dow Jones by 0.2%.
  • Israel will sell Haifa Port, a major trade hub on its Mediterranean coast, to winning bidders Adani Ports of India and local chemicals and logistics group Gadot for USD 1.2 bn. Gadot and Adani made it to the end of a two-year tender process. Adani will hold a majority 70% stake and Gadot will hold the remaining 30%.
  • The government has offered 10 blocks for finding and producing oil and gas under its Open Acreage Licensing Programme (OALP). ONGC, Oil India, and GAIL won a total of 6 blocks out of the 10 blocks by the 7th round of OALP. The government expects an investment of USD 600-700 mn in the 10 blocks.
  • The Murugappa Group will launch an electric three-wheeler brand called Montra by September and invest Rs 2,000 mn in the segment. The company will manufacture Montra three-wheelers at its Ambattur facility in Chennai. The initial capacity for three-wheelers will be around 75,000 units per year and the company will have distributions at around 40 locations.
  • Exports in June were up by 23.5% to USD 40.1 bn while the trade deficit increased to a record high of USD 26.2 bn, both YoY, mainly due to a jump in gold and crude oil imports. Crude oil, coal, and coke imports doubled to USD 21.3 bn, and USD 6.76 bn on a YoY basis. Gold imports too were up YoY by about 183% to USD 2.74 bn.
  • Exports of finished steel from India more than halved in June on a YoY to 0.64 mn tonnes following the levy of a 15% duty on all outbound shipments by the government in its efforts to increase domestic supplies and curb inflation.
  • The inflation in the US was up 9.1% YoY in June, which was the highest increase in 41 years, whereas India’s WPI inflation eased down to 15.2% from 15.9% on a YoY.
  • FII (Foreign Institutional Investors) were net sellers of shares worth Rs 59,160 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 21,730 mn this week.

Things to watch out for next week

  • With results season picking up, quarterly numbers are to be watched out for. IT companies like TCS, Mindtree, LTI, and LTTS have already reported earnings that were a mixed bag. Kotak Mahindra Bank and ICICI Bank are set to report earnings next week. While the provisions are not expected to be a big surprise, there could be an impact of MTM losses on banks’ earnings. Commentary from HUL would help understand the impact of inflation on margins and rural-urban demand.
  • We expect the markets to remain volatile as investors show sentiments of fear guided by news related to the macro-economic aspects like supply-related constraints, and rising inflation.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered 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.”

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09 Jul

This Week in a nutshell (July 4th to July 8th)

Technical talks

NIFTY opened the week on 4th July at 15,727 and closed on 8th July at 16,220. During the week, NIFTY was up 3.1%. The index has breached the 100-week moving average on the weekly chart with RSI at 46. Immediate support for the index stands at 15,881 and resistance at 16,308.

Among the sectoral indices, PSU Bank (+6.6%), FMCG (+5.7%), and Realty (+5.0%) were the gainers during the week with no sector in the red.

Weekly highlights

  • Wall Street started the week on a positive note as investors kept their focus on the growth trajectory of the US economy. US Markets were subdued for a day as investors awaited minutes from the Federal Reserve’s meeting.
  • However, Wall Street ended higher after the release of the Fed minutes, which showed officials agreeing that the inflation outlook had deteriorated and expressed concern over lost faith in the Fed’s ability to stem it. The Fed at that meeting hiked rates by 0.75 percent for the first time since 1994.
  • Fed officials also indicated that a hike of 50-75 bps would be likely at the July meeting to control inflation.
  • US markets ended the week flat as Treasury yields jumped following a stronger-than-expected U.S. jobs report, which suggested the Federal Reserve may push further interest rate hikes to cool the economy and slow inflation.
  • Strong data from the U.S. Labor Department, which reported the United States added more jobs than expected in June, indicated a recession was not yet imminent amid persistent job growth and gives the Fed scope to deliver another large interest rate increase later this month.
  • Coming to the Indian market, the Nifty gained ~3% this week as Indian stocks witnessed buying interest during the week supported by positive cues from global peers, declining FIIs selling, falling commodities, and crude oil prices. However, depreciation in the Indian rupee remained a concern for the investors.
  • Government officials stated that they are trying to address volatility in the Indian rupee that has tumbled to record lows against the dollar in recent weeks. The rising trade deficit and investors retreating from the domestic share markets led to a fall in rupee value.
  • Even RBI announced several measures to improve foreign flows into the country to support the rupee.
  • The monthly trade deficit has been rising for the past few months. The trade deficit was up 62% YoY in the month of Jun-22.
  • Brent crude futures extended gains at the start of the week as a strike in Norway is expected to disrupt oil and gas output, fanning tight supply worries. The prices slipped later as fears of a potential global recession spurred concerns about oil demand.
  • The government is taking steps to curb inflation. It directed edible oil manufacturers to cut prices of imported cooking oils by up to Rs 10 per liter within a week and maintain a uniform MRP of the same brand of oil across the country. As the global prices have declined by 10 percent in the last week the price cuts should be passed on to consumers.
  • Cooling Oil prices coupled with the progress made by the Monsoon has now set the stage for the first-quarter earnings.
  • The foreign institutional investors (FIIs) remained net sellers for the week as they offloaded equities worth Rs 22,184 mn. However, domestic institutional investors (DIIs) purchased equities worth Rs 39103 mn during the week gone by.

Things to watch out for next week

  • The Indian Inflation data along with the result season will set the tone for the market in the upcoming week. D-Street will be interested to hear the management commentary about the future earnings growth trajectory.
  • The markets globally will be majorly influenced by the inflation numbers of the USA which hasn’t shown any signs of deceleration. Further, the USA’s Producer Price Index (PPI) and jobless claims are something the global markets will keep a track of.

 

 

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.”

 

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04 Jul

Week in a nutshell (27June-1July)

Technical talks

NIFTY opened the week on 27th June at 15,926 and closed at 15,752 on 1st July. The lower Bollinger Band level of 15,370 might act as a support, while, on the upside, the 16,250 level might act as a resistance.

Among the sectoral indices, FMCG (+2.8%), REALTY (+1.6%), and HEALTHCARE (+1.1%) were the gainers during the week. OIL&GAS (-4.2%) was the only loser.

Weekly highlights

  • All of the major US indices ended the week on a volatile note as oil prices rose and fell throughout the week. S&P 500 closed the week marginally higher at 3,825 and Nasdaq at 11,129.
  • WTI crude oil and Brent crude closed flat at -0.3% after fears that the US economy would enter a recession, resulting in lower oil demand.
  • Accenture reported 3QFY22 earnings, with revenues exceeding expectations at US$16.2 billion. According to the leadership, cost optimization, along with growth, is now the focus area for clients. However, it lowered its fiscal forecast due to a negative foreign exchange impact and rising inflation.
  • According to official data released on June 30th, output in India’s eight core infrastructure sectors increased by 18.1% in May, compared to 16.4% the previous year. This suggests that the economy is gradually returning to normalcy.
  • Japan’s factory activity growth slowed in June, with the PMI falling from 53 to 52, as supply disruptions, exacerbated in part by China’s strict COVID-19 curbs, hurt manufacturers, keeping the economy underpowered and with few catalysts to spur a robust recovery in the short run.
  • US consumer spending data was released on June 30th, showing that US consumer spending rose less than expected in May as motor vehicles remained scarce and higher prices forced cutbacks on purchases of other goods, indicating that the early recovery in economic growth was a losings steam.
  • On June 29, India’s Cabinet approved a plan that would allow local crude producers to sell oil to private companies, boosting revenue for state-run producers such as ONGC and Oil India. The decision will take effect on Oct. 1, and existing conditions for selling crude oil to government-run companies will be waived, according to a government statement, adding that exports will be prohibited. Reliance Industries’ share price tanked more than 7% Friday after the government levied an additional tax on crude oil.
  • FII (Foreign Institutional Investors) net sold ₹ 68,350 mn and DII (Domestic Institutional Investors) were net buyers this week. DIIs bought shares worth ₹ 59,250 mn.

Things to watch out for the next week

  • On Monday the labor markets will be in the spotlight next week, with the June nonfarm payrolls report due on Friday.
  • The 1QFY23 result season kicks off with IT major TCS reporting earnings on Friday.
  • The International PMI surveys, which track business sentiment in the United Kingdom and the eurozone, will be released on Tuesday, while the meeting minutes from the FOMC’s most recent policy meeting, held in mid-June, will be available on Wednesday.

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.”

 

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26 Jun

Week in a Nutshell (20-24 June)

Technical talks

NIFTY opened the week on 20th June at 15,334 and closed just below 15,700 on 24th June. The index is trading near the lower Bollinger Band level of 15,370 which might act as a support, although a weak one as the markets have been falling for the past three weeks. On the upside, the 16,200 level might act as a resistance, since a gap was made last week. The RSI (14) at 40 has been consistently coming down.

Among the sectoral indices, AUTO (+6.9%), CONSUMER DURABLES (+4.6%), and FMCG (+4.2%) were the gainers during the week. METAL (-2.7%) was the only loser.

Weekly highlights

  • All the major US indices have risen from 5.4% to 7.5%, a recovery after two weeks of continuous selling.
  • The WTI Crude oil fell 1.7% and Brent Crude closed flat for the week after worries about the US economy going into a recession, which means lower oil demand.
  • The minutes of the RBI MPC meeting got released this week. The rate-setting committee has indicated of further rate hikes are on their way as inflation has been consistently staying above the upper tolerance band of 6%. The RBI has the mandate to control inflation and let it stay at 4% +/- 2%. Hiking or lowering interest rates is one of the prominent tools to control inflation.
  • Another update related to RBI is the fall in forex reserves that the RBI maintains. The latest data released by the RBI report shows that the foreign currency reserves have fallen by USD 10 bn in the last two weeks as the RBI has stepped up intervention in the foreign exchange market. The RBI has been selling dollars to curb excessive volatility in the exchange rate and prevent runaway depreciation of the Indian rupee. The forex reserves with the RBI now stand at USD 590bn. The rupee has been depreciating against the dollar and now trades below ₹78.2/USD.
  • The government, from July 1 will ban 22 single-use plastic products such as plastic spoons, forks, plates, etc. Within that also falls plastic straws that come with tetra pack juices, milkshakes, and buttermilk. Manufacturers of such products including Amul, Parle Agro, Dabur, etc are pleading with the government to postpone the ban on straws as an alternative which is paper straws which are largely imported and they cannot be made available in a short span.
  • After a scare of a few electric two-wheelers catching fire, this week in Mumbai, a TATA Nexon EV car caught fire while parked. Now even though many EV manufacturers are saying that a small percentage of EVs catching fire is normal and is a global phenomenon, it will still create a negative sentiment in the minds of the prospective customers of electric vehicles.
  • However, good news for internal combustion engine (ICE) vehicles that run on traditional fuels like petrol, diesel, and CNG. Many manufacturers are about to launch their newer models and variants as we approach the monsoon and subsequently the festival season. Multiple test vehicles, covered in camouflage have been located by auto enthusiasts. This has always been a strong indication that upcoming launches are expected very soon.
  • FII (Foreign Institutional Investors) net sold ₹ 1,15,116 mn and DII (Domestic Institutional Investors) were net buyers this week. DIIs bought shares worth ₹ 1,16,704 mn.

Things to watch out for the next week

  • At the beginning of the month, economic data watchers will look for GST collection data, and in addition to that, stock market watchers will look for monthly automobile sales volume data. Automobile, a sector that contributes 7% to the GDP and creates big employment opportunities, a consecutive and steady recovery is essential for the economy.
  • The G7 Summit will be held in Germany on Monday. The leaders will likely discuss rising worldwide inflation and the post-war scenario in Russia, Ukraine, and the European Union.
  • The US economy had contracted 1.5% in the January to March 2022 quarter. A consecutive decline in the quarter ending June will officially make the US economy to enter into a recession. Hence, the quarterly GDP numbers to be released on June 29 will be keenly watched.

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.”

 

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19 Jun

Week in a Nutshell (13-17 June)

Technical talks

NIFTY opened the week on 13th June at 15,878 and closed down 4% on 17th June at 15,294. The index is trading below the lower Bollinger band and the next support is likely at 15,183. The recent high of 16,794 might act as a resistance. The RSI (14) of 36 indicates the index is nearing the oversold levels.

During the week, METAL (-9.1%), IT (-8.2%), and PSU Bank (-7.7%) led the sectoral losers. There were no sectoral gainers.

Weekly highlights

  • High inflation has investors worried in recent weeks about a toll on corporate profits and economic growth. On Monday, the S&P 500 confirmed it’s in a bear market at is now down more than 20 percent from its most recent record closing high.
  • After a selloff triggered by a series of interest rate hikes by the Federal Reserve and other major central banks, all three US indices ended in the red this week. NASDAQ and Dow Jones were down 4.8% each while S&P 500 was down 5.8%. The cosmetics company Revlon Inc surged ~80% on Friday after reports suggested Reliance Industries may be considering buying out the company.
  • The Federal Reserve raised interest rates by three-quarters of a percentage point, the most since 1994. Officials have indicated that aggressive rate hikes will continue, with severe measures being used to combat rising inflation.
  • Crude oil prices were impacted as investors worried about the global economic outlook and markets were impacted post interest rate hikes around the world. Brent Oil was down 6.9% during the week and ended at USD 113.6/barrel while Crude oil ended 8.4% lower at USD 110.4/barrel on Friday.
  • The Indian Index of Industrial Production (IIP) climbed from 2.2% in March to 7.1% in April. The April industrial growth rate of 7.1 percent is the highest in eight months, notwithstanding the benefit of a favorable base effect.
  • Wholesale price inflation soared to a record high in May due to rising food and fuel prices, posing a challenge to authorities dealing with high inflation. Wholesale prices climbed to 15.9 percent in May vs 15.1 percent in April and was, according to economists, India’s highest since September 1991.
  • Retail inflation for May was 7.04% from April’s near-eight-year high of 7.79 percent due to a favorable base effect. The fall in inflation in May is unlikely to do much to slow down the Reserve Bank of India’s (RBI) rate hike cycle.
  • Foreign institutional investors (FIIs) continued to be sellers, selling equities worth Rs 232,740 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 172,270 mn.

Things to watch out for next week

  • Major central banks followed the US Federal Reserve in raising interest rates. Rising prices and tightening monetary policies have rattled investors which dragged the equities world over.
  • S&P Global will release the flash purchasing managers indices (PMI) data for June for major economies later next week. In addition, inflation, and consumer and business climate gauges will also be released. This will provide insights into the current state of the global economy.
  • With quarterly earnings season out of the way, investors will focus on macroeconomic activities and action would be stock specific. Indian investors’ attention will be on the progress of the monsoon across the country.

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.”

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13 Jun

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.”

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