#WeekInANutshell

This week in a nutshell (July 26^thto July 30^th)

Technical talks

NIFTY opened the week on 26^thJulyat 15,849and closed on 30^th July at 15,763, a decline of 0.5%.NIFTY has been getting strong resistance around the 20 DMA of 15,788 throughout the week. This remains the crucial level to watch out foras it’s capping Nifty’s upward movement.

Weekly highlights

·         FIIs were net sellers each day of the week with a net total outflow of Rs 108,250 m. DIIs continued to give support to the market through daily net buying. DIIs pumped in Rs 82,550 mn in the market this week.

·         The US equities kept up with all time high levels through the week. Strong quarterly results and Fed rates retained at near zero levels aided the positive sentiments.

·         An increase in regulatory crackdown on Chinese tech companies led to a selloffin Chinese equities. Whether this remains a long term concern and other Asian markets will see the benefit of higher allocation remains to be seen.

·         International Monetary Fund (IMF) has cut India’s FY22E GDP forecast to 9.5% due to setback from the second wave of Covid-19.

Things to watch out for next week

·         July 2021 monthly auto sales data will be released in the coming week. This data would be crucial to understand the demand trend post easing of lockdowns.

·         RBI’s Monetary Policy Committee (MPC) is scheduled to meet between August 4^th to 6^th. MPC’s comments on inflation, economy growth will be something to watch out for.

·         The quarterly result season continues with companies such as HDFC, Bharti Airtel, and Dabur reporting earnings next week. Management commentary on consumer demand post easing of lockdowns and near term outlook will be critical.

Technical Talks

NIFTY opened the week on 19th July at 15,754 and closed on 23rd July at 15,851, it made a small weekly gain of 0.6%. The index is trading below its upper Bollinger band level of 15,952, which might act as a resistance. On the downside, 20 DMA of 15,788 might act as a support. The index might trade in the range of the above-mentioned levels before making a strong move on either side.

Weekly highlights

• After two sessions of losses and Wednesday being a holiday, the Market recovered for the last 2 days of the week as Nifty ended below 15,900, led by gains in most of the sectoral indices including Realty, Bank, Pvt bank, etc.
• Among the sectoral indices, NIFTY Private Bank was the top loser (-2.26%) this week followed by Nifty Auto (-2.18%) and NIFTY IT was the top gainer (+1.68%) as most of the IT companies came up with strong numbers and positive outlook. 
• The Nifty Private Banks sector was impacted by the result of HDFC Bank where the earnings growth in the June quarter was the lowest seen in many years. The disruption caused by the second wave of COVID-19 impacted profitability as the bank shored up provisions. HDFC Bank was down by 5.2% this week. On monthly basis, the defensive sectors are again at the forefront. Pharma and IT are up by 4.5% and 2.9% respectively.
• Zomato made a stellar debut on bourses on Friday, listing at Rs 116 apiece on the NSE, garnering a 53 percent premium over its issue price of Rs 76 per share. The valuation of the company soared to Rs 910 bn.
• India continued to attract strong foreign direct investment inflows in the first two months of FY22.  Gross FDI inflows more than doubled to $18.3 billion in April-May this year compared to $8.5 billion in the same period a year ago, according to RBI data. Nearly a third of the inflows are in the form of acquisition of shares rather than investing in new projects.
• Oil prices trimmed gains on Friday but were poised to end the week largely steady after rebounding from a sharp drop, underpinned by expectations supply will remain tight as demand recovers. Brent crude futures fell 7 cents, or 0.1%, to $73.72 a barrel at 0147 GMT, after jumping 2.2% on Thursday. For the week, Brent was headed for a 0.1% gain.
• Foreign Institutional Investors (FIIs) continued to be net sellers in Indian equity of Rs 54,460 mn, and the quantum of outflows increased from the previous week of Rs 15,350 mn. Conversely, Domestic Institutional Investors (DIIs) continued to be net buyers with an increased net outflow of Rs 50,520 mn vs the previous week’s Rs 12,000 mn. 

                                                                       Things to watch out

• With results season picking up, quarterly numbers are to be watched out.
• With Covid third wave concerns hovering around, government restrictions & policies regarding full or partial lockdowns are to be watched out for.

Technical talks

NIFTY opened the week on 12th July at 15,767 and closed on 16th July at 15,923. The index made a gain of 0.9% this week. On the downside, 10DMA of 15,816 might act as a support. Flat RSI (62) suggests a consolidation before making a strong move on either side.

Weekly highlights

• The market started the week on a positive note but erased intraday gains as key inflation data was released.
• Consumer Price Index-based inflation (CPI) for the month of June rose 6.3 percent, as food prices hardened further, and transportation costs rose due to higher petrol and diesel prices.
• Food inflation (CFPI) came in at ~5.2 percent in June, compared with ~5.0 percent in May, as food prices continued to remain inflated, official data by the National Statistical Office showed on July 12.
• Most of the IT companies reported this week with strong numbers and also increased the revenue guidance for FY22 leading Nifty to hit fresh highs. NIFTY IT was up 2.6% this week followed by NIFTY PHARMA (+1.9%) and NIFTY PRIVATE BANK (+1.8%).
• Positive global cues, rally in IT stocks, comments from the US Federal Reserve and rally in banks pushed the benchmarks to record high. However, profit booking at all-time high levels pushed benchmark indices lower as they snapped the three-day winning run-on Friday. IT stocks saw intense selling while banks also contributed to the fall.
• Nasdaq and the S&P 500 were hitting record highs at the beginning of the week as investors awaited the start of the second-quarter earnings season and a batch of economic data to gauge the next leg of the equity market. But the rally was short-lived as the biggest hike in U.S. inflation in 13 years rattled investors who fear rising interest rates could end a stock market rally that has doubled prices from 2020 lows.
• Federal Reserve Chair Jerome Powell commented that US monetary policy will offer powerful support to the economy until the recovery is complete and the pace of price increases will likely remain elevated in coming months before moderating. The language indicated that he saw no need to rush the shift towards post-pandemic policy. Long-term inflation expectations, remained consistent with the Fed’s 2% inflation target.
• Post comment the US indices fell as a rally in growth stocks ran out of steam even though US unemployment claims fell to 3,60,000 which is the its lowest level since the pandemic struck last year and strengthened views about a recovery in the labor market.
• Late Thursday, Treasury Secretary Janet Yellen warned that prices could continue to rise for several more months, expects inflation to reach normal levels in medium term and to keep a careful eye on it.
• The stock market was falling Friday following Yellen’s comments on inflation and snapped a three-week winning streak. All three major indexes notched weekly losses. The S&P 500 and Dow shed 1% and 0.5%, respectively. The Nasdaq fell 1.9%.
• The foreign institutional investors (FII) sold Rs 15,350 mn worth of Indian equity shares in the week. Domestic institutional investors (DII) undertook Rs 21,000 mn of net buying during this week.

Things to watch out for next week

• Next week, investors’ focus will largely be dominated by the quarterly results. As in half of the duration of the June quarter, the economy was in a lockdown, investors will look beyond the earnings print or just the quantitative number and focus on the qualitative commentary provided by management.

Technical Talks

NIFTY opened the week on 28^th June at 15,915 and closed on 2^nd July at 15,725. It made a weekly loss of 1%. The 20DMA of 15,752 might as a resistance to the index and the 50DMA of 15,301 might act as a support. This suggests a net downside of 2.5% from hereon.

Weekly highlights

• On 28^th June 21, India’s finance minister Ms. Nirmala Sitharam addressed a press conference announcing economic relief measures. Rs 11.1 lakh mn of loan guarantee scheme was announced for Covid affected sectors. Few measures were also announced with a view to reviewing the tourism sector.
• The GOI removed import restrictions on refined palm oil till December 21. India is the largest importer of vegetable oils with nearly 15mn tonne annually. The palm oil comprises 9mn tonnes out of the total 15mn tonne. The domestic edible oil prices have doubled in FY21. We believe this move might lead to better availability of the commodity in the domestic market which will further lead to lower prices.
• The seasonally-adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 48.1 in June 21 from 50.8 in May. The index fell below the critical 50.0 mark for the first time since July 20. A level above 50 denotes expansion while a score below 50 denotes contraction. The manufacturing sector activities contracted as a rise in coronavirus cases led to strict containment measures which adversely impacted demand.
•   The Indian Meteorological Department (IMD) forecasted a normal monsoon rainfall over the country as a whole in July 21. However, prevailing conditions suggest that no favorable conditions may develop for further advance of southwest monsoon in Rajasthan, Western UP, Haryana, Chandigarh, Delhi, and Punjab. The availability of good monsoon leads to better agricultural output, which in turn further leads to a boost in the agriculture sector.
•  The foreign institutional investors (FII) sold Rs 54,168 mn worth of Indian equity shares last week. Domestic institutional investors (DII) undertook Rs 64,174mn of net buying during this week.

Things to watch out for this week

• The 1QFY22 result season will start next week, with TCS reporting results on July 8, 2021.
• Auto OEM’s announced June monthly volume data, with a rebound over the previous month’s volume across the board. Further easing of state specific restrictions might drive the share price of auto OEM’s.

Technical talks

NIFTY opened the week on 21st June at 15,526 and closed on 25th June at 15,860. The index made a gain of 2% this week. The index has taken support of its 10DMA of 15,768 which might act as a support. RSI (65) and MACD trending upwards suggests an up move from hereon.

Weekly highlights

• The state of Gujarat has announced a new Electric Vehicle Policy 2021, which will provide a subsidy worth Rs 8,700mn for electric vehicles and for setting up charging infrastructure in the State. EV buyers will get a subsidy up to Rs 20,000 for electric two-wheelers, up to Rs 50,000 for electric three-wheelers and up to Rs 150,000 for 4- wheelers.
• NBFCs are facing a sudden increase in loan recast, about a tenth of their loan book could be recast due to the pandemic stress. Many NBFCs are seeing recast in the June quarter, which will be implemented in the next few months. The recasts are also to be seen across the June and September quarters. (Source: The Economic Times)
• On 23 June, banks recovered Rs 58 Bn by selling Vijay Mallya’s shares in United Breweries to Heineken international, which was a 15% stake in the company. So far, banks have recovered Rs 71.8 bn through the share sales, which is a little over 70 percent of the amount that Vijay Mallya owes to the lenders.
• Reliance Industries Limited (RIL) in its AGM, has announced a Rs 750 Bn capital investment plan towards a clean energy push. RIL’s deal with Aramco is expected to conclude this year, where the latter will buy a 20% stake in RIL’s oil-to-chemical (O2C) unit. The Retail business is expected to create 1 Mn new jobs and add 10 Mn new vendors in next 3 years to the business.
• FII (Foreign Institutional Investors) selling and DII (Domestic Institutional Investors) buying trend continued this week as well. There was a net outflow of Rs 44571mn from the FII kitty while DII invested Rs 52833 mn.

Things to watch out for next week

• As the country gradually recovers from the 2^nd wave of covid 19 supplemented by a strong vaccine drive, the stock market will be driven by these and global factors.

This Week in a nutshell (June 14th to June 19th)

Technical talks

NIFTY opened the week on 14th June at 15,812 and closed 1% lower on 18th June at 15,683. The index came off from it’s all-time high levels as indicated by last week’s RSI and MACD trends. The index has broken past 10DMA of 15,749 but seems to have found support at 20DMA of 15,603. These two levels on either side will be crucial indicators to understand the index movement hereon. 

Weekly highlights

• In response to the improving economic indicators and rising inflation, the US Federal Reserve indicated that fed interest rate hikes could start in 2023. The earlier indication was for the interest rates to remain near zero throughout 2023 and only start increasing in 2024. Rising interest rates would mean funds flowing away from equities and into the debt market as well as out of emerging markets and into the US. This development led to some consolidation in broader equity indices in the US as well as India. 
• In it’s monthly bulletin, RBI said that the impact of the covid-19 second wave led lockdowns has impacted the FY22E output by Rs 2 lakh crore. The report also said that unlike the first wave, the second wave has impacted rural India and in turn, the rural demand scenario.
• Shares of Adani group companies tumbled in response to a report stating that National Securities Depository Ltd. (NSDL) had frozen accounts of 3 foreign funds who are among top investors of Adani group companies. Despite clarifications from the group, the stocks continued to decline for most of the week- some declining as much as 18%. 
• Foreign Institutional Investors (FII) continued to be net buyers of Indian equities of Rs 10,596  mn. Domestic Institutional Investors (DII) continued their selling spree, with a net outflow of Rs 4,878 mn.

Things to watch out for next week

• As the result season is now well behind us, the stock markets will be driven by macro developments. The covid-19 situation as well as vaccination drive will continue to be important metrics to be tracked. 

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.” 

Technical talks

NIFTY opened the week on 7th June at 15,725 and closed on 11th June at 15,799. The index closed this week on a flat note. The index is trading at its all-time high levels. Indicators like RSI (14) 70 and downward turning MACD suggest a downward correction is likely. The index may take support of its 10DMA of 15,676 before making a strong move on either side.

Weekly highlights

• The week opened on a positive note as declining COVID-19 cases and positive global stocks boosted sentiment. Later the market traded lower as profit booking was witnessed in major financial stocks. The week ended on a positive note as NIFTY registered their longest stretch of weekly gains since January as new coronavirus cases slow.
• The latest World Bank report on global economic recovery post the COVID-19 pandemic predicted India’s GDP growth at 8.3 percent for the FY22. The growth projection was slashed from 10.1 percent predicted in April due to the second wave of the COVID-19 in the country.
• The US S&P 500 was weak, with investors standing by for news of a global minimum corporate tax rate, lingering inflation fears, and a lack of market-moving economic news. It continued to be weak as US CPI release was awaited.
• China’s PPI (Producer Price Index) came out. It jumped 9.0% from a year ago in May, accelerating from April’s 6.8% increase according to the National Bureau of Statistics. The result topped the 8.6% increase expected by economists polled by The Wall Street Journal, and marked the fastest YoY rise since Sep-08, when producer prices rose 9.1%. The statistics bureau said that soaring crude-oil, iron-ore and metals prices boosted factory-gate prices last month, and drove China’s imports to the fastest increase in over a decade.
• The outlook for Indian economic activity is brightening as pandemic restrictions ease and vaccinations increase. Government and central bank stimulus will continue to help. The central bank now holds more than half of the 10-year bond because of its purchases of government debt.
• Foreign Institutional Investors (FII) continued to be net buyers of Indian equities of Rs 17,410 mn. Domestic Institutional Investors (DII) continued their selling spree, with a net outflow of Rs 8,240 mn.

Things to watch out for next week

• Next week, investors’ focus will largely be dominated by economic data as the country reports official data on retail and wholesale inflation. A persistent higher print may put more pressure on RBI’s Monetary Policy Committee to start thinking about the policy normalisation.
• On the global front, investors will keenly look for data on industrial production and retail sales from US and China on June 15 and June 16, respectively, which may set the tone for world equities for the 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.”