Weekly Markets highlights

29 May

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.    
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22 May

This week in a nutshell (May 17th to May 21st)

Technical Talks

NIFTY opened the week on 17th May at 14,756 and closed on 21st May at 15,175. It made a weekly gain of 3%. The index is trading above its 10DMA of 14,913 which might act as a support. RSI 14 (60) and MACD turning upwards suggests a possible rally going ahead.

Weekly highlights

  • India on Thursday cut sugar export subsidies by 31.4% for the current season which ends on Sept 30th Higher sugar exports from India, also the world’s biggest consumer of the sweetener, will cut back large inventories at home and prop up domestic prices, which will help the country’s money-losing mills.
  • New investment projects announced by private sector during the previous financial year fell by 68% on account of the Covid-19 pandemic. The announced projects, which represent an intention to invest, amounted to Rs 5,180 bn in FY21, the lowest since 2004-05 and down from the Rs 16,280 bn announced in FY20.
  • India Inc’s investment abroad in the April-21 jumped by more than two times YoY to $2.51 billion, data from the Reserve Bank showed.
  • The US Labor Department reported initial jobless claims fell to 444,000 in the week ended May 15. That was lower than the prior week’s 478,000 claims and economists’ forecasts for 460,000 new filings. This led the Wall Street higher.
  • Gold is at the highest price in more than four months. Its claimed virtual rival, Bitcoin, steadied after a volatile cryptocurrency slump this week.
  • Foreign Institutional Investors (FIIs) were net sellers in Indian equity of Rs 17,540 mn, against net selling of Rs 36,199 mn in the previous week. Domestic Institutional Investors (DIIs) were net buyers of Rs 13,180 mn, against last week’s selling of Rs 18,170 mn.

                                                                       Things to watch out

  • India reported 2.59 lakh new COVID-19 cases on Friday, the lowest daily count in one month. Declining covid cases and hope of lockdown being lifted by June/July in metro cities might lead the Indian market sentiment going forward.
  • As the 4QFY21 result season is going on, companies’ results will be the key thing to watch out for.

 

 

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18 Apr

The week in a nutshell (April 12th to 16th)

 

Technical talks

  • NIFTY opened the week on 12th April at 14,645 and closed on 16th April at 14,617. After beginning the week with major losses, the index rebounded to close flat for the week. The index is trading below its 20DMA of 14,661, which may act as resistance. The next level being 50DMA at 14,863. The Index breached its 100DMA at 14,316 during the week where it may find support.

Weekly highlights

  • The week began with major indices in red due to the rising Covid-19 cases and lockdown-like conditions imposed across major areas in the country.  Indices recovered during the week to end flat. Gains were seen in pharma, IT, metals, and auto stocks, while bank and realty indices ended in the red.
  • Due to the increasing number of COVID-19 cases in India, Foreign Institutional Investors (FII) turned net sellers this week,  at  Rs 10,590 mn. Domestic Institutional Investors (DII) were net buyers and pumped in Rs 6,080 mn.
  • Q4FY21 result earnings season started this week with the big 3 tech companies -TCS, Infosys, and  Wipro. All reported good revenue growth on the expected lines. Their comments for upcoming quarters suggest promising growth. On the back of a strong earnings show, Infosys has announced a buyback of Rs.92 bn, at an upper price limit of Rs. 1750/share.
  • The US Equity markets hit a record high during the week. The Dow Jones Industrial Average hit the historic milestone of 34,000 for the first time owing to economic recovery and stimulus package announced by President Joe Biden and reducing unemployment.
  • American banking major Citibank on Thursday announced that it will exit from the consumer banking business in India and 13 countries. This is a part of a global strategy of CEO Jane Fraser attributing the decision to an absence of scale to compete in these geographies. The bank has 35 branches in India and employs approximately 4,000 people in the consumer banking business. 
  • India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 5.52 percent in March. Separately, the country’s factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a contraction of 3.6 percent in February. The retail inflation during February was at 5.03 per cent.

Things to watch out 

  • Q4FY21 result season to continue with HDFC Bank and Nestle reporting their earnings. India’s COVID patient numbers will drive the sentiment of the market in the near term. Some economists are already reducing India’s GDP growth forecast for FY22 due to the second wave. We expect investors to focus back on cash flow creators – pharma, consumer, and software services. This is a holiday-shortened week due to a break on Wednesday. 
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04 Apr

The Week in a nutshell (30th March-1st April)

Technical Talks

NIFTY opened the week on 30 th March at 14,628 and closed on 1 st April at 14,867, a weekly
gain of 1.6%. On the upside, 15,536 could be a resistance to watch for. On the downside,
100 DMA of 14,139 might act as a support. RSI on the uptrend at 52 and reducing negativity
in MACD indicates that the market might see some uptrend in the coming days.

Weekly highlights

● The government has approved a Rs 109 bn production-linked incentive scheme for the food
processing industry (PTI). The scheme will attract investments from global and domestic
companies in the food processing sector.
● GST collections rose 27% to hit a record high of nearly Rs 1,240 bn in March, helping to
narrow the deficit for the full financial year to ~7%. Revenue from imported goods jumped
70%, while those from domestic transactions, including services imports, were 17% higher
than the corresponding periods of 2020. Economic activities are picking up which will be
positive for economy linked stocks.
● A sharp recovery in the US dollar, hints of a strong global economic outlook, and a surge in
US treasury yields continue to hit the safe investment demand and thus the price of gold.
The Gold futures have fallen from a high of US $ 1962 to the US $ 1730 on April 1. A
possible physical demand recovery due to the upcoming marriage season in India and China
can attract fresh buyers.
● OPEC+ agreed on Thursday to gradually ease its oil output cuts from May. The new U.S.
administration called on Saudi Arabia to keep energy affordable, mirroring Donald Trump's
practice of calling OPEC's leader over oil policy.
● Auto volumes for the month of March-21 were reported. Companies have been talking of
the supply chain being impacted due to the global chip shortage issue. Despite the supply
chain issues, most companies reported good performance. Maruti and Tata Motors reported
2% and 15% MoM growth. NIFTY AUTO witnessed a gain of 1.6% on Thursday.
● Foreign Institutional Investors (FIIs) were net buyers in Indian equity of Rs 26,044 mn,
against net selling of Rs 67,013 mn in the previous week. Domestic Institutional Investors
(DIIs) continued to be net buyers of Rs 39,660 mn, lower than last week’s buying of Rs
50,181 mn.

Things to watch out
● RBI Monetary Policy Committee to announce the new policy on 7 April. No interest rate
changes are expected in this meeting too. After a cumulative reduction of 115 bps in the
policy repo rate to 4.00 per cent in two of the out-of-cycle meetings held in March 2020 and
May 2020, the Monetary Policy Committee (MPC) kept the repo rate unchanged in the
subsequent policy reviews. Since the last policy review, the CPI inflation has risen from a low
of 4.1 per cent in January 2021, to a sharper-than-expected 5.0 per cent in February 2021.
Consensus expects no changes in interest rates.
● Due to the everyday rise in covid cases, the Government is planning a weekend lockdown in
Maharashtra and planning to close restaurants, Malls, parks etc. How the market reacts to
these rising cases in the country will be the key thing to watch out for.

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28 Feb

This week in a nutshell (Feb 22nd to Feb 26th)

                                                                                      Technical Talks

As expected, Nifty continued to decline this week. On Friday, the index had a gap down opening and it witnessed a fall of (-3.8%). Opening on 22nd Feb at 14,999 and closing on 26th Feb at 14,529, it made a weekly loss of ~3%. For the next week we think that on the downside, 50DMA of 14,445 could act as a support. On the upside, 14,957 is the key level to watch out for as the 20DMA might act as a resistance. With the RSI (45) and MACD on a declining trend, the technical indicators have cooled off a bit but the trend is declining. There could be further possible decline.                                                           

Weekly highlights

  • The Indian Cabinet launched a production-linked incentive scheme (PLI) for the Pharmaceutical sector. The outlay of ~Rs 150 bn is approved by the Union Cabinet. This scheme will benefit domestic manufacturers to offer a wide range of affordable medicines to consumers, and it will also help to generate employment. The duration of the scheme would be from FY21 to FY29.
  • Agriculture Ministry estimates that India’s foodgrain production will rise by 2% in FY21 to an all-time high of 303.34mn tonnes. The estimates suggest a better output of rice, wheat, pulses, and coarse cereals. Availability of grains reduces dependence on a good monsoon.
  • Oil prices climbed this week to fresh 13-month highs after US government data showed a drop in crude output after a deep freeze disrupted production last week. The Brent crude futures and US West Texas Intermediate (WTI) crude futures rallied to 66.96$ and 63.01per barrel respectively.
  • Many OEMs (Automobile companies) have written to GOI to address the semiconductor shortage issue. The industry has requested the government to direct embassies to help in restoring supplies of semiconductors.
  • The foreign institutional investors’ (FII) bought Rs 181bn worth Indian equity shares last week. The inflows are elevated due to the bulk deal of Bosch Ltd. Excluding this deal, FIIs were net sellers. Domestic institutional investors (DII) were net buyers during this week of Rs 2.8 bn.

Things to watch out for this week

  • Auto data- OEMs will be reporting their volumes data for the month of February. The previous 2-3 months performance for almost all OEM’s was impressive led by festive season demand and some pent-up The semi-conductor shortage issue impact on monthly volumes is key to watch. The volume numbers will set the tone for auto OEM’s performance in March.
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21 Feb

This week in a nutshell (Feb 15th to Feb 19th)

Technical Talks

During this week NIFTY declined as expected, opening on 15th Feb at 15,270 and closing on 19th Feb at 14,982, a weekly loss of 1.9%. After hitting a new high of 15,432 this week, the index has started to decline. With the RSI (58) and MACD on a declining trend, the technical indicators indicate a further possible decline. On the downside, 20DMA of 14,759 could act as a support. On the upside, 15,432 is the key level to watch out for as the last high could act as a resistance.                                                                 

Weekly highlights

  • The Indian Cabinet launched a production-linked incentive scheme (PLI) for telecommunication and networking products. The outlay of ~Rs 122bn over five years is approved for manufacturing telecom equipment, 4G/5G next generation radio access network and wireless equipment, Internet-of-Things (IoT) access devices and other wireless equipment, and equipment like switches and routers. The scheme will be operational from April 1, 2021. This scheme is expected to incentivize telecom service providers and is another push for the Prime Minister’s Atma Nirbhar Bharat plan.
  • On the other side of the world, a severe winter storm hit North America, with Texas being the worst hit. The storm has impacted crude oil output in the energy rich state of Texas and it is estimated that about 4mn barrels a day of output is offline.
  • The Brent crude futures and US West Texas Intermediate (WTI) crude futures, both corrected after rallying to 13-month highs of $65.5 and $62.3 per barrel respectively. The correction has been due to worries that refineries will take time to resume operations after the big freeze.
  • On the domestic front, consecutive hikes in petrol and diesel are pinching the pockets of Indians. The rise in international crude prices and higher central and state taxes have led to petrol prices crossing a century in some states.
  • The foreign institutional investors’ (FII) buying in Indian equity market continued to decline. FIIs inflows for the week were Rs 44,080 mn. Domestic institutional investors’ (DII) selling continued this week as well with outflows of Rs 62,840mn vs Rs 56,430 mn in the previous week.

Things to watch out

  • With the quarterly result season out of the way, the attention is now onto macroeconomic developments.
  • The benchmark 10-year bond yields have surged post the Budget announcement of additional borrowing to bridge the deficit. To keep the yields under control, RBI has held a special G-sec auction, a separate open market operation (OMO) and Operation Twist this week. Further measures by RBI will be something to watch for. Equity markets are inversely related to interest rates so increasing bond yields could lead to a decline in share prices.
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