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12 Sep

This week in a nutshell (6th – 9th September)

Technical talks

NIFTY opened the week on 6th September at 17,399 and ended the truncated week at 17,369 on 9th September. The index made a weekly loss of 0.2%. On the upside, 17,378 might be a critical level to watch for. On the downside, 16,451 might act as a support. The RSI (82) indicates the index is in the overbought zone.

Weekly highlights

  • World stocks hit fresh record highs on Tuesday on growing bets that the U.S. Federal Reserve will push back tapering its bond purchases and keep its expansive policy for the near term. The latest rally, which started after Fed Chair Jerome Powell’s dovish speech at the Jackson Hole Symposium in August, received a further boost from a surprisingly soft U.S. payrolls report on Friday. The U.S. economy created 235,000 jobs in August, the fewest in seven months as hiring in the leisure and hospitality sectors stalled, reducing expectations that the Fed will opt for an early tapering of its monthly bond purchases.
  • Investors were caught by surprise by a sudden rally in the benchmark 10-year Indian bond yield. In the previous week (ended 3rd September), the yield had dropped ten basis points, the biggest weekly drop since April. There was a quick turn of sentiment after the benchmark 10-year bond yield rose to its highest since March. The sentiment change was aided by 1QFY22 GDP growth which grew ~20% YoY albeit on a low base and global market cues. The rally in the bond yield was led by mutual fund investors and overseas investors. The spike in overseas investors’ interest could be attributed to the appreciation of INR against USD. (Source: Bloomberg Quint Read more at: https://www.bloombergquint.com/business/a-surprise-bond-rally-sweeps-over-india-as-global-funds-pile-in )
  • The Securities and Exchange Board of India (SEBI) has introduced an optional T+1 settlement cycle for the market, which will come into effect from January 1, 2022. The T+1 cycle means settlements will have to be cleared within one day of the actual transactions taking place. A switch to the T+1 settlement cycle is expected to boost market liquidity and trading turnover while reducing settlement risk and broker defaults. While this move could be beneficial for the domestic investors, foreign investors may face challenges adjusting to this system due to time zone differences. While the regulator has come up with the new settlement cycle, the onus is on the exchanges if they want to opt for the shorter cycle.
  • The monthly data for life insurance premiums collected by companies was released by the Life Insurance Council. The industry reported a 3% YoY increase in the New Business Premiums (NBP) collected, led by private players. This growth comes after the NBP collected reported a decline of 11% YoY in July-21.
  • Stocks ended lower Friday, with major indexes booking weekly losses as the Dow Jones Industrial Average and the S&P 500 extended a losing streak to five sessions. Investors said uncertainty around the spread of the delta variant of the coronavirus that causes COVID-19 hung over markets this week as investors also weighed the timing of the Federal Reserve’s eventual tapering of its monthly bond purchases. The slide left the Dow down 2.2% for the week, while the S&P 500 suffered a 1.7% fall and the Nasdaq declined 1.6%.
  • Institutional activity trends reversed this week compared to last week. Foreign institutional investors (FII) turned sellers with an outflow of Rs 11,139mn. Domestic institutional investors (DII) tuned buyers with an inflow of Rs 11,160mn.

Things to watch out for next week

  • The Indian CPI and WPI data are expected next week. A key indicator for measuring the changes in purchasing trends and inflation.
  • As the result season has drawn to a close, the developments from Wall Street will be the guiding force for the Dalal Street.

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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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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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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11 Apr

The Week in a nutshell (5th April- 9th April)

Technical Talks

NIFTY opened the week on 5th April at 14,778 and closed on 9th April at 14,835, a muted weekly gain of 0.4%. On the upside, 15,336 could be a resistance to watch out for. On the downside, 100DMA of 14,249 might act as a support. The flat trending RSI of 52 and reducing negativity in MACD indicates that the market might see some uptrend in the coming days.

Weekly Highlights

  • The Reserve Bank of India (RBI) maintained the status quo for the fifth time in a row on policy rate. The repo rate is kept unchanged at 4 percent. The RBI expects economic growth for FY22E to be at 10.5 percent. The Governor said that the recent surge in COVID-19 infections has created uncertainty over economic growth recovery.
  • SEBI: Capital markets regulator SEBI asked institutional investors like banks, insurance companies, and pension funds to follow the ’transparent’ Stewardship Code in order to be truly accountable to their clients and beneficiaries.
  • The country’s foreign exchange reserves declined by USD 2.99 billion to reach USD 579.29 billion in the week ended March 26, RBI data showed. The fall in reserves was on account of a decrease in foreign currency assets (FCA), a major component of the overall reserves. FCA declined by USD 3.2 billion to USD 538 billion. In the previous week ended March 19, the forex kitty had increased by USD 233 million to USD 582 billion.
  • According to AMFI, the equity mutual funds saw a net inflow of Rs 91,150mn in Mar-2021 as compared to an outflow of Rs 44,970mn in the previous month (Feb-2021). 
  • INR saw its worst one-day fall in nearly 20 months on Wednesday on the fears of another lockdown hitting economic recovery. INR closed 1.5% down on Wednesday and closed the week at 74.76INR/ USD.
  • Foreign Institutional Investors (FII) were net sellers worth Rs 23,410mn in Indian equities, against net buying worth Rs 26,044mn in the previous week. Domestic Institutional Investors (DII) continued to be net buyers worth Rs 11,550mn, lower than last week’s buying of Rs 39,660mn.

Things to watch out 

  • The 4QFY21 result season will kick-off on Monday with the biggie, TCS announcing its FY21 audited result. During the week, Infosys and Wipro will announce results. Investors will keep an eye on dollar revenue growth and EBIT margin delivered by IT companies during the result season. Apart from the IT sector, the rising raw material prices are expected to affect the profitability and margins of industrial companies.
  • The key macro numbers like inflation data, Industrial production, Wholesale Price Index (WPI), export and import data are to be announced during the week.
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