Weekly Market Outlook

It turned out to be a gloomy week of trade for Indian equity benchmarks with frontline gauges ending the holiday-shortened week with a cut of over one and a half percentage points.

Traders were worried after the US Fed signalled on keeping interest rates at an elevated level through 2024 after one more rate hike this year, despite the decision to hold interest rates steady this month.

Local indices started the week on a pessimistic note as traders were concerned after India’s merchandise trade deficit widened to a 10-month high of $24.16 billion in August. India’s exports declined by 6.86 per cent to $34.48 billion in August this year as against $37.02 billion in the same month last year.

Some concern also came as the latest data by the Reserve Bank of India (RBI) showed India’s foreign exchange reserve declined by $5 billion to $594 billion in the previous week on the back of a fall in foreign currency assets.

Markets continued the southward journey throughout the week and never witnessed any recovery. Street overlooked reports that Fitch Ratings upwardly revised the global growth forecast 2023 by 10 basis points to 2.5 per cent, reflecting surprising resilience so far this year in the US, Japan, and emerging markets excluding China.

Sentiments remain dampened after the Reserve Bank of India (RBI) in its monthly bulletin said that a shift by state governments to the Old Pension Scheme (OPS) will be fiscally unsustainable and a significant step backwards.

Selling continued during the week as the Asian Development Bank (ADB) marginally lowered India’s growth forecast to 6.3 per cent for the current financial year from its earlier projection of 6.4 per cent on account of slowing exports and the likely impact of erratic rainfall on agriculture output.

Selling on the final day of the week forced markets to extend weekly losses as escalating diplomatic tensions between India and Canada impacted market sentiments.

BSE movement for the week

 The Bombay Stock Exchange (BSE) Sensex slipped 1829.48 points or 2.70% to 66,009.15 during the week ended September 22, 2023.

The BSE Midcap index lost 556.61 points or 1.71% to 31,948.76, while the small-cap index slipped 771.08 points or 2.04% to 37,057.48.

On the sectoral front, S&P BSE Realty was down by 201.03 points or 4.28% to 4,491.99, S&P BSE Finance was down by 329.59 points or 3.33% to 9,578.17, S&P BSE Metal was down by 764.22 points or 3.25% to 22,715.96, S&P BSE Healthcare was down by 918.73 points or 3.20% to 27,763.92 and S&P BSE BANKEX was down by 1,643.46 points or 3.17% to 50,201.45 were the top losers.

S&P BSE PSU was up by 70.94 points or 0.57% to 12,449.37 and S&P BSE Power was up by 2.57 points or 0.06% to 4,626.43 were the only gainers on the BSE.

NSE movement for the week

Nifty slipped 518.10 points or 2.57% to 19,674.25.

On the National Stock Exchange (NSE), Bank Nifty was down by 1619.45 points or 3.50% to 44,612.05, Nifty IT was down by 448.75 points or 1.35% to 32,906.30.

Nifty Mid Cap 100 decreased 690.75 points or 1.69% to 40,139.15 and Nifty Next 50 decreased 875.85 points or 1.90% to 45,176.00.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 66,786.24 crore and gross sales of Rs 72,182.24 crore, leading to a net outflow of Rs 5,396.00 crore.

They also stood as net sellers in the debt segment with gross purchases of Rs 2,634.58 crore against gross sales of Rs 4,362.02 crore, resulting in a net outflow of Rs 1,727.44 crore.

In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 264.49 crore and gross sales of Rs 394.38 crore, leading to a net outflow of Rs 129.89 crore.

Outlook for the coming week

Local equity markets witnessed a significant fall in the passing week amid global uncertainty. The US Fed signalled on keeping interest rates at an elevated level through 2024 after one more rate hike this year, despite the decision to hold interest rates steady this month.

The next week is likely to be volatile with the scheduled F&O series expiry on September 28 and traders balancing their positions for the next series.

On the economy front, traders will be eyeing India’s fiscal deficit data, which is scheduled to be released on September 29.

On the same day, investors will see the data on India’s Infrastructure Output, Foreign Exchange Reserves, and current account deficit.

On the global front, investors would be eyeing a few economic data from the United States (US), starting with the Chicago Fed National Activity Index and Dallas Fed Manufacturing Index on September 25 followed by Redbook, CB Consumer Confidence.

New Home Sales, Dallas Fed Services Index, Building Permits Final on September 26, Durable Goods Orders on September 27, Initial Jobless Claims, GDP Growth Rate, Pending Home Sales on September 28 and finally Personal Spending, Personal Income, Goods Trade Balance, Chicago PMI, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on September 29.

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