Weekly Market Outlook

Dalal Street witnessed fireworks during Diwali week as upbeat macroeconomic data boosted investors’ sentiment. Indian gauges ushered into the new Hindu calendar year — Samvat 2080 — on a bullish note with frontline gauges adding half a per cent on Muhurat Trading on Diwali.

On the very next day, markets witnessed some hiccups as traders remained cautious with Fitch Ratings’ statement that the geopolitical uncertainty from the conflict in the Middle East could upend countries’ inflation and growth calculations, leading to higher-than-expected inflation for India as well.

Sentiments remained dampened after data released by the National Statistical Office (NSO) showed that growth in the Index of Industrial Production (IIP) cooled to a three-month low of 5.8 per cent in September from 10.3 per cent in August, on the back of moderation across all sub-sectors and use-based categories.

But other favourable macroeconomic data helped markets to march northward. Retail inflation based on the Consumer Price Index (CPI) eased for the second consecutive month to a four-month low of 4.87 per cent in October 2023, in line with cooling prices of food items.

This marks the second consecutive month when the consumer price index or CPI-based inflation has remained within the Reserve Bank of India’s comfort zone of below 6 per cent.

Sentiments remained positive as wholesale price inflation remained in the negative territory for the seventh month in a row in October at (-) 0.52 per cent on easing prices of food items.

Sentiments remained jubilant after as government data showed India’s merchandise exports rose by 6.21 per cent to $33.57 billion in October 2023 even as the trade deficit ballooned to $31.46 billion during the month. Imports increased to $65.03 billion in the month under consideration, as against $57.91 billion recorded in October 2022.

Some support also came with SBI’s report stating that India’s unemployment rate is at a record low and India’s labour market is undergoing a deep structural transformation with self-entrepreneurship across all echelons and higher educational attainment emerging as key enablers.

Markets extended a rally as softer-than-expected U.S. CPI data boosted bets the Federal Reserve will forgo any more interest rate hikes and indeed start cutting rates by May.

Some support also came with that the government is considering several measures such as a flexible framework for the sale of products manufactured in special economic zones (SEZs) in the domestic market, easy de-notification norms, and streamlining approval processes for units.

On the final day of the week, markets booked some of their gains after the Reserve Bank of India (RBI) tightened norms for unsecured personal loans for banks and non-banking financial companies (NBFCs).

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 890.05 points or 1.37% to 65,794.73 during the week ended November 17, 2023.

The BSE Midcap index gained 814.45 points or 2.50% to 33,380.58 and the small-cap index surged 1219.87 points or 3.18% to 39,598.63.

On the sectoral front, S&P BSE Information Technology was up by 1,570.80 points or 5.03% to 32,819.47, S&P BSE Realty was up by 249.47 points or 4.76% to 5,490.02, S&P BSE TECK was up by 586.40 points or 4.18% to 14,615.36 were the top gainers on the BSE sectoral front.

S&P BSE BANKEX was down by 410.02 points or 0.83% to 49,170.81 were the only losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 306.45 points or 1.58% to 19,731.80.

On the National Stock Exchange (NSE), Nifty IT was up by 1552.25 points or 5.07% to 32,191.30, Nifty Mid Cap 100 was up 1078.20 points or 2.65% to 41,811.25 and Nifty Next 50 was up by 1114.05 points or 2.44% to 46,838.25.

On the other side, Bank Nifty was down by 236.15 points or 0.54% to 43,583.95.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 48,854.28 crore and gross sales of Rs 41,615.46 crore, leading to a net inflow of Rs 7,238.82 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 7,271.74 crore against gross sales of Rs 994.53 crore, resulting in a net inflow of Rs 6,277.21 crore.

In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 16.68 crore and gross sales of Rs 40.06 crore, leading to a net outflow of Rs 23.38 crore.

Outlook for the coming week

Indian equity markets ended in green for a third consecutive week with data showing that the retail inflation based on the Consumer Price Index (CPI) eased for a second consecutive month to a four-month low of 4.87 per cent in October 2023, in line with cooling prices of food items.

On the economic data front, market participants will be eyeing Foreign Exchange Reserves data to be out on November 24 for further cues.

Foreign Exchange Reserves in India increased to $590780 million on November 3 from $586110 million in the previous week. Meanwhile, the trend in investment by foreign institutional investors and the movement of the rupee against the dollar will also be closely watched by the market participants.

On the global front, investors would be eyeing some economic data from the world’s largest economy, the United States (US), starting with the Chicago Fed National Activity Index, Redbook on November 21, FOMC Minutes, Durable Goods Orders, Initial Jobless Claims, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on November 22, S&P Global Composite PMI, S&P Global Manufacturing PMI, S&P Global Services PMI on November 24.


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