Weekly Market Outlook

Indian equity benchmarks ended the passing week with a significant gain of two percentage points as the government remained committed to its goal of fiscal consolidation in the Interim Budget 2024-25.

Markets started the week on an optimistic note as traders took support with Union Coal Minister Pralhad Joshi’s statement that India will have surplus domestic coal by the financial year 2025-26 that can be used to run the imported coal-based (ICB) power plants. He asserted that the government is aiming at boosting domestic production and reducing fossil fuel imports.

Traders also remained optimistic, as lauding the Pradhan Mantri Jan Dhan Yojana (PMJDY), Union Minister of Commerce & Industry, Piyush Goyal said that it has played a pivotal role in empowering the entrepreneurs to be self-reliant and be a part of the country’s growth story and also emphasized that the PMJDY has propelled the country from being part of a ‘fragile five’ to be the fifth largest economy in the world.

Traders overlooked report that the India’s foreign exchange reserves saw a dip of $2.79 billion to $616.14 billion for the week ending on January 19. Previously, forex reserves were up by $1.6 billion, dragging the reserves to $618.94 billion, for the week ended on January 12, 2024.

However, key gauges oscillated between green and red terrain during the week as traders turned cautious with a report stating that wholesale prices of tur dal have increased 5% in the last month despite the arrival of new crops and continuing imports from Myanmar as reduced acreage and decreased production for a second consecutive year impact supply.

Some concern also came amid a private report stating that Foreign Portfolio Investors (FPIs) have expressed concerns about market regulator Securities and Exchange Board of India’s (Sebi) plan to introduce instant trade settlement in the equity markets.

At the same time, some solace came after the International Monetary Fund (IMF) raised India’s growth projection for 2024-25 (FY25) by 20 basis points (bps) to 6.5 per cent in its World Economic Outlook (WEO) update, citing buoyant domestic spending and improved global growth prospects.

Meanwhile, traders got anxious with data showing that India’s core sector output growth hit a 14-month low of 3.8 per cent year-on-year in December on the back of a high base and a moderation in the growth of six constituent sectors.

Traders failed to draw any sense of relief from the interim budget 2024-25. Traders also overlooked India’s final manufacturing PMI showing that manufacturing activity accelerated in January.

However, the day after the budget, which was the last day of the week as well, long-term investors understood the budget and welcomed her decision to stay on the path of fiscal consolidation. The government targeted a fiscal deficit of 5.1 per cent of the GDP for 2024-25. In absolute terms, the fiscal deficit for 2024-25 is seen at Rs 16.85 lakh crore, with the number for 2023-24 lowered to Rs 17.35 lakh crore from the budget estimate of Rs 17.87 lakh crore.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 1384.96 points or 1.96% to 72,085.63 during the week ended February 02, 2024.

The BSE Midcap index gained 1181.82 points or 3.13% to 38,928.11 and the small cap index surged 1486.06 points or 3.35% to 45,849.80.

On the sectoral front, S&P BSE Oil & Gas was up by 2,337.04 points or 9.47% to 27,005.37, S&P BSE PSU was up by 1,364.22 points or 8.23% to 17,936.97, S&P BSE Power was up by 344.53 points or 5.62% to 6,474.86, S&P BSE Metal was up by 1,167.70 points or 4.47% to 27,275.50 and S&P BSE Auto was up by 1,712.17 points or 4.02% to 44,328.49 were the top gainers on the BSE sectoral front.

S&P BSE Capital Goods was down by 831.59 points or 1.46% to 56,072.20, S&P BSE Consumer Durables was down by 202.79 points or 0.40% to 50,050.43 and S&P BSE Fast Moving Consumer Goods was down by 30.36 points or 0.15% to 19,898.63 were the few losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 501.20 points or 2.35% to 21,853.80.

On the National Stock Exchange (NSE), Bank Nifty was up by 1104.80 points or 2.46% to 45,970.95, Nifty IT was up by 827.05 points or 2.27% to 37,323.25, Nifty Mid Cap 100 was up by 1268.35 points or 2.69% to 48,477.00 and Nifty Next 50 was up by 1648.55 points or 3.04% to 55,940.30.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 124,736.42 crore and gross sales of Rs 123,692.80 crore, leading to a net inflow of Rs 1,043.62 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 13,734.49 crore against gross sales of Rs 6,157.52 crore, resulting in a net inflow of Rs 7,576.97 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 171.46 crore and gross sales of Rs 151.66 crore, leading to a net inflow of Rs 19.80 crore.

Outlook for the coming week

In the passing week, Indian markets posted hefty gains amid a growth-oriented budget from the government. Besides, positive macroeconomic data boosted the sentiments.

On the economy front, market participants would be eyeing the data of the HSBC Composite PMI Final and HSBC Services PMI Final, which is scheduled to be released on February 05.

Besides, traders would be awaiting the Reserve Bank of India (RBI) Interest Rate decision, which will be announced on February 08.

RBI held its benchmark policy repo at 6.5 per cent for the fifth consecutive meeting in December 2023 to ensure inflation stays within the central bank’s 2-6% target range while supporting growth. Data on Bank Loan Growth, Deposit Growth and Foreign Exchange Reserves is going to be released on February 09.

In a result, heavy season lots of companies including Ashok Leyland, Aurionpro Solutions, Bharti Airtel, Britannia Industries, Godrej Properties, Apollo Tyres, Cummins India, Fortis Healthcare, Lupin, Nestle India, Power Grid Corporation of India, Apollo Hospitals Enterprise will be announcing their numbers.  

On the global front, investors will be eyeing macro-economic reports from the world’s largest economy, the United States, starting with S&P Global Composite PMI, S&P Global Services PMI, ISM Services PMI, ISM Services Business Activity on February 05 followed by Redbook on February 06, Balance of Trade on February 07, Initial Jobless Claims on February 08, and Baker Hughes Oil Rig Count on February 09.

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