Weekly Market Outlook

Indian equity benchmarks ended the passing week with a minor cut as the Reserve Bank of India (RBI) kept its key interest rate unchanged for a sixth consecutive meeting, in line with expectations.

Key gauges started the week on a pessimistic note as traders shrugged off reports that India’s services activity rose at the sharpest rate of expansion in January 2024.

The HSBC India Services PMI came in at 61.8 in January, up from 59 in December. It is the highest since July 2023 when the PMI was 62.3. A reading above 50 shows that the sector is expanding.

Traders also overlooked CRISIL’s latest report that the Indian economy is expected to grow at an average rate of 6.7% annually until the end of the decade. The economy will grow at this rate between the financial years 2024 to 2031, a notch above the pre-pandemic average of 6.6%.

Some support also came in, as according to data from the Central Depository Service and National Securities Depository, the number of demat accounts opened in January totalled over 46.84 lakh, compared to 40.94 lakh a month ago and 21.90 lakhs a year ago. The total demat tally crossed 14.39 crore, up 3.4 per cent from a month ago and 30.3 per cent from a year ago.

But recovery proved short-lived, and markets once again witnessed selling with traders turning cautious as India’s aggressive fiscal consolidation objective for next year is already being doubted, with Fitch Ratings saying it expects the target of 5.1 per cent of GDP to be missed by as much as 30 basis points.

Markets extended losses after RBI held the short-term interest rate steady for the sixth time at 6.5 per cent. While it was in line with expectations, there were hopes for positive commentary from the central bank’s Monetary Policy Committee. However, RBI Governor Shaktikanta Das said the MPC has decided to maintain its “withdrawal of accommodation” stance, with a focus on bringing inflation down to 4 per cent.

However, some buying on the final day of trade minimises weekly losses as traders got support after RBI’s consumer confidence survey showed that the households expect improvements in general economic and employment conditions to continue over the next year.

Sentiments also got support with a private report that India’s retail inflation likely eased to a three-month low of 5.09 per cent in January on slowing food price rises and favourable base effects.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex slipped 490.14 points or 0.68% to 71,595.49 during the week ended February 09, 2024.

The BSE Midcap index gained 641.46 points or 1.65% to 39,569.57, while small-cap index slipped 199.5 points or 0.44% to 45,650.30.

On the sectoral front, S&P BSE Fast Moving Consumer Goods was down by 449.48 points or 2.26% to 19,449.15, S&P BSE Capital Goods was down by 620.46 points or 1.11% to 55,451.74 were the top losers, while S&P BSE Oil & Gas was up by 1,026.73 points or 3.80% to 28,032.10, S&P BSE Healthcare was up by 1,145.90 points or 3.39% to 34,931.55, S&P BSE Realty was up by 167.78 points or 2.48% to 6,920.06, S&P BSE PSU was up by 443.36 points or 2.47% to 18,380.33 were the top gainers on the BSE.

NSE movement for the week

The Nifty decreased 71.30 points or 0.33% to 21,782.50.

On the National Stock Exchange (NSE), Nifty IT was up by 376.00 points or 1.01% to 37,699.25, Nifty Mid Cap 100 increased 412.05 points or 0.85% to 48,889.05 and Nifty Next 50 gained 1492.60 points or 2.67% to 57,432.90, while Bank Nifty was down by 336.40 points or 0.73% to 45,634.55.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 77,510.44 crore and gross sales of Rs 82,638.01 crore, leading to a net outflow of Rs 5,127.57 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 17,658.43 crore against gross sales of Rs 7,424.91 crore, resulting in a net inflow of Rs 10,233.52 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 1,049.16 crore and gross sales of Rs 80.77 crore, leading to a net inflow of Rs 968.39 crore.

Outlook for the coming week

Indian markets settled in red in the passing week after RBI decided to keep the repo rate unchanged at 6.50 per cent for the sixth time in a row.

In the coming week, traders will be eyeing major macroeconomic data starting with Consumer Price Index (CPI) data for the month of January to be out on February 12. On the same day, India Industrial Production (IIP) is also going to be released.

The Wholesale Price Index (WPI) data for the month of January will be released on February 14. Market participants will be looking for the Balance of Trade data on February 15. The foreign exchange reserves data is going to be released on February 16.

 Besides, Finance Minister Nirmala Sitharaman is scheduled to address the Reserve Bank of India’s central board on February 12 and highlight key points of the interim Union Budget. In the post-budget meeting, the finance minister will address the board members and talk about announcements made in the interim Budget 2024-25. 

In the last leg of result season, there are many companies likely to report their quarterly numbers during the week including Bharat Forge, Coal India, NHPC, Steel Authority of India, BHEL, Deepak Nitrite, DLF, Eicher Motors, Hindalco Industries, IRCTC, Info Edge (India), NBCC, ZEEL, Glenmark Pharmaceuticals, Mahindra, and Mahindra, Crisil etc. 

On the global front, investors would be eyeing a few economic data from the world’s largest economy, the United States (US), starting with Consumer Inflation Expectations on February 12, Inflation Rate, Redbook on February 13.

Export & Import data, Initial Jobless Claims, NY Empire State Manufacturing, Philadelphia Fed Manufacturing, Industrial Production, Manufacturing Production, NAHB Housing Market Index on February 15, Building Permits Prel, Producer Price Inflation, Michigan Consumer Sentiment and Baker Hughes Oil Rig Count on February 16.

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