Weekly Market Outlook

Indian equity benchmarks ended the passing week with a gain of around a percent with frontline gauges ending above their crucial 73,100 (Sensex) and 22,200 (Nifty) levels.

Markets started the week on an optimistic note as sentiments remained up-beat, taking support from India’s G-20 Sherpa and former NITI Aayog CEO Amitabh Kant’s statement that India needs to grow at an annual rate of 9-10 per cent for around three decades and constant innovations to become a $35 trillion economy by 2047.

Adding to the optimism, a private report stated that the government is mulling over introducing a new production-linked incentive (PLI) scheme for the pharmaceutical sector to boost the production of key chemicals critical to the manufacture of active pharmaceutical ingredients (APIs).

Markets extended gains as traders got some support after Commerce and Industry Minister Piyush Goyal exuded confidence that the Reserve Bank of India (RBI) will cut interest rates as inflation is under control. The RBI has been maintaining the benchmark interest rate at an elevated level of 6.5 per cent since February 2023.

Union minister Hardeep Singh Puri’s statement that infrastructure will be a vital component for India to become a developed country by 2047 too aided sentiments. He asserted that the country will be the third-largest construction market globally by next year.

However, traders opted to book profit at higher levels during the week and overlooked the latest payroll data released by the Employees’ Provident Fund Organization (EPFO) showing that the labour market recovered slightly in December as fresh formal job creation hit a three-month high.

Traders got anxious with a research report by CRISIL Market Intelligence and Analytics showing that financial conditions have tightened the economy with liquidity going into a deeper deficit putting upward pressure on short-term rates.

The selloff proved short-lived, and markets resumed their northward journey taking encouragement from a private survey showing that Indian business activity expanded at its fastest pace in seven months in February as demand remained strong for both manufacturing and services.

HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 61.5 this month from January’s final reading of 61.2, staying above the 50-mark that separates expansion from contraction for a 31st straight month.

The final day of the week witnessed consolidation as market participants considered the path ahead for interest rates after minutes from the Federal Reserve’s latest meeting indicated caution about cutting rates too soon.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex increased 716.16 points or 0.99% to 73,142.80 during the week ended February 23, 2024.

The BSE Midcap index increased 4.13 points or 0.01% to 39,934.21 and small-cap index surged 374.17 points or 0.82% to 46,033.47.

On the sectoral front, S&P BSE Realty was up by 283.46 points or 4.07% to 7,254.65, S&P BSE Consumer Durables was up by 1,005.07 points or 1.99% to 51,437.55, S&P BSE Fast Moving Consumer Goods was up by 299.14 points or 1.55% to 19,607.14, S&P BSE Power was up by 93.72 points or 1.44% to 6,612.98 and S&P BSE Capital Goods was up by 732.74 points or 1.31% to 56,732.11 were the top gainers.

S&P BSE Oil & Gas was down by 554.63 points or 1.92% to 28,360.26, S&P BSE Information Technology was down by 412.51 points or 1.06% to 38,628.31, S&P BSE Metal was down by 224.62 points or 0.81% to 27,396.6153 were the top losers on the BSE.

NSE movement for the week

The Nifty gained 172.00 points or 0.78% to 22,212.70.

On the National Stock Exchange (NSE), Bank Nifty gained by 426.90 points or 0.92% to 46,811.75, Nifty Mid Cap 100 increased 147.60 points or 0.30% to 49,279.55 and Nifty Next 50 gained 567.60 points or 0.97% to 59,153.75, while Nifty IT was down by 431.40 points or 1.12% to 38,045.65.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 55,886.07 crore and gross sales of Rs 52,346.18 crore, leading to a net inflow of Rs 3,539.89 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 4,652.73 crore against gross sales of Rs 3,119.16 crore, resulting in a net inflow of Rs 1,533.57 crore.

In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 353.70 crore and gross sales of Rs 272.05 crore, leading to a net inflow of Rs 81.65 crore.

Outlook for the coming week

In the passing week, markets ended with gains of over half a percent amid positive cues from the HSBC Flash PMI Survey.

HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 61.5 this month from January’s final reading of 61.2, staying above the 50-mark that separates expansion from contraction for a 31st straight month.

The coming week marks the start of a new month, and it is likely to be a data-heavy week. Traders will be eyeing India’s fiscal deficit data, which is slated to be released on February 29.

On the same day, Gross Domestic Product (GDP) data and Core sector data are going to be released. Investors will be eyeing the HSBC Manufacturing PMI Final, scheduled to be released on March 01. On the same day, Foreign Exchange Reserves data will be released. Additionally, auto companies would grab some attention, as they will announce their monthly sales figures.

On the global front, investors will be eyeing economic data from United States, starting with the Dallas Fed Manufacturing Index, Building Permits Final on February 26, Durable Goods Orders, Redbook, CB Consumer Confidence, Richmond Fed Manufacturing Index, Dallas Fed Services Index on February 27, GDP Growth Rate, Goods Trade Balance on February 28.

Core PCE Price Index, Personal Income, Personal Spending, Initial Jobless Claims, Chicago PMI, Fed Bostic Speech, Fed Goolsbee Speech, Kansas Fed Composite Index on February 29.

S&P Global Manufacturing PMI Final, ISM Manufacturing PMI, ISM Manufacturing Employment, Baker Hughes Oil Rig Count on March 01.

Leave a Reply

Your email address will not be published. Required fields are marked *