Weekly Market Outlook

Indian equity benchmarks edged higher during the week due to a strong macro forecast. Also, the earnings growth in India is expected to remain strong, going forward.

Markets started the holiday-shortened week on a pessimistic note as the latest payroll data released by the Employee Provident Fund Organization (EPFO) stated that the formal labour market in January experienced a slowdown as fewer fresh jobs were created during the month.

In January 2024, the number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined by nearly 4% to 807,865 from 840,584 in December 2023.

Sentiments also remained dampened after the Ministry of Finance warned the ongoing crisis along the Red Sea shipping route poses a risk to 80 per cent of India’s goods trade with Europe and could lead to higher inflation and lower growth in India due to rising transport costs.

But markets took a U-turn and started moving northward as traders took some support with a report that S&P Global Ratings has raised India’s Gross domestic product (GDP) growth forecast for the next financial year (FY25) to 6.8 per cent but flagged restrictive interest rates as a dampener for economic growth. In November 2023, it had projected India’s growth to be 6.4 per cent in FY25 on robust domestic momentum.

Traders took encouragement from the RBI stating that India’s current account deficit declined to $10.5 billion or 1.2 per cent of the GDP in the October-December quarter of the current fiscal from $11.4 billion in the previous three months and $16.8 billion a year back.

Some optimism also came with Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that various initiatives from the government and growing investment are going to create more job opportunities during the decade. Sentiments remained upbeat taking support from the Engineering Export Promotion Council (EEPC) of India’s statement that India’s engineering exports to Russia doubled to $1.22 billion till February during the 2023-24 fiscal.

Markets extended gains as Union Finance Minister Nirmala Sitharaman said the government will continue the push on its reform agenda in its third term since political continuity, along with a predictable and stable economic environment and taxation structure, is important to achieve the laid-down developmental goals.

Finally, markets ended near a week’s high as sentiments remained up-beat with Chairman of the 16th Finance Commission Arvind Panagariya stating that India can realistically push its economic growth close to 9 per cent from the current 7 per cent or so, by implementing a few more reforms in the next five years. 

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 819.41 points or 1.13% to 73,651.35 during the week ended March 28, 2024.

The BSE Midcap index gained 520.89 points or 1.34% to 39,322.12 and the small-cap index surged 395.07 points or 0.92% to 43,166.34.

On the sectoral front, S&P BSE Capital Goods was up by 2,216.77 points or 3.77% to 60,943.12, S&P BSE Realty was up by 202.05 points or 2.93% to 7,108.37, S&P BSE Power was up by 165.79 points or 2.54% to 6,701.74, S&P BSE Consumer Durables was up by 1,272.72 points or 2.50% to 52,276.61 and S&P BSE Auto was up by 892.13 points or 1.85% to 49,142.11 were the top gainers.

S&P BSE Information Technology was down by 179.96 points or 0.50% to 35644.77 and S&P BSE TECK was down by 96.04 points or 0.59% to 16111.17 were the only losers on the BSE.

NSE movement for the week

The Nifty surged 230.15 points or 1.04% to 22,326.90.

On the National Stock Exchange (NSE), Bank Nifty was up by 260.85 points or 0.56% to 47,124.60, Nifty Mid Cap 100 was up 762.90 points or 1.61% to 48,075.75 and Nifty Next 50 gained 1435.40 points or 2.43% to 60,624.30, while Nifty IT was down by 290.25 points or 0.82% to 34,898.15.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 37,675.79 crore and gross sales of Rs 44,717.81 crore, leading to a net outflow of Rs 7,042.02 crore.

They also stood as net sellers in the debt segment with gross purchases of Rs 4,140.26 crore against gross sales of Rs 5,202.72 crore, resulting in a net outflow of Rs 1,062.46 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 596.03 crore and gross sales of Rs 24.88 crore, leading to a net inflow of Rs 571.15 crore.

Outlook for the coming week

Indian markets ended the week with healthy gains as S&P Global Ratings has raised India’s Gross domestic product (GDP) growth forecast for the next financial year (FY25) to 6.8 per cent. 

The coming week will be crucial as it’s the start of the new month and there will be some important macroeconomic data to guide the markets. Investors will be eyeing the HSBC Manufacturing PMI Final, scheduled to be released on April 02, and the HSBC Composite PMI Final, HSBC Services PMI Final to be released on April 04.

The Reserve Bank of India (RBI) policy decisions will be announced on April 05. On the same day, Cash Reserve Ratio, Bank Loan Growth, Deposit Growth and Foreign Exchange Reserves data will be out. Additionally, auto companies would grab some attention, as they will announce their monthly sales figures.

On the global front, investors would be eyeing some important economic data from the world’s largest economy, the United States (US), starting with S&P Global Manufacturing PMI Final, ISM Manufacturing PMI, and ISM Manufacturing Employment on April 01.

Redbook, Factory Orders on April 02, S&P Global Composite PMI, S&P Global Services PMI Final, ISM Services PMI, ISM Services Business Activity on April 03, Balance of Trade, Initial Jobless Claims on April 04, Non-Farm Payrolls, Unemployment Rate, Baker Hughes Oil Rig Count on April 05.

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