Weekly Market Outlook

Key gauges started the first week of FY25 on an optimistic note propelled by comments from US Federal Reserve Chair Jerome Powell. Powell’s statement, indicating a potential policy rate reduction later this year, provided crucial insights for investors, enhancing their awareness of market trends.

Key gauges made a positive start to the week as traders supported Finance Minister Nirmala Sitharaman’s statement that India’s gross domestic product (GDP) is on track to grow by 8 per cent or more in the quarter ended March 31.

Some support also came as growth in output of the eight key infrastructure sectors – known as the core sector – rose to a three-month high of 6.7 per cent (Y-o-Y) in February from 4.1 per cent in January.

Additional support came in with a report that foreign investors made a strong return by injecting more than Rs 2 lakh crore into Indian equities in 2023-24, driven by optimism surrounding the country’s robust economic fundamentals amidst a challenging global environment.

On the very next day, traders booked some of their gains amid a report by the United Nations Conference on Trade and Development (UNCTAD) showing that India’s dependence for trade on the European Union (EU) and China is rising as global trade has seen a restructuring along the geopolitical lines in the past two years.

Traders overlooked a private survey showing that the manufacturing sector in India closed out FY24 with a stellar performance in March, as companies stepped up hiring in response to strong production and new orders.

The HSBC India Manufacturing PMI rose to a 16-year high of 59.1 in March, from 56.9 in February. While this number was the highest since February 2008, it was lower than HSBC’s preliminary estimate of 59.2. A reading of over 50 separates expansion from contraction.

Traders also paid no heed to the report that the Centre collected Rs 1.78 lakh crore as gross goods and services tax in March, up 11.5% against the same month last year. This is the second-highest monthly gross GST collection.

Traders also took encouragement with data showing that India’s services activity continued to expand in March, with the HSBC Purchasing Managers’ Index (PMI) for the sector coming in at 61.2. Rising from 60.6 in February to 61.2 in March, the seasonally adjusted HSBC India Services Business Activity Index pointed to one of the strongest growth rates in over 13-and-a-half years.

Domestic bourses witnessed consolidation on the final day of the week as the Reserve Bank of India (RBI) maintained the status quo. The RBI’s Monetary Policy Committee (MPC) has decided to Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent for the seventh consecutive time.

Consequently, the standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. Besides, hawkish comments from Fed officials spurred concerns about the outlook for inflation and interest rates.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 596.87 points or 0.81% to 74,248.22 during the week ended April 05, 2024.

The BSE Midcap index gained 1508.42 points or 3.84% to 40,830.54 and the small-cap index surged 2866.37 points or 6.64% to 46,032.71.

On the sectoral front, S&P BSE Metal was up by 1,338.62 points or 4.75% to 29,534.70, S&P BSE Power was up by 315.75 points or 4.71% to 7,017.49, S&P BSE PSU was up by 759.50 points or 4.16% to 19,034.07, S&P BSE Realty was up by 284.62 points or 4.00% to 7,392.99 and S&P BSE Finance was up by 364.04 points or 3.53% to 10,679.39 were the top gainers on the BSE sectoral front, while there were no losers on the BSE.

NSE movement for the week

The Nifty surged 186.80 points or 0.84% to 22,513.70.

On the National Stock Exchange (NSE), Bank Nifty was up by 1368.45 points or 2.90% to 48,493.05, Nifty IT was up by 349.75 points or 1.00% to 35,247.90, Nifty Mid Cap 100 increased 1947.10 points or 4.05% to 50,022.85 and Nifty Next 50 increased 2071.80 points or 3.42% to 62,696.10.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 83,619.83 crore and gross sales of Rs 83,944.47 crore, leading to a net outflow of Rs 324.64 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 12,507.80 crore against gross sales of Rs 11,293.05 crore, resulting in a net inflow of Rs 1,214.75 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 121.76 crore and gross sales of Rs 77.92 crore, leading to a net inflow of Rs 43.84 crore.

Outlook for the coming week

Indian equity markets ended the passing week with gains of over half a per cent amid positive HSBC India Manufacturing PMI and India Services PMI data. Meanwhile, the Reserve Bank of India, as expected, kept the repo rate unchanged at 6.5 per cent for the seventh straight time.

In the coming week, market participants will be eyeing the release of Index of Industrial Production (IIP) data, scheduled to be released on April 12.

Industrial production in India increased 3.8% year-on-year in January 2024, after an upwardly revised 4.2% rise in the previous month and below market expectations of 4.1%. On the same day, Consumer Price Index (CPI) data will also be out. The Consumer Price Index in India increased 0.16 per cent in February of 2024 over the previous month. 

The coming week is expected to be a crucial one for Indian equity markets as it marks the start of the Q4 earning season, which will formally commence with the earnings of IT bellwether, TCS on April 12, 2024.

On the global front, investors would be eyeing a few economic data from the world’s largest economy, the United States (US), starting from Consumer Inflation Expectations on April 08 followed by Redbook on April 09, Core Inflation Rate, Fed Goolsbe Speech, FOMC Minutes on April 10.

Producer Price Index (PPI), Initial Jobless Claims, Fed Bostic Speech on April 11, Import-Export data, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on April 12.

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