Weekly Market Outlook

Indian equity benchmarks ended the volatile week of trade with marginal gains, supported by decent macroeconomic data.

Key gauges started the holiday truncated week on an optimistic note after economic think-tank National Institute of Public Finance and Policy (NIPFP) said it has estimated India’s GDP growth at 7.1 per cent for the current fiscal, using high-frequency models. NIPFP said the Centre is on a fiscal consolidation path through buoyancy in taxes and revenue expenditure compression.

Some optimism also came as S&P Global Ratings in the Asia-Pacific 2Q 2024 Banking Update stated that Indian banks’ credit growth, profitability and asset quality would remain robust in the current fiscal reflecting strong economic growth, but they may be compelled to slow down their loan growth as deposits are not growing at a similar pace.

Sentiments also remained upbeat with the private report estimating India’s GDP growth at 6.6 per cent in the current fiscal helped by consumption expenditure, exports rebound and capital flows. It said the rapid growth of the middle-income class has led to rising purchasing power and even created demand for premium luxury products and services.

On the very next day, domestic bourses witnessed profit booking after Crisil in its report stated that India Inc is likely to log 4-6 per cent revenue growth in the January-March quarter of 2023-24, marking the slowest quarterly growth since recovery from the Covid-19 pandemic which began in September 2021.

However decent macroeconomic data helped markets to maintain gains as India’s Goods and Services Tax (GST) collections in gross terms hit a record high in April 2024 at Rs 2.1 lakh crore. The government had collected Rs 1.87 lakh crore as GST in the same period last year.

Sentiments remained positive in afternoon deals, taking support from data showing that the output of eight core industries posted a growth of 5.2 per cent in March 2024 as the production of cement, coal, electricity, natural gas, steel and crude oil recorded positive growth in the same month.

The output of core sectors had grown by 7.1 per cent in February 2024 and 4.1 per cent in January 2024, while it stood at 4.2 per cent in March 2023.  Meanwhile, India’s manufacturing sector slowed marginally in April but remained robust thanks to strong demand, prompting firms to ramp up purchases of raw materials at a near-record pace.

The HSBC final India Manufacturing Purchasing Managers’ Index, compiled by S&P Global, dipped to 58.8 in April from a 16-year high of 59.1 in March, below a preliminary estimate for no change from the previous month. Despite softening, it was above its long-run average and in expansionary territory for the 34th month.

The selloff on the final day of the week mainly ate most of the weekly gains as traders turned cautious with Reserve Bank data showing that India’s services exports declined 1.3 per cent in March to $30 billion while imports fell by 2.1 per cent to $16.61 billion. As per RBI’s data on India’s international trade in services, the trade surplus during March 2024 was $13.4 billion.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex increased 147.99 points or 0.20% to 73,878.15 during the week ended May 03, 2024.

The BSE Midcap index gained 826.76 points or 1.99% to 42,414.53, while small cap index slipped 47.88 points or 0.10% to 47,191.41. 

On the sectoral front, S&P BSE Power was up by 235.83 points or 3.33% to 7,317.33, S&P BSE PSU was up by 612.24 points or 3.09% to 20,421.06, S&P BSE Auto was up by 1,211.03 points or 2.42% to 51,341.01, S&P BSE Finance was up by 174.25 points or 1.64% to 10,792.58 were the top gainers.

S&P BSE TECK was down by 339.71 points or 2.13% to 15,615.24, S&P BSE Information Technology was down by 519.11 points or 1.51% to 33,901.70, S&P BSE Capital Goods was down by 498.31 points or 0.79% to 62,616.74, S&P BSE Realty was down by 53.98 points or 0.71% to 7,554.33 and S&P BSE Consumer Durables was down by 185.06 points or 0.34% to 54,810.88 were the top losers on the BSE.

NSE movement for the week

The Nifty gained 55.90 points or 0.25% to 22,475.85.

On the National Stock Exchange (NSE), Bank Nifty was up by 722.50 points or 1.50% to 48,923.55, Nifty Mid Cap 100 was up 311.05 points or 0.61% to 50,935.15 and Nifty Next 50 was up 1635.95 points or 2.55% to 65,770.50, while Nifty IT was down by 757.80 points or 2.25% to 32,908.40.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 67,953.67 crore and gross sales of Rs 69,164.96 crore, leading to a net outflow of Rs 1,211.29 crore.

They also stood as net sellers in the debt segment with gross purchases of Rs 3,619.73 crore against gross sales of Rs 5,656.00 crore, resulting in a net outflow of Rs 2,036.27 crore.

In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 38.31 crore and gross sales of Rs 67.05 crore, leading to a net outflow of Rs 28.74 crore.

Outlook for the coming week

In the passing week, Indian equity markets ended in green amid positive India’s manufacturing sector data. India’s manufacturing sector growth eased slightly in the month of April but signalled the second-best improvement in the health of the sector for three-and-a-half years, supported by buoyant demand.

On the economy front, market participants would be eyeing the data of HSBC Composite PMI Final, HSBC Services PMI Final, which is scheduled to be released on May 06, India’s Industrial output and Manufacturing production going to be out on May 10.

Industrial output in India rose by 5.7% on an annual basis in February of 2024, missing market expectations of a 6% expansion, but still pointing to the sharpest increase since October 2023.

In the ongoing result season, traders will be eyeing the earnings of prominent companies, including Godrej Consumer Products, Lupin, Dr Reddy’s Laboratories, JSW Energy, Pidilite Industries, SRF, Voltas, Hero Motocorp, Larsen and Toubro, Piramal Enterprises, Tata Power Company, TVS Motor Company, Asian Paints, Bharat Petroleum Corporation, Escorts Kubota, Hindustan Petroleum Corporation, State Bank of India, Cipla, Tata Motors, Union Bank of India etc. 

On the global front, investors would be eyeing a few economic data from Redbook, Fed Kashkari Speech on May 07 followed by Initial Jobless Claims on May 09, Michigan Consumer Sentiment Prel, Fed Goolsbee Speech, Baker Hughes Oil Rig Count on May 10.

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