Weekly Market Outlook

Indian equity benchmarks ended the passing week with a gain of around two percentage points as the Indian CPI came in lower than the previous month which increased hope for rate cuts at the domestic level.

Key gauges made a muted start as traders remain concerned after India’s industrial production growth slowed marginally to 4.9 per cent month-on-month in March 2024, mainly due to poor show by the mining sector. The factory output growth, measured in terms of the Index of Industrial Production (IIP), was 5.6 per cent in February 2024.

However, markets managed to keep their head above water with think tank GTRI stating that India’s exports to the UAE increased by 18.25 per cent to $35.63 billion in 2023-24 as against $30.13 billion in 2018-19, while imports surged 61.21 per cent, from $29.79 billion in FY2019 to $48.02 billion in the last fiscal.

Markets added some gains as market participants took encouragement with the government data showing that retail inflation eased to an 11-month low of 4.83 per cent in April as prices of some kitchen items declined though overall food basket firmed up marginally. The Consumer Price Index (CPI)-based retail inflation was 4.85 per cent in March.

Some consolidation witnessed during the week after inflation based on wholesale price index (WPI) accelerated in the month of April 2024 to 1.26% from 0.53% in March 2024, due to increase in prices of food articles, crude petroleum & natural gas, manufacture of food products, other manufacturing etc.

Traders also remained cautious with ICRA Chief Economist Aditi Nayar’s statement that the wholesale food inflation, which is at a four-month high, will continue to be a cause for concern in May and June as heatwave is likely to jack up prices of perishable commodities.

Rally in the second half of the week mainly helped key gauges to surpass their crucial 74,000 (Sensex) and 22,500 (Nifty) levels. Sentiments turned optimistic with report that India’s monsoon is forecast to hit the Kerala coast in the southwest on May 31, offering relief to farmers after below average rainfall last year.

Sentiments also got some support with the National Sample Survey Office (NSSO) report showing that the unemployment rate for people aged 15 years and above in urban areas declined to 6.7 per cent in the January-March period from 6.8 per cent a year ago.

Traders took support with Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal’s statement that India will be a $4 trillion economy in 2024-25 and surpass Japan by early next fiscal to become the world’s fourth largest economy.

Buying on special trading session on Saturday helped markets to end above their respective psychological levels as India’s foreign exchange reserves climbed for the second consecutive week, reaching a peak of $644.15 billion as of May 10, according to data released by the central bank. 

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 1341.47 points or 1.85% to 74,005.94 during the week ended May 18, 2024.

The BSE Midcap index gained 2019.77 points or 4.92% to 43,047.52 and Small cap index surged 2562.68 points or 5.65% to 47,959.67.

On the sectoral front, S&P BSE Capital Goods was up by 6,095.07 points or 9.99% to 67,082.55, S&P BSE Realty was up by 559.81 points or 7.65% to 7,879.48, S&P BSE Power was up by 496.87 points or 7.00% to 7,599.48, S&P BSE PSU was up by 1,146.20 points or 5.90% to 20,578.31 and S&P BSE Metal was up by 1,770.96 points or 5.75% to 32,544.26 were the top gainers.

There were no losers on the BSE.

NSE movement for the week

The Nifty surged 446.80 points or 2.03% to 22,502.00.

On the National Stock Exchange (NSE), Bank Nifty was up by 778.40 points or 1.64% to 48,199.50, Nifty IT gained 503.60 points or 1.53% to 33,438.75, Nifty Mid Cap 100 gained 2336.95 points or 4.72% to 51,869.25 and Nifty Next 50 gained 3722.80 points or 5.82% to 67,657.00.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 62,499.00 crore and gross sales of Rs 73,657.92 crore, leading to a net outflow of Rs 11,158.92 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 7,799.37 crore against gross sales of Rs 6,019.57 crore, resulting in a net inflow of Rs 1,779.80 crore.

In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 122.83 crore and gross sales of Rs 151.76 crore, leading to a net outflow of Rs 28.93 crore.

Outlook for the coming week

Indian markets ended significantly higher in the passing week with easing inflation. The government data showed that retail inflation eased to an 11-month low of 4.83 per cent in April as prices of some kitchen items declined though overall food basket firmed up marginally. The retail inflation was 4.85 per cent in March.

In the coming holiday truncated week, investors will be eyeing HSBC Composite PMI Flash, HSBC Manufacturing PMI Flash, HSBC Services PMI Flash, which scheduled to be released on May 23. The HSBC India Composite PMI was revised downward to 61.5 in April from a flash print of 62.2, coming after March’s reading of 61.8.

Foreign Exchange Reserves data to be announced on May 24. Foreign Exchange Reserves in India increased to $641590 million on May 3 from $637920 million in the previous week. Stock markets will be shut for trade on May 20 on account of fifth phase of voting for the Lok Sabha Election in Mumbai.

In the ongoing result season, traders will be eyeing earnings of prominent companies, including, MPS, PI Industries, Jubilant FoodWorks, One 97 Communications, Power Grid Corporation of India, Fortis Healthcare, Interglobe Aviation, ITC, Bosch, Glenmark Pharmaceuticals, Hindalco Industries, NTPC, Divi’s Laboratories etc. 

On the global front, investors would be eyeing some important economic data from world’s largest economy, United States (US), starting with Fed Chair Powell Speech, Fed Bostic Speech, Fed Barr Speech on May 20, Redbook on May 21, Existing Home Sales, FOMC Minutes on May 22.

Chicago Fed National Activity Index, Initial Jobless Claims, S&P Global Composite PMI Flash, S&P Global Manufacturing PMI Flash, S&P Global Services PMI Flash, Building Permits Final on May 23, Durable Goods Orders, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on May 24.

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