Extending the previous week’s rally, Indian equity benchmarks ended the passing with a gain of around two percentage points. Key gauges started the holiday truncated week on a quiet note as traders remain concerned with a private report that demand-supply mismatches could keep prices of pulses elevated until the new crop starts arriving in the market in October, putting further pressure on already high food inflation.
Some concern also came as domestic rating agency ICRA projected India’s GDP growth to moderate to a four-quarter low of 6.7 per cent in the March quarter of the 2023-24 fiscal. For the full 2023-24 fiscal, ICRA estimates GDP growth to come in at 7.8 per cent.
ICRA Chief Economist, Head-Research & Outreach Aditi Nayar said the lower volume growth coupled with diminishing gains from commodity prices dampening the profitability of some of the industrial sectors is expected to dampen India’s GVA growth in Q4 FY2024.
However, losses remain capped as some support came with the report that India Ratings and Research expects the country’s GDP growth rate for the March quarter at 6.2 per cent and around 6.9-7 per cent for the 2023-24 fiscal. The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter and 8.4 per cent in the December quarter of 2023-24.
Some solace also came after the EPFO’s provisional payroll data showed that EPFO has added 14.41 lakh net members in the month of March 2024. The data indicates that around 7.47 lakh new members have been enrolled during March 2024.
Further, local bourses gained traction and hit record highs as sentiments turned optimistic as private survey showed business activity in India expanded robustly in May, helped by the dominant services industry. It also showed exports rising at a record pace and the sharpest job addition rate in nearly 18 years.
HSBC’s flash India Composite purchasing managers’ Index, compiled by S&P Global, rose slightly to 61.7 this month from April’s final reading of 61.5, marking the 34th month above the 50-level separating growth from contraction.
Also, traders took a note of report that the Reserve Bank of India’s board approved transfer of Rs 2.11 trillion ($25.35 billion) as surplus to the federal government for the fiscal year ended March. As per the interim budget estimates for fiscal year 2024/25, the Narendra Modi-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks, and other financial institutions.
On the final day of the week, markets witnessed consolidation as traders remained on the sidelines ahead of the results of the Lok Sabha polls announcement. Some cautiousness came in with the report that India’s engineering exports declined 3.2 per cent to $8.67 billion in April 2024, primarily due to lower shipments of metals, especially iron, steel and copper. The lower shipment of steel was mainly witnessed in Italy, Nepal, the UAE, the Netherlands, the USA, China, and South Korea, among others.
BSE movement for the week
The Bombay Stock Exchange (BSE) Sensex surged 1404.45 points or 1.90% to 75,410.39 during the week ended May 24, 2024.
The BSE Midcap index gained 471.92 points or 1.10% to 43,519.44 and the Small Cap index surged 36.78 points or 0.08% to 47,996.45.
On the sectoral front, S&P BSE Capital Goods was up by 3,152.94 points or 4.70% to 70,235.49, S&P BSE PSU was up by 723.02 points or 3.51% to 21,301.33, S&P BSE Metal was up by 922.13 points or 2.83% to 33,466.39, S&P BSE Power was up by 191.54 points or 2.52% to 7,791.02 and S&P BSE Oil & Gas was up by 627.40 points or 2.17% to 29,562.62 were the top gainers on the BSE sectoral front.
S&P BSE Healthcare was down by 212.18 points or 0.60% to 35,445.32 and was the only loser on the BSE sectoral front.
NSE movement for the week
The Nifty surged 455.10 points or 2.02% to 22,957.10.
On the National Stock Exchange (NSE), Bank Nifty was up by 772.15 points or 1.60% to 48,971.65, Nifty IT was up by 385.55 points or 1.15% to 33,824.30, Nifty Mid Cap 100 was up by 555.20 points or 1.07% to 52,424.45 and Nifty Next 50 was up by 1376.25 points or 2.03% to 69,033.25.
FII transactions during the week
Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 71,705.60 crore and gross sales of Rs 65,510.46 crore, leading to a net inflow of Rs 6,195.14 crore.
They also stood as net buyers in the debt segment with gross purchases of Rs 4,072.09 crore against gross sales of Rs 2,241.20 crore, resulting in a net inflow of Rs 1,830.89 crore.
In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 81.82 crore and gross sales of Rs 173.39 crore, leading to a net outflow of Rs 91.57 crore.
Outlook for the coming week
In the passing week, Indian markets ended with gains of around two percent amid positive HSBC Flash India Manufacturing PMI data.
The headline HSBC Flash India Composite Output Index – a seasonally adjusted index that measures the month-on-month change in the combined output of India’s manufacturing and service sectors – rose from a final reading of 61.5 in April to 61.7 in May, which indicated the third-strongest rate of expansion in close to 14 years.
On the economy front, market participants would be eyeing the data of Government Budget Value, Infrastructure Output, India’s GDP Growth Rate, Bank Loan Growth, Deposit Growth, Foreign Exchange Reserves data, which are scheduled to be released on May 31.
The Indian economy expanded 8.4% year-on-year in Q4 2023, the strongest growth since Q2 2022, compared to an upwardly revised 8.1% in Q3 and beating forecasts of 6.6%.
Traders will be reacting to important earnings in the last leg of the result season starting with Campus Activewear, Indian Railway Catering and Tourism Corporation, NBCC (India), Rites, Bata India, Deepak Fertilizers and Petrochemicals Corporation, Emami, IPCA Laboratories, Jindal Poly Films, Lemon Tree Hotels, SJVN, Tata Steel, Apollo Hospitals Enterprise etc.
On the global front, investors would be eyeing few economic data from the world’s largest economy, starting with the Dallas Fed Manufacturing Index on May 28, Redbook, Richmond Fed Manufacturing Index, Dallas Fed Services Index on May 29, Goods Trade Balance, Initial Jobless Claims, Fed Williams Speech on May 30, Personal Income, Personal Spending, Chicago PMI, Baker Hughes Oil Rig Count on May 31.