It turned out to be a jubilant week for Indian equity benchmarks with frontline gauges settling all-time highs after all the members of the National Democratic Alliance (NDA) formally accepted and appointed Narendra Modi as the leader of the alliance and backed his candidature for being the country’s Prime Minister for a third term.
Markets started the volatile week with a huge margin as exit polls predicted a historic third term for Prime Minister Narendra Modi.
Robust Indian GDP data for the fourth quarter of FY24 also boosted investor sentiment. India’s gross domestic product (GDP) grew 7.8 per cent y-o-y during the January-March 2024 quarter (Q4 FY24) as compared to 7 per cent growth recorded a year ago. For the full financial year 2023-24, India’s GDP growth rate stood at 8.2 per cent as against 7 per cent in FY23.
Some support came in as growth of eight core industries rose to 6.2% in April from 6% in March, mainly due to higher growth achieved in natural gas, refinery products, coal, steel and electricity sectors.
Traders overlooked reports that India’s manufacturing sector growth eased further in the month of May, signalling a slower but still substantial improvement in the health of the sector. The headline figure was nearly four points higher than its long-run average.
On the very next day, markets not only reversed all their gains but witnessed a massacre everywhere on Dalal Street as the counting of votes showed Prime Minister Narendra Modi’s BJP-led NDA alliance past the majority mark but not registering a landslide victory as predicted by most exit polls.
Sentiments also remain dampened after S&P Global Market Intelligence asserts that weak private consumption in India remains the largest concern, with rural demand in particular still straggling to catch up, at a time when the country’s overall growth remains strong.
But local bourses staged significant recovery as all the jitters over political drama comes to an end as BJP-led alliance finally setting its house in order to form stable government for the third straight time.
Also, traders took encouragement with a private report that India’s world record beating economic growth rate together with robust tax revenues, a fast-expanding digital and financial infrastructure and a strong manufacturing sector will give the new government a base for unleashing next generation reforms that may make the country a developed nation by 2047.
Markets extended gains after India Ratings and Research (Ind-Ra) projects that India’s current account balance (CAB) will achieve a surplus of approximately $6 billion (0.6 per cent of GDP) in the fourth quarter of the fiscal year 2024 (Q4FY24). Some support also came with report that Fitch Ratings reinforced its ‘positive’ outlook on India’s medium-term economic growth.
Finally, key gauges settled at record high levels after the Reserve Bank of India revised upwards the GDP growth projection to 7.2 per cent for 2024-25 from 7 per cent earlier. Also, RBI decided to keep the policy rate unchanged for the eighth time in a row, saying it will maintain a tight vigil on inflation.
BSE movement for the week
The Bombay Stock Exchange (BSE) Sensex surged 2732.05 points or 3.69% to 76,693.36 during the week ended June 07, 2024.
The BSE Midcap index gained 1258.75 points or 2.94% to 44,111.44 and Small cap index surged 1467.89 points or 3.11% to 48,731.55.
On the sectoral front, S&P BSE Information Technology was up by 2,710.70 points or 8.17% to 35,909.41, S&P BSE TECK was up by 1,087.44 points or 6.94% to 16,761.62, S&P BSE Fast Moving Consumer Goods was up by 1,354.28 points or 6.93% to 20,883.10, S&P BSE Auto was up by 3,597.71 points or 6.78% to 56,623.88 and S&P BSE Consumer Discretionary Goods & Services was up by 501.68 points or 5.50% to 9,617.03 were the top gainers.
On the sectoral front, S&P BSE PSU was down by 384.28 points or 1.84% to 20,504.08, S&P BSE Capital Goods was down by 1,203.31 points or 1.72% to 68,852.26, S&P BSE Power was down by 34.38 points or 0.45% to 7,665.08 and S&P BSE Oil & Gas was down by 25.53 points or 0.09% to 28,614.34 were the few losers on the BSE.
NSE movement for the week
The Nifty surged 759.45 points or 3.37% to 23,290.15.
On the National Stock Exchange (NSE), Nifty IT was up by 2783.80 points or 8.60% to 35,169.90, Nifty Mid Cap 100 gained 1489.00 points or 2.88% to 53,194.70, Nifty Next 50 gained 1694.60 points or 2.51% to 69,222.25 and Bank Nifty was up by 819.25 points or 1.67% to 49,803.20.
FII transactions during the week
Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 184,212.94 crore and gross sales of Rs 199,007.17 crore, leading to a net outflow of Rs 14,794.23 crore.
They also stood as net buyers in the debt segment with gross purchases of Rs 10,740.86 crore against gross sales of Rs 6,732.97 crore, resulting in a net inflow of Rs 4,007.89 crore.
In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 230.77 crore and gross sales of Rs 281.04 crore, leading to a net outflow of Rs 50.27 crore.
Outlook for the coming week
In the passing week, Indian markets ended with gains of over three percent amid RBI’s monetary policy decision. Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) decided to Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent for the eighth consecutive time.
On the economy front, market-participants would be eyeing the data of Index of Industrial Production (IIP) scheduled to be release on June 12.
On the same day, Consumer Price Index (CPI) data for the month of May, scheduled to be released. The Consumer Price Index in India increased 0.48 percent in April of 2024 over the previous month.
In another major event, investors will have an eye on the Wholesale Price Index (WPI), which is scheduled to be release on June 14. India’s wholesale prices increased by 1.26% year-on-year in April 2024, accelerating from a 0.53% rise in the previous month and above market estimates of a 1% gain. On the same day, imports and exports data, Foreign Exchange Reserves data are going to be out.
Meanwhile, Prime Minister Narendra Modi’s swearing-in ceremony is likely to take place on the evening of June 9.
On the global front, investors would be eyeing a few economic data from world’s largest economy, the United States (US), starting with Redbook on June 11 followed by Inflation data, Fed Interest Rate Decision, and FOMC Economic Projections on June 12.
Fed Press Conference, Producer Price Inflation (PPI), Initial Jobless Claims, Fed Williams Speech on June 13, Imports and Exports Data, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on June 14.