Weekly Market Outlook

Indian equity benchmarks ended the passing week in green terrain with Sensex and Nifty settling at record closing high levels as fueling optimism about the strength of India’s economic growth outlook coupled with healthy macroeconomic numbers buoyed sentiments.

Key gauges started the week on a pessimistic note after Fitch Ratings reportedly said that India’s medium-term fiscal consolidation, critical to any rating upgrade, is likely to get more challenging as a new coalition government comes to power.

Sentiments were also dampened after the Reserve Bank of India (RBI) in its latest ‘Inflation Expectations Survey of Households (IESH) – May 2024’ showed that Households’ inflation expectations for the three months and one year ahead periods increased by 20 basis points (bps) and 10 bps, respectively.

Domestic bourses took a U-turn and started moving northward as traders took encouragement with a World Bank report stating that India will remain the fastest-growing major economy recording a steady growth of 6.7 per cent in the next three years including the current financial year.

Sentiments remained upbeat as data from the commerce ministry showed exports from special economic zones (SEZs) rose by over 4 per cent to $163.69 billion in 2023-24 even though the country’s total shipments dipped by more than 3 per cent in the last fiscal. Exports from these zones stood at $157.24 billion in 2022-23 and $133 billion in 2021-22.

Local indices extended gains as government data showed Retail inflation continued its downward slide to reach a one-year low of 4.75 per cent in May due to a marginal decline of prices in the food basket and remained within the Reserve Bank’s comfort zone of below 6 per cent.

Sentiments remained optimistic as the Reserve Bank of India (RBI) in its latest data report on ‘Overseas Direct Investment’ has showed that the country’s outward foreign direct investment (OFDI) commitments increased 1.04% at $2009.51 million in May 2024 as compared to $1988.8 million in May 2023.

Gains on final day of the week helped markets to end at record high levels as some support came with credit rating agency Moody’s Ratings’ statement that India is expected to remain the region’s fastest-growing economy in the Asia-Pacific region in the second half of the year 2024, fueled by domestic demand growth. The report also noted that India, Indonesia, and the Philippines were the key growth outperformers in the first half of the year 2024. 

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex gained 299.41 points or 0.39% to 76,992.77 during the week ended June 14, 2024.

The BSE Midcap index gained 1947.32 points or 4.41% to 46,058.76 and Small cap index surged 2468.44 points or 5.07% to 51,199.99.

On the sectoral front, S&P BSE PSU was up by 881.47 points or 4.30% to 21,385.55, S&P BSE Capital Goods was up by 4,403.46 points or 6.40% to 73,255.72, S&P BSE Power was up by 236.08 points or 3.08% to 7,901.16, S&P BSE Oil & Gas was up by 996.93 points or 3.48% to 29,611.27 and S&P BSE Metal was up by 315.36 points or 0.95% to 33,596.41 were the top gainers.

S&P BSE Information Technology was down by 403.34 points or 1.12% to 35,506.07, S&P BSE TECK was down by 161.77 points or 0.97% to 16,599.85 and S&P BSE Fast Moving Consumer Goods was down by 168.11 points or 0.81% to 20,714.99 were the few losers on the BSE.

NSE movement for the week

The Nifty surged 175.45 points or 0.75% to 23,465.60.

On the National Stock Exchange (NSE), Nifty Mid Cap 100 increased 2031.25 points or 3.82% to 55,225.95, Nifty Next 50 gained 2669.90 points or 3.86% to 71,892.15 and Bank Nifty increased 198.80 points or 0.40% to 50,002.00, while Nifty IT was down by 571.35 points or 1.62% to 34,598.55.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 66,226.32 crore and gross sales of Rs 57,266.27 crore, leading to a net inflow of Rs 8,960.05 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 8,555.37 crore against gross sales of Rs 7,818.98 crore, resulting in a net inflow of Rs 736.39 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 85.24 crore and gross sales of Rs 57.45 crore, leading to a net inflow of Rs 27.79 crore.

Outlook for the coming week

In the passing week, markets ended with gains on hopes that RBI will cut rates in October as inflation has cooled off significantly.

On the economy front, marketmen will be eyeing the HSBC Composite PMI Flash, HSBC Manufacturing PMI Flash, and HSBC Services PMI Flash data to be announced on June 21. The HSBC India Composite PMI fell to 60.5 in May 2024, revised down from the initial estimate of 61.7 and April’s reading of 61.5.

Bank Loan Growth, Deposit Growth and Foreign Exchange Reserves data going to be released on same day.

Meanwhile, the first meeting of the Goods and Services Tax (GST) Council after the Narendra Modi-led government took charge at the Centre for the third consecutive term, will be held on June 22 in New Delhi, which is likely to review online gaming taxation and discuss further rationalization of indirect tax structure.

On the global front, investors would be eyeing few economic data from the world’s largest economy, the United States (US), starting with NY Empire State Manufacturing Index on June 17, followed by Retail Sales, Redbook, Industrial Production, Manufacturing Production, Fed Goolsbee Speech on June 18.

Net Long-term TIC Flows, Foreign Bond Investment, NAHB Housing Market Index on June 19, Building Permits Prel, Initial Jobless Claims, Philadelphia Fed Manufacturing Index on June 20, S&P Global Composite PMI Flash, S&P Global Manufacturing PMI Flash, S&P Global Services PMI Flash, Existing Home Sales and Baker Hughes Oil Rig Count on June 21.

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