Buoyed by strong macroeconomic data, Indian equity benchmarks ended the passing week near all-time closing levels. During the week key gauges hit multiples high points, driven by renewed buying interest by foreign investors; hopes of a rate cut in the US and upcoming Union Budget expectations.

Domestic bourses started the week on an optimistic note as traders took encouragement with the data released by the Controller General of Accounts (CGA) showing that a fiscal surplus of Rs 1.6 trillion in May due to the Reserve Bank of India’s (RBI’s) record dividend transfer narrowed the Centre’s fiscal deficit for the first two months of 2024-25 to Rs 0.5 trillion or 3 per cent of the full-year estimate.

Some support also came as Commerce and Industry Minister Piyush Goyal stated that a healthy increase in the country’s exports, improvement in the current account deficit (CAD) and focus on expanding manufacturing will help the Indian economy register a healthy growth rate.

Strong macro-economic data too aided sentiments with output of eight core industries registering a growth of 6.3 per cent in May 2024 as compared with 5.2 per cent a year ago, on the back of healthy expansion in the production of coal, natural gas, and electricity.

Sentiments also got a boost with the report that growth in the Indian manufacturing sector recovered some of the ground lost in May, as the headline Purchasing Managers Index (PMI) figure released by HSBC rose to 58.3 in June from 57.5 in May. Markets witnessed some consolidation on the very next day as a surge in crude oil prices to a two-month high revived concerns about inflation and interest rates.

However, markets once again gained momentum and started moving northward as India’s services sector activity improved during the month of June amid a stronger rise in new orders and an unprecedented expansion in international sales. According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index rose to 60.5 in June from 60.2 in May.

Traders also took support with a CRISIL Ratings report stating that revenues of top 18 states, which account for 90 per cent of India’s gross state domestic product, are likely to grow at a pace of eight to 10 per cent during the current financial year at Rs 38 lakh crore with robust GST collections and devolution of finances from the Centre, which comprises around 50 per cent of the aggregate state revenues.

Traders took note of S&P Global Ratings’ report stating that a sovereign rating upgrade for India in the next 24 months is possible if the central government is able to prudently manage its finances and bring down the fiscal deficit to 4 per cent of GDP. On the final day of the week, markets ended flat as traders remained on the sidelines ahead of the Q1FY25 earnings season and key macroeconomic data due next week. 

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 963.87 points or 1.22% to 79,996.60 during the week ended July 05, 2024.

The BSE Midcap index gained 1279.50 points or 2.77% to 47,437.85 and the Small Cap index surged 2023.55 points or 3.88% to 54,153.96.

On the sectoral front, S&P BSE Information Technology was up by 1,531.97 points or 4.15% to 38,483.33, S&P BSE PSU was up by 837.06 points or 3.95% to 22,040.78, S&P BSE Capital Goods was up by 2,807.02 points or 3.88% to 75,131.43, S&P BSE Healthcare was up by 1,136.21 points or 3.06% to 38,246.54 and S&P BSE TECK was up by 516.79 points or 3.01% to 17,681.20 were the top gainers, while S&P BSE Consumer Durables was down by 126.65 points or 0.22% to 58700.26 was the only loser on the BSE.

NSE movement for the week

The Nifty surged 313.25 points or 1.30% to 24,323.85.

On the National Stock Exchange (NSE), Nifty IT was up by 1563.25 points or 4.32% to 37,720.75, Nifty Mid Cap 100 was up 1352.55 points or 2.43% to 57,089.45, Nifty Next 50 gained 1903.10 points or 2.66% to 73,426.55 and Bank Nifty was up by 318.10 points or 0.61% to 52,660.35.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 83,840.42 crore and gross sales of Rs 75,878.17 crore, leading to a net inflow of Rs 7,962.25 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 14,286.42 crore against gross sales of Rs 7,982.23 crore, resulting in a net inflow of Rs 6,304.19 crore.

In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 122.93 crore and gross sales of Rs 125.76 crore, leading to a net outflow of Rs 2.83 crore.

Outlook for the coming week

For yet another week, Indian equity markets climbed towards fresh record high levels and ended with gains of over one per cent this week.  

On the economy front, market-participants would be eyeing the data of Index of Industrial Production (IIP), which is scheduled to be release on July 12. On the same day, the Consumer Price Index (CPI) for the month of June is also being released.

The annual consumer inflation rate in India eased to 4.67% in May of 2024 from 4.83% in the previous month. Traders will also be looking forward to Bank Loan growth, Deposit growth and Foreign Exchange Reserves data. 

The coming week would also be important as investors brace for a slew of earnings from the Industry’s bigwigs such as Delta Corp, Tata Elxsi, Tata Consultancy Services, HCL Technologies, Avenue Supermarts etc.

Prime Minister Narendra Modi will embark on an official visit to Russia and Austria between July 8 and 10. The Prime Minister will be in Moscow on July 8 and July 9, at the invitation of President Vladimir Putin, to hold the 22nd India-Russia Annual Summit. The leaders will review the entire range of multifaceted relations between the two countries and exchange views on contemporary regional and global issues of mutual interest. 

On the global front, investors will be eyeing macro-economic reports from world’s largest economy, United States, starting with Consumer Inflation Expectations on July 08 followed by Redbook, Fed Chair Powell Testimony, Fed Bowman Speech on July 09, Fed Goolsbee Speech, Core Inflation Rate, Initial Jobless Claims on July 11, Producer Price Inflation (PPI), Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on July 12.