Selling on the final day of the week wiped out most of the weekly gains and forced markets to settle with meagre gains as traders avoided taking any fresh positions ahead of the union budget 2024-25 to be announced on July 23.

Markets started the holiday-shortened week on an optimistic note and traded northward for the most part of the week, breaking record highs one after another as traders took encouragement after government data showed that the industrial output growth surprised in May rising to a seven-month high of 5.9 percent from 5 percent in the previous month, as manufacturing and electricity production soared.

Some optimism also came as the income tax department said India’s net direct tax collections grew 19.54 percent to Rs 5.74 lakh crore till July 11 in the current financial year as compared to Rs 4.80 lakh crore in FY24 in the corresponding period.

Market participants shrugged off reports that India’s retail inflation rose to a four-month high of 5.08 percent in June compared with 4.75 percent in the previous month. Besides, wholesale inflation rose to a 16-month high of 3.4 percent in June, compared with 2.6 percent in the previous month.

Sentiments remained jubilant with Commerce and Industry Minister Piyush Goyal’s statement that India’s exports recorded healthy growth in May and remained in the positive zone in June and the first quarter of the current fiscal despite global challenges.

Key gauges extended gains with traders taking support from the commerce ministry’s data showing that India’s merchandise export increased by 2.56 per cent to $35.20 billion in June 2024 as compared to $34.32 billion in June last year.

Traders took a note of Reserve Bank of India (RBI) data showing that India’s outward foreign direct investment (FDI) commitments rose to $2.14 billion in June 2024, compared to $1.14 billion in June 2023. Sequentially, they declined from $2.22 billion in May 2024.

Some support also came from CRISIL’s report stating that industrial activity in the current fiscal year is poised to gain support from domestic consumption, with an anticipated improvement in private consumption, which had weakened to 4 per cent last fiscal. Jubilation continued on Dalal Street supported by encouraging quarterly results by some blue-chip companies.

Some support also came after the International Monetary Fund in its World Economic Outlook raised India’s growth forecast for FY25 to 7 percent from 6.8 percent projected in April.

Sentiments continued to remain upbeat after the Asian Development Bank (ADB) in its July edition of the Asian Development Outlook (ADO) maintained India’s GDP growth forecast at 7 per cent for the current financial year (FY25), citing that a rebound in agriculture is expected given above-normal monsoon projections.

But, selling on the final day of the week mainly played spoil sports for major indices as investors chose to book profits at record high levels, ahead of the Union Budget 2024. Some concern also came after RBI in its monthly bulletin said that despite the overall positive trajectory, inflation remains a key concern for the Indian economy as the uptick in June 2024 has derailed its disinflation path. 

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex increased 85.31 points or 0.11% to 80,604.65 during the week ended July 19, 2024. The BSE Midcap index losses 1248.23 points or 2.63% to 46,260.03, while Small cap index slipped 1531.45 points or 2.84% to 52,481.80.

On the sectoral front, S&P BSE TECK was up by 421.54 points or 2.32% to 18,570.06, S&P BSE Fast Moving Consumer Goods was up by 432.15 points or 2.00% to 22,058.75, S&P BSE Information Technology was up by 791.37 points or 1.99% to 40,620.28, S&P BSE Realty was up by 21.09 points or 0.25% to 8,558.01 and S&P BSE BANKEX was up by 26.66 points or 0.04% to 60,167.10 were the top gainers.

S&P BSE Capital Goods was down by 3,351.73 points or 4.47% to 71,599.17, S&P BSE Metal was down by 1,471.14 points or 4.46% to 31,517.10, S&P BSE Power was down by 324.89 points or 4.04% to 7,709.69, S&P BSE PSU was down by 620.61 points or 2.76% to 21,841.99 and S&P BSE Consumer Durables was down by 1,518.85 points or 2.57% to 57,500.54.

NSE movement for the week

The Nifty increased 28.75 points or 0.12% to 24,530.90.

On the National Stock Exchange (NSE), Bank Nifty was down by 13.30 points or 0.03% to 52,265.60, Nifty Next 50 lost 2379.10 points or 3.23% to 71,353.00 and Nifty Mid Cap 100 decreased 1265.50 points or 2.21% to 55,908.30, while Nifty IT was up by 900.30 points or 2.31% to 39,923.30.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 76,406.18 crore and gross sales of Rs 60,986.86 crore, leading to a net inflow of Rs 15,419.32 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 8,383.09 crore against gross sales of Rs 3,294.27 crore, resulting in a net inflow of Rs 5,088.82 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 176.40 crore and gross sales of Rs 65.09 crore, leading to a net inflow of Rs 111.31 crore.

Outlook for the coming week

In the passing week, Indian equity markets ended with limited gains amid mixed microeconomic data.

The coming week will have the mega event of Union Budget which will keep the markets buzzing through the week and there will be sector specific moves based on the budget announcements, with lots of hopes hinging with Finance Minister. Parliament’s Budget session will start on July 22. The Union Budget will be presented by Union Finance Minister Nirmala Sitharaman on July 23.  

On the economic front, HSBC Composite PMI Flash, HSBC Manufacturing PMI Flash, HSBC Services PMI Flash data will be released on July 24. F&O July series expiry slated on July 25. Also, market participants will be eyeing Bank Loan Growth, Deposit Growth and Foreign Exchange Reserves data, which is going to be out on July 26. 

Further, in the ongoing earning season, investors would first react to results of Coforge, Bajaj Finance, Hindustan Unilever, Mahindra and Mahindra Financial, Axis Bank, Bajaj Finserv, Bajaj Holdings, CG Power and Industrial Solutions, Jindal Steel and Power, Larsen and Toubro, Adani Green Energy, Ashok Leyland, Cyient, Nestle India, Tech Mahindra, Cipla, Indusind Bank, Dr Reddy’s Laboratories, ICICI Bank etc. 

On the global front, investors would be eyeing a few economic data from the world’s largest economy, United States (US), starting with Chicago Fed National Activity on July 22 followed by Redbook, Existing Home Sales, Richmond Fed Manufacturing Index, and Richmond Fed Manufacturing Shipments on July 23.

S&P Global Composite PMI Flash, S&P Global Manufacturing PMI Flash, S&P Global Services PMI Flash, Building Permits Final on July 24, Durable Goods Orders, Initial Jobless Claims, Kansas Fed Composite Index on July 25, Core PCE Price Index, Personal Income, Personal Spending, Michigan Consumer Sentiment Final and Baker Hughes Oil Rig Count on July 26.