The selloff on the final day of the week dragged benchmarks lower for the week as traders remained concerned over global economic growth after weaker-than-expected US factory data. Also, escalating Middle East tensions and China demand worries rendered the underlying mood cautious.
Key gauges made a muted start to the week after credit rating agency, India Ratings and Research’s (Ind-Ra) report predicted that the recent surge in container freight rates by 4x (YoY basis), if sustained, could affect the business operations, EBITDA margins and working capital of exporters during FY25.
The markets found support from S&P Global Ratings’ statement that it does not expect recent general election results to cast a shadow on the prospects for fiscal improvements in India, even as the US credit rating agency suggested that it may further raise the country’s ratings if fiscal deficits narrow meaningfully. S&P raised India’s sovereign rating outlook to positive from stable in May of this year.
Key gauges gradually extended their gains taking support from Executive Director at the International Monetary Fund (IMF) Krishnamurthy Subramanian’s statement that reduction of corporate tax from 40 per cent to 35 per cent in the 2024 Indian Budget and removal of Angel Tax are among the measures that will promote India-US economic engagement.
Markets extended their northward journey to hit record highs as traders took encouragement with the report that the government has garnered Rs 98,681 crore from long-term capital gains tax on listed equities in 2022-23, a 15 per cent growth over the previous year.
Sentiments remained optimistic as India Ratings & Research (Ind-Ra) upped India’s GDP growth forecast for the current fiscal to 7.5 per cent from 7.1 per cent projected earlier on the expectation of improved consumption demand. It said ongoing growth momentum led by government capex, deleveraged balance sheets of corporates/banks, and incipient private corporate capex cycle has now found support from the union government budget.
Jubilation continued during the week and domestic indices continued to hit fresh peak after Commerce and Industry Minister Piyush Goyal expressed hope that steps such as focus on self-sufficiency, technology, stronger currency and fundamentals would help India become a $55-trillion economy by 2047.
But selloff on the final day of the week played spoilsports for Indian equity markets, forcing them to snap an eight-week winning streak as traders turned cautious about the outlook for global economic growth after some disappointing economic data from the U.S.
BSE movement for the week
The Bombay Stock Exchange (BSE) Sensex decreased 350.77 points or 0.43% to 80,981.95 during the week ended August 02, 2024. The BSE Midcap index lost 31.44 points or 0.07% to 47,675.23, while the Small cap index surged 334.94 points or 0.62% to 54,629.29.
On the sectoral front, S&P BSE Realty was down by 314.85 points or 3.74% to 8,098.49, S&P BSE Information Technology was down by 1,206.18 points or 2.88% to 40,630.67, S&P BSE TECK was down by 446.52 points or 2.33% to 18,701.31, S&P BSE Auto was down by 1,292.26 points or 2.18% to 57,942.28 and S&P BSE Fast Moving Consumer Goods was down by 311.58 points or 1.37% to 22,381.50 were the top losers.
S&P BSE Power was up by 334.29 points or 4.11% to 8,470.29, S&P BSE Healthcare was up by 630.59 points or 1.57% to 40,807.44, S&P BSE Oil & Gas was up by 448.48 points or 1.41% to 32,310.83, S&P BSE PSU was up by 132.36 points or 0.59% to 22,409.13 and S&P BSE Finance was up by 28.99 points or 0.25% to 11,417.37 were the top gainers on the BSE.
NSE movement for the week
The Nifty declined 117.15 points or 0.47% to 24,717.70.
On the National Stock Exchange (NSE), Nifty IT was down by 1247.05 points or 3.04% to 39,730.30 and Nifty Next 50 lost 72.50 points or 0.10% to 73,328.15, while Bank Nifty was up by 54.20 points or 0.11% to 51,350.15 and Nifty Mid Cap 100 increased 145.55 points or 0.25% to 57,913.65.
FII transactions during the week
Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 74,434.48 crore and gross sales of Rs 78,611.30 crore, leading to a net outflow of Rs 4,176.82 crore.
They also stood as net buyers in the debt segment with gross purchases of Rs 14,902.87 crore against gross sales of Rs 10,054.70 crore, resulting in a net inflow of Rs 4,848.17 crore.
In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 101.98 crore and gross sales of Rs 47.39 crore, leading to a net inflow of Rs 54.59 crore. (Provisional)
Outlook for the coming week
In the passing week, markets ended in red territory after India’s manufacturing sector growth eased in the month of July, amid slightly softer increases in new orders and output. According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased to 58.1 in July 2024 as against 58.3 in June 2024.
On the economy front, market participants would be eyeing on HSBC Composite PMI Final, HSBC Composite PMI Final, which is scheduled to be released on August 05, On August 08, traders will be looking forward to RBI Interest Rate Decision.
The Reserve Bank of India kept its benchmark policy repo at 6.5% for the eighth consecutive meeting in June 2024, as widely expected amid persistent price pressures and remaining economy resilient. Bank Loan Growth, Deposit Growth and Foreign Exchange Reserves data are going to be out on August 09.
In the ongoing earning season, market participants would be majorly looking for earnings from industries like Bharti Airtel, Marico, ONGC, Tata Chemicals, Bata India, Bosch, Lupin, PI Industries, Raymond, Tata Power, TVS Motor Company, Vedanta, NHPC, Pidilite Industries, Biocon, Eicher Motors, MRF, Oil India, SAIL, SJVN etc.
On the global front, investors would be eyeing few economic data from the world’s largest economy, United States (US), starting with S&P Global Composite PMI Final, S&P Global Services PMI Final, ISM Services PMI, ISM Services Business Activity on August 05, Balance of Trade, Redbook on August 06, Initial Jobless Claims, Continuing Jobless Claims on August 08, Baker Hughes Oil Rig Count on August 09.