Weekly Market Outlook

Extending the previous week’s losses, Indian equity benchmarks ended lower for the passing week after Fitch Ratings downgraded the U.S. sovereign credit grade. Markets made an optimistic start to the week as cooling inflation across the globe gave hopes of an end to the policy-tightening era.

The labour ministry’s announcement of retail inflation for industrial workers rising to 5.57 per cent in June 2023 (compared to 4.42 per cent in May) led to pessimistic sentiments, the increase was primarily due to higher prices of specific food items. Similarly, food inflation surged to 6 per cent from 3.24 per cent in the previous month and 6.73 per cent in the same month last year.

Last month, the Manufacturing Purchasing Managers’ Index, compiled by S&P Global, decreased slightly to 57.7 from June’s 57.8. On the other hand, services activity witnessed a significant surge, soaring to 62.3 in July from a PMI of 58.5 in June. Notably, the July services PMI reached its highest level in over 13 years at 62.3.

Following the credit rating downgrade of the US to AA+ from AAA by rating agency Fitch, selling intensified. Sentiments remained downbeat as a report revealed that India’s services trade surplus dropped to $36.4 billion in the April-June quarter of 2023-24, marking the lowest figure in three quarters.

Sentiments stayed upbeat following a report by S&P Global, which stated that India has the potential to become a $6.7 trillion economy by 2031, compared to the current $3.4 trillion, if the country maintains an average growth rate of 6.7 per cent for seven years.

Foreign Portfolio Investors (FPIs) purchased Indian shares worth 466.18 billion rupees ($5.63 billion) on a net basis in July, according to data from the National Securities Depository (NSDL).

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex slipped 438.95 points or 0.66% to 65,721.25 during the week ended August 04, 2023.

The BSE Midcap index gained 2.84 points or 0.01% to 30,162.66 and the small-cap index surged 522.19 points or 1.51% to 35,070.65.

On the sectoral front, S&P BSE Realty was down by 194.55 points or 4.31% to 4,314.36, S&P BSE PSU was down by 205.41 points or 1.78% to 11,339.00, S&P BSE Bankex was down by 891.11 points or 1.74% to 50,428.55 were the top losers.

S&P BSE Information Technology was up by 888.00 points or 2.97% to 30,781.16, S&P BSE TECK was up by 288.88 points or 2.13% to 13,824.84 and S&P BSE Healthcare was up by 104.95 points or 0.38% to 27,852.00 were the few gainers on the BSE.

NSE movement for the week

The Nifty slipped 129.05 points or 0.66% to 19,517.00.

On the National Stock Exchange (NSE), Bank Nifty was down by 588.60 points or 1.29% to 44,879.50 and Nifty Next 50 was down 401.40 points or 0.89% to 44,765.00.

Nifty IT increased by 945.85 points or 3.21% to 30,436.10 and Nifty Mid Cap 100 increased by 273.45 points or 0.73% to 37,630.60.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 52,698.07 crore and gross sales of Rs 53,479.45 crore, leading to a net outflow of Rs 781.38 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 3,539.23 crore against gross sales of Rs 2,002.57 crore, resulting in a net inflow of Rs 1,536.66 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 731.43 crore and gross sales of Rs 80.74 crore, leading to a net inflow of Rs 650.69 crore.

Outlook for the coming week

In the passing week, markets ended with a cut of over half a per cent amid mixed macroeconomic data. India’s manufacturing sector displayed resilience even as activity moderated in July for the second straight month owing to moderation in output and new orders.

On the economic front, market participants would be eyeing on Reserve Bank of India (RBI) Interest Rate Decision. The policy decision will be announced on August 10. On August 11, traders will be looking forward to the Index of Industrial Production (IIP) data.

On the same day, Consumer Price Index (CPI) data was also released. India’s annual consumer inflation rate accelerated for the first time in five months to 4.81% in June of 2023 from an upwardly revised 4.31% in May, and above market forecasts of 4.58%.

In the ongoing earning season, market participants would be majorly looking for earnings from industries like Emami, Godrej Consumer Products, Tata Chemicals, Torrent Pharma, Adani Ports, Coal India, DLF, Gujarat Alkalies and Chemicals, Hindalco Industries, Oil India, Bajaj Consumer Care etc.

On the global front, investors would be eyeing few economic data from the world’s largest economy, the United States (US), starting with Imports and Exports data, Redbook on August 08, Core Inflation Rate, Initial Jobless Claims, Monthly Budget Statement on August 10 and finally Core PPI, Michigan Consumer Sentiment, Baker Hughes Total Rig Count on August 11.

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