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Markets extend gaining streak for fourth straight week
Mar-07-2024

Extending winning streak for fourth straight session, Indian equity benchmarks ended the holiday shortened week with fresh record highs. Markets started the week slightly in green as traders took support with report that Global rating agency Moody's has raised India's growth forecast for 2024 calendar year to 6.8 per cent, from 6.1 per cent estimated earlier, on the back of 'stronger-than-expected' economic data of 2023 and fading global economic headwinds. Some support also came with Reserve Bank of India’s (RBI's) Monetary Policy Committee (MPC) member Ashima Goyal’s statement that the Indian economy has done well despite multiple external shocks, but counter-cyclical macroeconomic policy measures will be required to aid the economy's natural resilience as geopolitical situation remains fragile. On the very next day, key gauges witnessed selloff as traders turned cautious after Paul Gruenwald, Global Chief Economist at S&P Global Ratings, stated that the global economic growth is likely to surprise on the upside and hence he sees only modest headwinds for India next fiscal. Sentiments remain dented on report that India’s services sector activity slowed in the month of February but remained comfortably above the neutral mark of 50.0 and signaled a sharp rate of expansion that was well above the series history (since December 2005), as positive demand trends supported sales and business activity. Business activity increased across all parts of the service sector. Finance & Insurance saw the strongest pace of growth by a considerable margin, with the slowest rise registered in Real Estate & Business Services. However, buying on penultimate session of the holiday truncated week mainly helped markets to end in green terrain. Sentiments turned optimistic amid CareEdge Ratings’ report that bad loans of banks in India have reached record lows due to recoveries from defaulters and regularisation of payments many-fold. Some support also came as Crisil Ratings projected India's GDP growth at 6.8 per cent in the next fiscal and said the country will become an upper middle-income nation by 2031 with the economy doubling to $7 trillion. Crisil said the Indian economy will take support from domestic structural reforms and cyclical levers and can retain -- perhaps even improve -- its growth prospects to become the third largest economy by 2031. Traders also took a note of the Ministry of Agriculture & Farmers Welfare’s latest report stating that the enrolment under the Pradhan Mantri Fasal Bima Yojana (PMFBY) increased by 27% in current year so far. Also, it said that 42% of total farmers insured under the scheme in FY 2023-24 are non-loanee farmers. Markets witnessed consolidation on final day of the week as traders remained largely on sidelines ahead of major macro-economic data -- Index of industrial production (IIP) and Consumer Price Index (CPI). Traders remained little optimistic after RBI Governor Shaktikanta Das said the Indian economy is likely to grow more than the National Statistical Office (NSO) estimate of 7.6 per cent in the current financial year (FY24) and it could be close to 8 per cent. Some support also came in amid reports that to attract foreign investments and showcase India's burgeoning opportunities, the government has prepared a strategy to step up outreach to foreign investors.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 313.24 points or 0.42% to 74,119.39 during the week ended March 07, 2024. The BSE Midcap index losses 109.74 points or 0.27% to 39,852.85, while Smallcap index slipped 1198.91 points or 2.61% to 44,653.57. On the sectoral front, S&P BSE PSU was up by 369.77 points or 1.97% to 19,184.00, S&P BSE Power was up by 124.86 points or 1.86% to 6,829.45, S&P BSE Metal was up by 438.00 points or 1.55% to 28,737.21, S&P BSE BANKEX was up by 662.99 points or 1.23% to 54,394.38 and S&P BSE Auto was up by 379.23 points or 0.79% to 48,387.93 were the top gainers, while S&P BSE Information Technology was down by 544.37 points or 1.42% to 37,744.24, S&P BSE Realty was down by 69.67 points or 0.95% to 7,235.84, S&P BSE Consumer Discretionary Goods & Services was down by 42.49 points or 0.49% to 8,578.23, S&P BSE Consumer Durables was down by 184.88 points or 0.35% to 52,673.36 and S&P BSE Fast Moving Consumer Goods was down by 67.15 points or 0.34% to 19,554.05 were the top losers on the BSE.

NSE movement for the week

The Nifty surged 115.15 points or 0.51% to 22,493.55. On the National Stock Exchange (NSE), Bank Nifty was up by 538.30 points or 1.14% to 47,835.80 and Nifty Next 50 gained 540.20 points or 0.90% to 60,323.90, while Nifty IT was down by 505.90 points or 1.35% to 37,099.90 and Nifty Mid Cap 100 was down 186.90 points or 0.38% to 48,966.15.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 66,387.33 crore and gross sales of Rs 58,765.20 crore, leading to a net inflow of Rs 7,622.13 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 6,973.76 crore against gross sales of Rs 3,523.64 crore, resulting in a net inflow of Rs 3,450.12 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 163.64 crore and gross sales of Rs 108.26 crore, leading to a net inflow of Rs 55.38 crore.

Industry and Economy

In the view of the third quarter (October-December) Gross Domestic Product (GDP) data released by the government, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said the India’s economic growth could be close to 8 per cent in the current financial year (FY24). Recently, the National Statistical Office (NSO) projected 8.4 per cent growth in the October-December quarter of the FY24. It has also revised GDP estimates for the first and second quarters to 8.2 and 8.1 per cent from 7.8 per cent and 7.6 per cent, respectively.

Outlook for the coming week

In the passing week, markets ended with gains as global rating agency Moody’s has raised India’s Gross Domestic Product (GDP) growth forecast for 2024 calendar year to 6.8 per cent, from 6.1 per cent estimated earlier, on the back of ‘stronger-than-expected’ economic data of 2023 and fading global economic headwinds.

In the coming week, traders will be looking for the major macro-economic data starting with Index of industrial production (IIP) for the month of January to be out on March 12. On the same day, Consumer Price Index (CPI) for the month of February also going to be out. The Wholesale Price Index (WPI) data for the month of February will be released on March 14. Market participants will be eyeing for the Balance of Trade (Exports and Imports) data, which is slated to be released on March 15.

On the global front, investors would be eyeing few economic data from world’s largest economy, United States (US), starting with Consumer Inflation Expectations on March 11, Inflation Rate or CPI, Redbook on March 12, Producer prices data, Initial Jobless Claims on March 14, Import- export data, NY Empire State Manufacturing Index, Industrial Production, Manufacturing Production, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on March 15.

Top Gainers

  • Tata Steel up by 11.72% was the top gainer on Nifty for the week - Some of the metal stocks traded with traction in line with higher global metal prices amid shortage of inventories at LME-registered warehouse. In separate development, Tata Steel has received the first batch of deliveries of next-generation, green-fuel-powered commercial vehicles from Tata Motors. Tata Steel's commitment to net-zero emissions underscores its dedication to adopting innovative solutions for cleaner operations to make a responsible supply chain. The first set of vehicles received includes Prima tractor-trailers, tippers, and the Ultra EV bus, all powered by low and emission-free technologies - LNG and electric battery.
  • Tata Motors up by 8.48% was another top gainer on Nifty for the week - Tata Motors came under buyers’ radar after it reported 8.41% year-on-year increase in its total vehicle sales (including international markets) at 86,406 units in February. The company had sold a total of 79,705 vehicles in February last year. During the last month, total domestic sales stood at 84,834 units as against 78,006 units in January 2023, logging a 9% year-on-year growth. Meanwhile, Tata Motors is all set to increase the price of its commercial vehicles with effective from April 01, 2024, up to 2%. The price increase is to offset the residual impact of the past input costs. While the price increase will vary as per individual model and variant.
Top Losers

  • LTIMindtree down by 5.31% was the top loser of the week on Nifty - LTIMindtree came under pressure despite the company executed a Shareholder’s Agreement (SHA) with Global Digital Integrated Solutions Company (Global Digital), a wholly owned subsidiary of Saudi Arabian Oil Company (Saudi Aramco), for setting up a Joint Venture in the Kingdom of Saudi Arabia. Meanwhile, LTIMindtree’s product division -- Fosfor has launched the Fosfor Decision Cloud - a connected fabric that helps companies organize data to build automated, modular, trustworthy data transformation pipelines, build and deploy impactful AI applications, and harness the power of AI to make better business decisions, faster.
  • Apollo Hospital Enterprise down by 4.93% was another top loser of the week on Nifty - Apollo Hospital remained under pressure for yet another week. Shares of hospital operators traded lower after the Supreme Court cautioned the government on its failure to implement a decade-old law to standardise hospital treatment charges. The court warned the Government that it will directly implement standardised rates for treatments as prescribed under CGHS across the country after the next court hearing if it fails to come up with a concrete proposal. Besides, the National Consumer Disputes Redressal Commission imposed a fine of Rs 30 lakh on Apollo Speciality Hospital in Chennai and its two doctors in case of medical negligence.
Technical viewpoints

During the week, CNX Nifty touched the highest level of 22,525.65 on March 7 and lowest level of 22,224.35 on March 6. On the last trading day, the Nifty closed at 22,493.55 with weekly gain of 115.15 points or 0.51 percent. For the coming week, 22,303.38 followed by 22,113.22 are likely to be good support levels for the Nifty, while the index may face resistance at 22,604.68 and further at 22,715.82 levels.

US Market

The U.S. markets traded in red during the week following Federal Reserve Chair Jerome Powell told the House Financial Services Committee it will likely be appropriate for the Fed to begin lowering interest rates at some point this year, although he reiterated officials need greater confidence inflation is moving sustainably toward 2 percent. The Fed Chief described the economic outlook as uncertain and said progress towards the Fed's 2 percent inflation objective is not assured. Powell said ‘Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 percent.’ He added ‘At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment.’ Powell said future interest rate decisions will be based on careful assessment of the incoming data, the evolving outlook, and the balance of risks.

On the economic data front, a report released by payroll processor ADP showed private sector employment in the U.S. increased by slightly less than expected in the month of February. ADP said private sector employment rose by 140,000 jobs in February after climbing by an upwardly revised 111,000 jobs in January. Street had expected private sector employment to grow by 150,000 jobs compared to the addition of 107,000 jobs originally reported for the previous month. The report said employment in the service-providing sector jumped by 110,000 jobs, while employment in the goods-producing sector increased by 30,000 jobs. Employment at medium and large establishments climbed by 69,000 jobs and 61,000 jobs, respectively, while employment at small establishments edged up by 13,000 jobs. ADP also said pay growth for job-changers accelerated for the first time since November 2022, rising to 7.6 percent in February from 7.2 percent in January.

Besides, wholesale inventories in the U.S. fell by more than expected in the month of January, according to a report released by the Commerce Department. The report said wholesale inventories dipped by 0.3 percent in January after climbing by 0.4 percent in December. Street had expected wholesale inventories to edge down by 0.1 percent. The bigger than expected decrease came as a 1.0 percent slump by inventories of non-durable goods more than offset a 0.2 percent uptick by inventories of durable goods. Meanwhile, the Commerce Department said wholesale sales tumbled by 1.7 percent in January after rising by 0.3 percent in December. Sales of non-durable goods plunged by 2.5 percent during the month, while sales of durable goods slid by 0.7 percent.

European Market

European markets were lackluster during the passing week, as investors awaited cues from the ECB's rate decision. The start of the week was on a negative note, as industrial production in France declined faster than expected in January, led by a slump in manufacturing. The preliminary data from the statistical office INSEE showed that overall industrial production decreased 1.1 percent month-on-month, after rising 0.4 percent in December. Manufacturing output declined 1.6 percent from the previous month, when it grew 0.5 percent. Further, Hungary's industrial production continued its declining trend in January. The preliminary figures from the Hungarian Central Statistical Office showed that the volume of industrial production dropped a working-day-adjusted 4.1 percent yearly in January, though slower than the 7.6 percent fall a month ago.

Towards end of the week, subdued trade continued in major markets, as Germany's factory orders declined sharply in January. The figures from Destatis showed that new orders in manufacturing posted a monthly decline of 11.3 percent, in contrast to the 12.0 percent increase in December. Destatis said the sharp decline in January was due to the high volume of large orders in December 2023. Foreign orders were down 11.4 percent and domestic orders declined 11.2 percent. Besides, Germany's growth projection for 2024 was downgraded sharply as higher interest rates and fiscal policies hurt economic activity. In the Spring forecast, the ifo Institute said the German economy paralyzed. The institute trimmed growth outlook for this year to 0.2 percent from 0.9 percent, while the projection for 2025 was lifted to 1.5 percent from 1.3 percent.

On the inflation front, Eurozone producer prices logged a further steep decline in January amid a continued downward trend in energy prices. The data published by Eurostat showed that producer prices fell 8.6 percent year-over-year in January, slower than the revised 10.7 percent decrease in December. Prices were expected to decline by 8.1 percent. Excluding energy, the producer price index dropped only 1.5 percent at the start of the year. Besides, Estonia's consumer price inflation eased in February after accelerating in the previous month. The preliminary figures from Statistics Estonia showed that the consumer price index climbed 4.2 percent year-over-year in February, slower than January's 3-month high of 4.7 percent. Prices for food and non-alcoholic beverages grew 3.0 percent annually in February, but slower than the 5.0 percent rise in the prior month. 

Asian Market

Asian markets traded mixed during the week as Federal Reserve Chair Jerome Powell hinted at potential rate cuts later this year but signaled uncertainty about inflation and growth. Besides, China's week-long annual session of parliament commenced without any big-ticket stimulus plans to prop up the struggling economy. China is aiming for five percent GDP growth this year but there is reluctance to use deficit spending for economic stimulus. Seoul stocks fell marginally as data showed South Korea's consumer inflation accelerated in February and beat expectations due to supply-side pressures after three months of easing. The consumer price index (CPI) rose at an annual rate of 3.1% in February, compared to 2.8% in the previous month.

Chinese Shanghai traded higher during the week by around half a percent, after customs data revealed China's exports and imports grew more than expected in the first two months of 2024. Exports registered an annual increase of 7.1 percent in January to February period while imports grew 3.5 percent, resulting in a trade surplus of $125.16 billion for the period. However, gains remain capped after reports that the U.S. and its allies may further tighten restrictions on China's access to semiconductor technology.

Japanese Nikkei too rose by around half a percent as the latest survey from Jibun Bank revealed that the services sector in Japan continued to expand in February, albeit at a slower pace, with a services PMI score of 52.9. That's down from 53.1 in January, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Some support also came as the Bank of Japan said the monetary base in Japan was up 2.4 percent on year in February--coming in at 661.668 trillion yen.
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