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Key gauges edge higher for the week on strong macro forecast
Mar-28-2024

Indian equity benchmarks edged higher during the week on the back of strong macro forecast. Also, the earnings growth in India is expected to remain strong, going forward. Markets started the holiday shortened week on a pessimistic note as the latest payroll data released by the Employee Provident Fund Organisation (EPFO) stated that the formal labour market in January experienced a slowdown as fewer fresh jobs were created during the month. In January 2024, the number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined by nearly 4 per cent to 807,865 from 840,584 in December 2023. Sentiments also remain dampened after Ministry of Finance has warned the ongoing crisis along the Red Sea shipping route poses a risk to 80 percent of India’s goods trade with Europe and could lead to higher inflation and lower growth in India due to rising transport costs. But, markets took U-turn and started moving northward as traders took some support with report that S&P Global Ratings has raised India's Gross domestic product (GDP) growth forecast for the next financial year (FY25) to 6.8 per cent, but flagged restrictive interest rates as a dampener for economic growth. In November 2023, it had projected India's growth to be 6.4 per cent in FY25 on robust domestic momentum. It said the Indian economy is estimated to have clocked a growth of 7.6 per cent in the current fiscal (FY24). Traders took encouragement with the RBI stating that India's current account deficit declined to $10.5 billion or 1.2 per cent of the GDP in October-December quarter of current fiscal from $11.4 billion in the previous three months and $16.8 billion a year back. Some optimism also came with Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that various initiatives from the government and growing investment are going to create more job opportunities during the decade. Sentiments remained up-beat taking support from Engineering Export Promotion Council (EEPC) of India’s statement that India's engineering exports to Russia doubled to $1.22 billion till February during the 2023-24 fiscal. It said the shipments to the country stood at $616.68 million in the previous fiscal. Some solace came as S&P Global Ratings stated that India's financial system regulator, the RBI, is showing serious commitment to improving governance and transparency in the sector. The recent measures by the RBI will curtail lenders' over-exuberance, enhance compliance culture, and safeguard customers, but the drawback will be higher capital costs for institutions. Markets extended gains as Union Finance Minister Nirmala Sitharaman said the government will continue the push on its reforms agenda in its third term since political continuity, along with a predictable and stable economic environment and taxation structure, is important to achieve the laid-down developmental goals. Finally markets ended near week’s high as sentiments remained up-beat with Chairman of the 16th Finance Commission Arvind Panagariya stating that India can realistically push its economic growth close to 9 per cent from the current 7 per cent or so, by implementing a few more reforms in the next five years. 

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 819.41 points or 1.13% to 73,651.35 during the week ended March 28, 2024. The BSE Midcap index gained 520.89 points or 1.34% to 39,322.12 and Smallcap index surged 395.07 points or 0.92% to 43,166.34. On the sectoral front, S&P BSE Capital Goods was up by 2,216.77 points or 3.77% to 60,943.12, S&P BSE Realty was up by 202.05 points or 2.93% to 7,108.37, S&P BSE Power was up by 165.79 points or 2.54% to 6,701.74, S&P BSE Consumer Durables was up by 1,272.72 points or 2.50% to 52,276.61 and S&P BSE Auto was up by 892.13 points or 1.85% to 49,142.11 were the top gainers, while S&P BSE Information Technology was down by 179.96 points or 0.50% to 35644.77 and S&P BSE TECK was down by 96.04 points or 0.59% to 16111.17 were the only losers on the BSE.

NSE movement for the week

The Nifty surged 230.15 points or 1.04% to 22,326.90. On the National Stock Exchange (NSE), Bank Nifty was up by 260.85 points or 0.56% to 47,124.60, Nifty Mid Cap 100 was up 762.90 points or 1.61% to 48,075.75 and Nifty Next 50 gained 1435.40 points or 2.43% to 60,624.30, while Nifty IT was down by 290.25 points or 0.82% to 34,898.15.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 37,675.79 crore and gross sales of Rs 44,717.81 crore, leading to a net outflow of Rs 7,042.02 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 4,140.26 crore against gross sales of Rs 5,202.72 crore, resulting in a net outflow of Rs 1,062.46 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 596.03 crore and gross sales of Rs 24.88 crore, leading to a net inflow of Rs 571.15 crore. (Provisional)

Industry and Economy

Chairman of the 16th Finance Commission Arvind Panagariya has said India can realistically push its economic growth close to 9 per cent from the current 7 per cent or so, by implementing a few more reforms in the next five years. He said Prime Minister Narendra Modi worked hard over the past 10 years to make India a friendly place for businesses, so investment is coming in. He said ‘Today, the economy is open. In the next 2-3 decades, we can sustain a very rapid growth.’ India's economy grew at better-than-expected 8.4 per cent in the third quarter of FY24 -- the fastest in the past one-and-a-half years.  

Outlook for the coming week

Indian markets ended the passing week with healthy gains as S&P Global Ratings has raised India's Gross domestic product (GDP) growth forecast for the next financial year (FY25) to 6.8 per cent. 

The coming week will be crucial as it’s the start of the new month and there will be some important macroeconomic data to guide the markets. Investors will be eyeing HSBC Manufacturing PMI Final, scheduled to be release on April 02, HSBC Composite PMI Final, HSBC Services PMI Final to be released on April 04. The Reserve Bank of India (RBI) policy decisions will be announced on April 05. On the same day, Cash Reserve Ratio, Bank Loan Growth, Deposit Growth and Foreign Exchange Reserves data going to be out. Additionally, auto companies would grab some attention, as they will announce their monthly sales figures.

On the global front, investors would be eyeing some important economic data from world’s largest economy, United States (US), starting with S&P Global Manufacturing PMI Final, ISM Manufacturing PMI, ISM Manufacturing Employment on April 01, Redbook, Factory Orders on April 02, S&P Global Composite PMI, S&P Global Services PMI Final, ISM Services PMI, ISM Services Business Activity on April 03, Balance of Trade, Initial Jobless Claims on April 04, Non-Farm Payrolls, Unemployment Rate, Baker Hughes Oil Rig Count on April 05.

Top Gainers

  • Bajaj Finance up by 8.96% was the top gainer on Nifty for the week - Bajaj Finance edged higher during the week following reports that subsidiary Bajaj Housing Finance was planning to go public, with a valuation $9-10 billion. Meanwhile, the company has raised Rs 395.01 crore through the allotment of 39,500 Secured Redeemable Non-Convertible Debentures (NCDs), at face value of Rs 1 Lakh each, on private placement basis. The Debenture Allotment Committee of the company has at its meeting held on March 22, 2024, allotted the same. 
  • Adani Ports up by 7.74% was another top gainer on Nifty for the week - Adani Ports and Special Economic Zone (APSEZ) has entered into a definitive agreement on March 25, 2024 to acquire 95% stake of Gopalpur Ports (GPL) from the existing shareholders [56% stake from SP Port Maintenance (SP Group) and around 39% stake from Orissa Stevedores (OSL)] of GPL. The acquisition is made at an enterprise value of Rs 3,080 crore, and the transaction is subject to statutory approvals and fulfilment of other conditions precedents. Gopalpur port is located on the east coast of India and has the capacity to handle 20 MMTPA.
Top Losers

  • Infosys down by 3.66% was the top loser of the week on Nifty - Information Technology (IT) sector stocks continued to trade lower after Accenture cut its 2024 revenue forecast, as an uncertain economy prompts clients to curtail spending on its consulting services. Accenture now expects full-year revenue growth in the range of 1% to 3%, from its prior forecast of 2% to 5%. Meanwhile, the company will provide artificial intelligence (AI) technology to Germany-based Handelsblatt Media Group for storytelling, compiling reports of global economic and financial topics under a strategic deal signed between the companies. 
  • LTIMindtree down by 3.19% was another top loser of the week on Nifty - IT companies continued to witness selling pressure after Accenture lowered its revenue forecast for fiscal year 2024 due to global uncertainty and weak client spending on consulting services. Meanwhile, HCL Technologies has received two new Microsoft Azure specializations for its portfolio of artificial intelligence (AI) and machine learning (ML) solutions. Also, the company has been recognized with the Amazon Web Services (AWS) Generative AI Competency Partner status for its expertise in building generative AI (GenAI) applications on AWS and delivering transformative outcomes to enterprises.
Technical viewpoints

During the week, CNX Nifty touched the highest level of 22,516.00 on March 28 and lowest level of 21,947.55 on March 26. On the last trading day, the Nifty closed at 22,326.90 with weekly gain of 230.15 points or 1.04 percent. For the coming week, 22,010.97 followed by 21,695.03 are likely to be good support levels for the Nifty, while the index may face resistance at 22,579.42 and further at 22,831.93 levels.

US Market

The U.S. markets traded mostly in green during the week as traders looked to pick up stocks at somewhat reduced levels. A decrease by treasury yields also contributed to the strength in the markets amid ongoing optimism about the outlook for interest rates following the Federal Reserve's monetary policy announcement last week. Traders were getting some encouragement as the Commerce Department released a report showing a notable increase in new orders for U.S. manufactured durable goods in the month of February. The report said durable goods orders jumped by 1.4 percent in February after plummeting by a revised 6.9 percent in January. Street had expected durable goods orders to shoot up by 1.3 percent compared to the 6.2 percent slump that had been reported for the previous month. Orders for transportation equipment led the way higher, surging by 3.3 percent in February after plunging by 18.3 percent in January.

Excluding the rebound in orders for transportation equipment, durable goods orders climbed by 0.5 percent in February after falling by 0.3 percent in January. Street had expected a 0.4 percent increase. Meanwhile, home price growth in major U.S. metropolitan areas accelerated in the month of January, according to a report released by Standard & Poor's. The report said S&P CoreLogic Case-Shiller 20-City Home Price Index soared 6.6 percent year-over-year in January compared to the 6.2 percent jump in December. Street had expected the pace of growth to accelerate to 6.7 percent. Standard & Poor's said San Diego again reported the highest year-over-year growth among the 20 cities with an 11.2 spike in January, followed by Los Angeles with an 8.6 percent surge.

The report also said the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, saw a 6.0 percent annual gain in January compared to the 5.6 percent increase in the previous month. However, traders were cautious during the week as a report released by the Federal Reserve Bank of Philadelphia showed a downturn in regional non-manufacturing activity in the month of March. The Philly Fed said its diffusion index for current general activity at the firm level fell to a negative 2.3 in March from a positive 0.8 in February. The index turned negative for the first time since last October, with a negative reading indicating a decline in non-manufacturing activity in the region. While the new orders index crept up to a negative 3.9 in March from a negative 4.7 in February, the sales or revenues index slumped to 0.2 in March from 7.7 in February. The report also said the full-time employment index slid to 3.5 in March from 9.1 in February, hitting its lowest level since last June. 

European Market

European markets garnered some gains during the passing week, amid continued optimism central banks will begin reducing interest rates soon. The start of the week was on a muted note, as the survey results from the Confederation of British Industry showed that UK retailers expect sales to fall again in April after rising moderately in March. At net 2 percent of retailers said their sales volume increased in March, which was the first rise after 10 consecutive months of decline. However, retailers said sales will fall again next month, with the net balance falling to -25 percent. The indicator measuring order volumes fell sharply to -22 percent in March from -14 percent in February. A net balance of 24 percent expects orders to fall in April.

However, indices added gains during the week, after Eurozone economic sentiment rose to a three-month high in March driven by the improvement across all sectors except construction. The survey data from the European Commission revealed that the economic sentiment index climbed to 96.3 in March, as expected, from 95.5 in the previous month. The industrial confidence index rose to -8.8 from -9.4 in February. Managers' production expectations weakened and fewer managers assessed the stocks of finished products as too large or above normal. Further, Sweden's foreign trade surplus increased in February from a year ago as exports rose amid a flat change in imports. The figures from Statistics Sweden showed that the trade surplus rose to SEK 9.3 billion in February from SEK 7.7 billion in the corresponding month last year. In January, the surplus was SEK 13.3 billion. The value of exports rose 1.0 percent in February from last year, while imports remained unchanged.

On the inflation front, Spain's consumer prices posted a faster growth in March reflecting increase in electricity and fuel prices. The flash data from the statistical office INE showed that the consumer price index advanced 3.2 percent on a yearly basis, following February's 2.8 percent rise. The rate came in line with expectations. Excluding food and energy prices, underlying inflation softened to 3.3 percent from 3.5 percent a month ago. Besides, Sweden's producer prices declined for the tenth straight month amid a continued fall in costs for energy-related products. The figures from Statistics Sweden showed that the producer price index dropped 1.3 percent year-on-year in February, though slower than the 2.3 percent fall in January. The annual rate of the producer price index, excluding energy-related products, was an increase of 0.7 percent.

Asian Market

Asian markets were trading mostly in red during the week as geopolitical tensions intensified and interest rate jitters persisted. Rising tensions in the Middle East and Russia boosted crude oil prices and brought inflation concerns to the fore. Investors kept a close eye on upcoming US inflation data and comments from central bank officials for additional clues on the rate outlook.

Chinese Shanghai fell by around two percent even after the governor of the People's Bank of China said the Chinese property market is showing some positive signs and the impact on the financial system from volatility in the sector has been limited. Traders paid no heed towards National Bureau of Statistics (NBS) data showing that China's industrial firms posted higher profits in the opening months of the year, reinforcing signs that an economic recovery was gaining traction despite persistent sluggishness in the property sector. Profits at China's industrial firms jumped 10.2 per cent in the first two months from a year earlier, following a 2.3 per cent profit decline for the whole of 2023.

Japanese Nikkei were trading marginally lower as investors await key U.S. inflation data and Federal Reserve commentary for signals on the rate path. However, losses remained capped as traders took some support with members of the Bank of Japan's Monetary Policy Board stating that Japan's economy is trending upward and should continue to do so in the short term.  Meanwhile, the central bank left its massive monetary stimulus unchanged at -0.1 percent and downgraded its inflation outlook for the next fiscal year. The bank will also continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.
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