Indian equity benchmarks ended the passing week in red terrain amid the escalating tensions between Israel and Iran which have increased in the past few weeks, dampening global markets sentiments. Following reports of an explosion in Iran, Indian markets too saw significant losses. Key gauges started the holiday truncated week on pessimistic note as sentiments remained downbeat after the provisional data released by the Ministry of Commerce & Industry showed that India’s wholesale price index (WPI)-based inflation accelerated to 0.53 per cent in March on an annual basis, as against 0.20 per cent in February. WPI inflation stood at 1.34 per cent in March 2023. Investors overlooked positive macro-economic data where India's retail inflation eased to 4.85 per cent on an annual basis in March as against 5.09 per cent in the previous month, while the Index of Industrial Production (IIP) in India rose 5.7 per cent in February as against 3.8 per cent in January. Traders remain concerned with report that India’s merchandise exports dipped marginally in March to $41.69 billion, and by 3.11 per cent during the last fiscal year to $437.06 billion mainly due to continued geopolitical turmoil, and depressed global trade. Imports, too, declined in March as well during the entire 2023-24. Sentiments remain dampened amid a private report stating that interest rate cuts in India are off the table in fiscal year 2024/25 given the change in the Federal Reserve's policy path and strong growth in the South Asian nation. Adding some worries, the Indian government has announced an increase in windfall tax on petroleum crude from Rs 6,800 to Rs 9,600 per metric ton. This change will come into effect on April 16, as part of the government's fortnightly revision of the tax. But, diesel and aviation turbine fuel will remain unaffected and will continue to have a zero windfall tax rate. Markets extended losses as traders continued to selloff risky assets as tensions flared up in the Middle East with Israel likely striking Iran at three locations. Iran says the explosion heard in Isfahan was a result of the activation of Iran's air defence system. Also, oil prices jumped on signs of escalating tensions in the Middle East, weighted down on the domestic sentiments. Traders shrugged off reports that the International Monetary Fund has raised India’s FY25 GDP growth forecast by 30 bps to 6.8 percent from its January forecast of 6.5 percent, citing bullish domestic demand conditions and a rising working-age population. With this, India continues to be the fastest growing economy of the world, ahead of China's growth projection of 4.6 percent during the same period. Traders also paid no heed towards UN Trade and Development’s (UNCTAD) report stating that India grew by 6.7 per cent in 2023 and is expected to expand by 6.5 per cent in 2024, continuing to be the fastest-growing major economy in the world. However, on the final day of the week markets pared some of their losses as traders found some support as Krishna Srinivasan, Director, Asia and Pacific Department, at the International Monetary Fund (IMF) has said that the Indian economy is doing well and continues to be the world's bright spot and also noted easing inflation and growth rate of 6.8 per cent. He also mentioned that inflation should come down to target and it is there on a durable basis.
BSE movement for the week
The Bombay Stock Exchange (BSE) Sensex slipped 1156.57 points or 1.56% to 73,088.33 during the week ended April 19, 2024. The BSE Midcap index losses 904.51 points or 2.21% to 40,004.52, while Smallcap index slipped 438.28 points or 0.96% to 45,433.79. On the sectoral front, S&P BSE Information Technology was down by 1,641.88 points or 4.59% to 34,139.78, S&P BSE TECK was down by 452.47 points or 2.79% to 15,743.36, S&P BSE Realty was down by 208.96 points or 2.79% to 7,287.49, S&P BSE Healthcare was down by 839.17 points or 2.38% to 34,422.67 and S&P BSE BANKEX was down by 1,163.61 points or 2.12% to 53,720.76 were the top losers, while there were no gainers on the BSE.
NSE movement for the week
The Nifty slipped 372.40 points or 1.65% to 22,147.00. On the National Stock Exchange (NSE), Bank Nifty was down by 990.40 points or 2.04% to 47,574.15, Nifty IT was down by 1649.80 points or 4.71% to 33,368.30, Nifty Mid Cap 100 decreased 1370.60 points or 2.74% to 48,696.95 and Nifty Next 50 decreased 1179.95 points or 1.87% to 61,887.90.
FII transactions during the week
Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 55,608.57 crore and gross sales of Rs 74,209.70 crore, leading to a net outflow of Rs 18,601.13 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 7,517.96 crore against gross sales of Rs 15,213.81 crore, resulting in a net outflow of Rs 7,695.85 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 162.57 crore and gross sales of Rs 139.55 crore, leading to a net inflow of Rs 23.02 crore.
Industry and Economy
Praising India for maintaining fiscal discipline in an election year, Krishna Srinivasan, Director, Asia and Pacific Department, at the IMF has said that the Indian economy is doing well and continues to be the world's bright spot and also noted easing inflation and growth rate of 6.8 per cent. He also mentioned that inflation should come down to target and it is there on a durable basis. Besides, he said ‘India has successfully navigated multiple shocks over the last several years. It's emerging to be one of the fastest major economies in the world. In fact, for this year, for 2024-25, we project growth at 6.8 per cent led by private consumption and public investment. Inflation is coming down gradually. It's now below 5 per cent.’
Outlook for the coming week
Indian markets ended the passing week with cut of over one and half a percent with rising geopolitical tensions in the Middle East. Besides, Ministry of Commerce & Industry showed that India’s wholesale price index (WPI)-based inflation accelerated to 0.53 per cent in March on an annual basis.
In the coming week, investors will be eyeing HSBC Composite PMI Flash, HSBC Manufacturing PMI Flash, HSBC Services PMI Flash, which scheduled to be release on April 23. The HSBC India Composite PMI was revised upward to 61.8 in March 2024 from a preliminary reading of 61.3, pointing to the second-strongest upturn in over 13-1/1 years. Foreign Exchange Reserves data to be out on April 26. Foreign Exchange Reserves in India increased to $648560 million in April 5 from $645580 million in the previous week.
In the ongoing result season, traders will be eyeing earnings of prominent companies, including Persistent Systems, Reliance Industries, Mahindra and Mahindra Financial, Tata Consumer Products, Tata Elxsi, Axis Bank, Hindustan Unilever, LTIMindtree, MAS Financial Services, Bajaj Finance, Cyient, Indusind Bank, L&T Technology Services, Nestle India, Tech Mahindra, Bajaj Finserv, Bajaj Holdings And Investment, HCL Technologies, Maruti Suzuki India, SBI Cards and Payment Services, SBI Life Insurance Company, ICICI Bank, L&T Finance etc.
On the global front, investors would be eyeing few economic data from world’s largest economy, United States (US), starting from Chicago Fed National Activity Index on April 22, Redbook, S&P Global Composite PMI Flash, S&P Global Manufacturing PMI Flash, S&P Global Services PMI Flash, New Home Sales, Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments Index, Building Permits Final on April 23, Durable Goods Orders on April 24, Goods Trade Balance Adv, Initial Jobless Claims, Continuing Jobless Claims, Real Consumer Spending, Kansas Fed Composite Index, Kansas Fed Manufacturing Index on April 25, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on April 26.
Top Gainers
- Bharti Airtel up by 5.18% was the top gainer on Nifty for the week - Bharti Airtel traded with traction after registering significant increase in 5G users across various States. The company has 5.9 million customers enjoying 5G service in the state of Tamil Nadu, 3 million customers in the state of Gujarat and 1.2 million customers in the state of Jammu, Kashmir and Ladakh. The company has registered a significant increase in 5G users in the past 6 months in various States. Besides, Bharti Airtel will merge its Sri Lanka operations with Dialog Axiata in an equity swap deal.
- Maruti Suzuki up by 3.62% was another top gainer on Nifty for the week - The all-new fourth-generation Maruti Suzuki Swift is all set to be released next month. As per reports, new Swift is expected to be launched on May 9. The major part of the design will resemble the international model, there are some India-specific changes as well on the 2024 Maruti Swift. The new Maruti Suzuki Swift will get a new interior and exterior design. On the outside, the brand will get a new LED headlight that will be integrated into an L-shaped LED DRL giving it a sleek and modern appearance.
Top Losers
- Adani Enterprises down by 5.70% was the top loser of the week on Nifty - Adani Enterprises’ wholly owned subsidiary - Adani Global Mauritius has executed a shareholders’ agreement for acquiring a 49 percent stake in Adani Esyasoft Smart Solutions, Abu Dhabi, from Esyasoft Holding, UAE. As a result of the agreement, Adani and Esyasoft Holding will hold 49 percent and 51 percent of Adani Esyasoft Smart Solutions, respectively. Adani Esyasoft Smart Solutions is involved in developing smart utility solutions: smart metering software, load forecasting, revenue maximisation etc.
- Tata Motors by 5.43% was another top loser of the week on Nifty - Tata Motors is reportedly planning to import its Jaguar Land Rover (JLR) luxury electric cars under a new government policy that lowers import taxes for companies agreeing to set up local manufacturing. Meanwhile, Tata Passenger Electric Mobility (TPEM), the electric car making arm of Tata Motors, signed a non-binding MoU with Shell India Markets (SIMPL) to collaborate in establishing public charging stations across India. Additionally, both companies will work towards delivering superior charging experiences.
Technical viewpoints
During the week, CNX Nifty touched the highest level of 22,427.45 on April 15 and lowest level of 21,777.65 on April 19. On the last trading day, the Nifty closed at 22,147.00 with weekly loss of 372.40 points or 1.65 percent. For the coming week, 21,807.28 followed by 21,467.57 are likely to be good support levels for the Nifty, while the index may face resistance at 22,457.08 and further at 22,767.17 levels.
US Market
The U.S. Markets traded lower during the passing week due to uncertainty over interest rate cut by the US Federal Reserve. Citing a lack of progress toward reaching the central bank's inflation goal, Federal Reserve Chair Jerome Powell suggested that interest rates are likely to remain higher for longer. Powell said recent data shows solid growth and continued strength in the labor market but also a lack of further progress so far this year on returning to 2 percent inflation goal. Fed officials, including Powell, have repeatedly stated they need greater confidence inflation is slowing before they consider cutting interest rates. Powell said ‘The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence. That said, we think policy is well positioned to handle the risks that we face.’
On the economic data front, a report released by the Federal Reserve showed industrial production in the U.S. increased in line with street estimates in the month of March. The Fed said industrial production climbed by 0.4 percent in March, matching the upwardly revised advance in February. Street had expected industrial production to rise by 0.4 percent compared to the 0.1 percent uptick originally reported for the previous month. The increase in production partly reflected a rebound by utilities output, which surged by 2.0 percent in March after plummeting by 7.6 percent in February. Manufacturing output also climbed by 0.5 percent in March after jumping by 1.2 percent in February, boosted in part by a 3.1 percent spike in motor vehicles and parts output. Meanwhile, the report said mining output tumbled by 1.4 percent in March after surging by 3.0 percent in the previous month.
Further, first-time claims for U.S. unemployment benefits remained flat in the week ended April 13th, according to a report released by the Labor Department. The report said initial jobless claims came in at 212,000, unchanged from the previous week's revised level. Street had expected jobless claims to rise to 215,000 from the 211,000 originally reported for the previous week. The Labor Department said the less volatile four-week moving average also came in unchanged from the previous week's revised average at 214,500. Besides, growth in Philadelphia-area manufacturing activity has unexpectedly seen a considerable acceleration in the month of April, the Federal Reserve Bank of Philadelphia revealed in a report released. The Philly Fed said its diffusion index for current general activity jumped to 15.5 in April from 3.2 in March, with a positive reading indicating growth. Street had expected the index to edge down to 1.5.
European Market
European markets remained lackluster during the passing week. Markets made a positive start to the week, as Eurozone industrial production recovered in February driven by the rebound in capital and durable consumer goods output. Industrial production grew 0.8 percent on a monthly basis in February. Overall production expanded despite a decline in energy output, which was down 3.0 percent. Capital goods production advanced 1.2 percent, reversing a sharp 15.5 percent fall in January. Further, the euro area trade surplus increased sharply in February on falling imports. The data published by Eurostat showed that the trade surplus registered a surplus of EUR 23.6 billion in February, up sharply from EUR 3.6 billion in the same period last year. On a yearly basis, exports gained 0.3 percent. By contrast, imports declined 8.4 percent from the previous year.
However, markets traded on muted note during the week, as the UK unemployment rate rose in three months to February. The data from the Office for National Statistics showed that the ILO jobless rate rose to 4.2 percent from 3.9 percent in three months to January. The rate was seen at 4.0 percent. In March, payrolled employment declined by 18,000 on month. The claimant count increased by 10,900 on the month to 1.583 million in March. Further, the International Monetary Fund said that a resilient global economy is set for steady growth in the next two years as inflation returns to target gradually, but the growth will be uneven amid persistent risks. Global growth is set to remain at 3.2 percent this year and next, the same as in 2023, the IMF said in its latest World Economic Outlook. The forecast for this year was raised by a percentage point from January, while the outlook for next year was retained.
On the inflation front, Italy's inflation accelerated slightly less than initially estimated in March. The latest data from the statistical office ISTAT showed that consumer prices logged an annual increase of 1.2 percent in March after rising 0.8 percent in February. That was slightly weaker than the 1.3 percent increase seen in the flash data published on March 29. Month-on-month, consumer prices remained flat in March, revised from a 0.1 percent rise estimated initially. Besides, Eurozone inflation softened in March, as initially estimated, largely due to slowing food price growth. The final data from Eurostat showed that the harmonized index of consumer prices registered an increase of 2.4 percent annually, slower than the 2.6 percent rise in February. Likewise, core inflation that excludes prices of food and energy eased to 2.9 percent in March from 3.1 percent in the previous month.
Asian Market
Asian markets, barring Shanghai Composite Index, traded lower during the passing week, on ongoing concerns over the tensions in the middle-east with reports of Israel retaliating to last weekend's attacks. Interest rates continued to weigh on markets as the US Fed is now widely expected to hold off on cutting rates until at least July.
Japanese Nikkei fell by over three and half percent as heightened geopolitical tensions and growing uncertainty over the outlook for U.S. interest rates spooked investors. Traders took a note of report that Japan's headline inflation rate in March slowed to 2.7 per cent, while the core-core index, excluding fresh food and energy costs, moderated to 2.9 per cent, marking the first time since November 2022 that the index fell below 3 per cent. Investors ignored data showed that Japan’s exports grew more than expected in March, continuing strong growth momentum from the prior month and pushing the country into a trade surplus as demand in its biggest markets- the U.S. and China- remained strong. Exports grew 7.3% year-on-year in March. The reading was higher than expectations of 7.0% and remained close to the 7.8% jump seen in the prior month.
Bucking the trend, Chinese Shanghai rose by around two percent as the country's top securities regulator said there won't be a surge in de-listings as a result of new stock exchange rules. Some support also came with report showing that China’s economy grew faster than expected in the first quarter of the year with help from policies and stronger demand, though signs of weakness in the troubled housing market persisted. The world’s second-largest economy expanded at a 5.3 per cent annual pace in January-March, beating expectations for a 4.6 percent increase. Compared to the previous quarter, the economy grew 1.6 per cent. China’s economy has struggled to bounce back from the COVID-19 pandemic but gained momentum late last year as government policies to help the housing market and boost investment took effect.
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