Buying which emerged in final session of the week helped markets to settle above their crucial 11,350 (Nifty) and 37,500 (Sensex) levels. Key gauges started the session on an optimistic note, as traders took some encouragement with Union Minister of State for Finance Shiv Pratap Shukla’s statement that the government is making concerted efforts to double the farmers' income by 2022. Markets extended gains to hit all-time highs on the very next day on report that the government sought Parliament’s approval for additional gross additional expenditure of Rs 11,697.92 crore for the current fiscal. Traders took note of a private report stating that GDP growth is likely to peak in April-June quarter and then moderate to 7.2% in the second half of 2018 from around 7.8% in first half. However, markets pared all of their early gains to enter into red terrain during the week, as sentiments turned pessimistic after the RBI’s Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to 6.50%. It is the first time since October 2013 that the rate has been increased at consecutive policy meetings. Traders also weighed report that growth in India’s manufacturing industry slowed last month, largely pressured by a modest weakening in demand and output, though overall conditions remained solid. The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, decreased to 52.3 in July from June’s 53.1. Markets extended losses as traders remained concerned with RBI Governor Urjit Patel flagging the risks to macroeconomic stability from a potential currency war in the wake of rising global trade tensions. However, rally in final day of trade helped markets to recoup all of their losses to end near all-time high levels, as the seasonally adjusted Nikkei Services Business Activity Index climbed to 54.2 in the month of July from 52.6 in June, registering its highest reading since October 2016. BSE movement for the week The Bombay Stock Exchange (BSE) Sensex surged 219.31 points or 0.59% to 37,556.16 during the week ended August 03, 2018. The BSE Midcap index gained 294.27 points or 1.85% to 16,206.89 and Smallcap index surged 383.32 points or 2.33% to 16,833.52. On the sectoral front, S&P BSE Healthcare was up by 647.25 points or 4.61% to 14674.96, S&P BSE PSU was up by 275.95 points or 3.65% to 7833.64, S&P BSE Consumer Durables was up by 741.98 points or 3.60% to 21372.04, S&P BSE Oil & Gas was up by 367.21 points or 2.47% to 15206.15 and S&P BSE Metal was up by 292.22 points or 2.34% to 12803.28 were the top gainers on the BSE sectoral front, while S&P BSE Auto was down by 148.22 points or 0.61% to 24121.10 and S&P BSE Finance was down by 4.61 points or 0.07% to 6244.33 were the only losers on the BSE sectoral front. NSE movement for the week The Nifty surged by 82.45 or 0.73% to 11,360.80. On the National Stock Exchange (NSE), Bank Nifty was up by 61.10 points or 0.22% to 27,695.50, Nifty IT was up by 131.15 points or 0.90% to 14,649.05, Nifty Mid Cap 100 increased by 331.25 points or 1.76% to 19,112.70 and Nifty Next 50 gained by 645.40 points or 2.21% to 29,903.85. FII transactions during the week Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 24770.63 crore and gross sales of Rs 24279.80 crore, leading to a net inflow of Rs 490.83 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 6383.86 crore against gross sales of Rs 3000.81 crore, resulting in a net inflow of Rs 3383.05 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 11.28 crore and gross sales of Rs 34.91 crore, leading to a net outflow of Rs 23.63 crore. Industry and Economy India’s fiscal deficit at the end of first three months of current financial year (FY19) stood at 68.7% of the Budget Estimate (BE) for 2018-19. It improved compared to the year-ago period, when it was 80.8% of the target. The improvement was mainly on account of higher revenue collection. The Controller General of Accounts’ (CGA) data showed that in actual terms, the fiscal deficit or gap between the total expenditure and receipts was Rs 4.29 lakh crore. The fiscal deficit target for FY19 is Rs 6.24 lakh crore. Outlook for the coming week In the passing week, Indian benchmark indices ended in green territory with Sensex and Nifty posting gains of more than 200 and 80 points respectively on the back of good quarterly results as well as mixed macro-economic data. In the next week, on the economy front, market-men will keep an eye on the release of Index of Industrial Production (IIP) data for the month of June on August 10. IIP for the month of May 2018 came at 3.2% as compared to 4.8% in April due to sluggish performance of manufacturing and power sectors coupled with poor offtake of fast moving consumer goods. In the coming week, traders will keep an eye on the Goods and Service Tax (GST) Council meeting on August 4 which would exclusively consider issues related to micro, small and medium enterprises (MSME) taxpayers. Investors will also be looking forward to External Affairs Minister Sushma Swaraj’s visit to Kazakhstan, Kyrgyzstan, and Uzbekistan from August 2 to August 5. The monsoon progress too will be keenly watched as the Indian Meteorological Department (IMD) said that India is set to receive average rainfall during the last two months of the crucial monsoon season. In the earnings season, traders will be eyeing important result announcements of Lloyds Steels Industries, Suzlon Energy, Wockhardt, Adani Ports And Special Economic Zone, Adani Power, Dena Bank, Dhanlaxmi Bank, Graphite India, Parag Milk Foods, Syndicate Bank, Birla Corporation, Mahindra & Mahindra, Punjab National Bank, SRF, Thomas Cook (India), Trident, TVS Motor Company, BEML, BPCL, Cipla, Hindustan Motors, NMDC, RCF, Siemens, Aurobindo Pharma, Bharat Forge, Eicher Motors, Excel Industries, Fiberweb (India), Hindustan Copper, ICRA, Jindal Steel & Power, SML Isuzu, GAIL, Glenmark Pharmaceuticals, Hindalco Industries, Dr. Lal PathLabs, Lux Industries, Matrimony.com, Max India, NCC, NHPC, along with many others in the coming week. On the global front, market-participants would watch key macro-economic data from US starting from JOLTS, Redbook and Consumer Credit on August 7, followed by Jobless Claims, PPI-FD, Fed Balance Sheet and Money Supply on August 9 and finally Consumer Price Index, Baker-Hughes Rig Count and Treasury Budget on August 10. Top Gainers Lupin up by 9.00% was the top gainer on Nifty for the week - Lupin gained traction on receiving attestation from the European Directorate for the Quality of Medicines (EDQM) for its Mandideep facility in Madhya Pradesh. The unit was inspected by EDQM in March 2018. The inspection was focused on the application for certificate of suitability for the dossier of Cefaclor, along with facility inspection for Quality Management Systems based on cGMP, as laid under European Union rules governing medicinal products. Besides, Lupin launched of Desoximetasone Topical Spray in the US market.
Titan Company up by 7.57% was another top gainer on Nifty for the week - Titan Company gained on reporting better-than-expected 36% jump in first-quarter profit, backed by healthy growth in its core businesses. The company posted consolidated net profit of Rs 331.46 crore for the quarter ended June 30, 2018, as compared to Rs 243.25 crore for the same quarter in the previous year. Total income of the company increased by 8.60% at Rs 4,487.16 crore for Q1FY19 as compared Rs 4,131.72 crore for the corresponding quarter previous year.
Top Losers Eicher Motors down by 4.49% was the top loser of the week on Nifty - Eicher Motors came under pressure despite its motorcycle division reporting 7% rise in sales at 69,063 units in July 2018 as compared to 64,459 motorcycles sold in July 2017. During July 2018, the number of motorcycles exported, increased by 58% to 2062 units from 1302 units in July 2017. In a separate development, Volvo Eicher Commercial Vehicles (VECV), the joint venture (JV) between Volvo Group and Eicher Motors reported a strong 37% Y-o-Y growth in July 2018.
HDFC Bank down by 3.24% was another top loser of the week on Nifty - HDFC Bank raised Rs 2,775 crore by issuing over 1.28 crore shares through qualified institutions placement (QIP). The share allotment committee of directors at its meeting held today approved the issue and allotment of 1,28,47,222 equity shares at an issue price of Rs 2,160 per equity share aggregating to Rs 27,74,99,99,520. Besides, HDFC Bank launched a share sale to raise up to Rs 15,500 crore from domestic and foreign institutional investors.
Technical viewpoints During the week, CNX Nifty touched the highest level of 11,390.55 on August 1 and lowest level of 11,234.95 on August 2. On the last trading day, the Nifty closed at 11,360.80 with weekly gain of 82.45 points or 0.73 percent. For the coming week, 11,266.98 followed by 11,173.17 are likely to be good support levels for the Nifty, while the index may face resistance at 11,422.58 and further at 11484.37 levels. US Market The US markets ended the passing week mostly in green terrain as on reports indicating the U.S. and China are trying to restart talks aimed at averting a full-blown trade war. The report said that representatives for U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are having private conversations. However, markets started the session on a pessimistic note, as shares of technology companies tumbled, and investors braced for a busy week of corporate earnings and central-bank meetings. Soon after the pessimistic start, US markets gained momentum and traded with traction throughout the week. Traders took some support with the latest batch of U.S. economic data, including a report from the Commerce Department showing personal income and spending both increased in line with the street estimates in the month of June. The report said personal income climbed by 0.4 percent in June, matching the increase seen in May as well as expectations. The Commerce Department said personal spending also rose by 0.4 percent in June after climbing by an upwardly revised 0.5 percent in May. The street had expected spending to increase by 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month. However, gains remained capped after the Federal Reserve left interest rates unchanged but signaled another imminent rate increase. With the decision widely anticipated, closer attention was paid to the accompanying statement, which included only minor changes from the June statement. Meanwhile, the National Association of Realtors released a report showing a much bigger than expected rebound in pending home sales in the month of June. NAR said its pending home sales index climbed by 0.9 percent to 106.9 in June after falling by 0.5 percent to 105.9 in May. Investors had expected pending home sales to inch up by 0.1 percent. Despite the much bigger than expected increase, pending home sales in June were down by 2.5 percent compared to the same month a year ago, reflecting the sixth straight year-over-year decrease. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. Meanwhile, overall trading activity was somewhat subdued as traders looked ahead to the Federal Reserve’s monetary policy announcement on August 1. The Fed is widely expected to leave interest rates unchanged, but traders are likely to keep a close eye on the accompanying statement for clues about the outlook for rates. European Market European markets ended the passing week lower, as trade worries persisted and the Bank of England raised interest rates despite the risk of a possible 'no-deal Brexit.' The Monetary Policy Committee, headed by Governor Mark Carney, unanimously decided to lift the benchmark rate by 25 basis points to 0.75 percent. The key indices made a negative start of the week, amid weak microeconomic data. Eurozone economic confidence continued its downward trend hitting the lowest level in almost a year in July on weaker sentiment among retailers and firms. The economic sentiment index dropped slightly to 112.1 in July from 112.3 in the previous month. Besides, France's economy grew less-than-expected in the second quarter, largely reflecting weak household consumption. As per first estimate from the statistical office Insee, gross domestic product grew 0.2 percent sequentially, the same pace of growth as seen in the first quarter. The pace of growth was forecast to improve to 0.3 percent. Domestic sentiments also got hit after the euro area economy grew at a slower pace in the second quarter. The preliminary flash estimate from Eurostat showed that gross domestic product grew 0.3 percent from the first quarter, when the economy expanded 0.4 percent. Separately, Euro area inflation accelerated for a third straight month in July to its highest level since late 2012. As per preliminary data from Eurostat, the harmonized index of consumer prices rose 2.1 percent year-on-year in July, after climbing 2 percent in June. Adding some anxiety on the street, France's consumer price inflation accelerated at a faster-than-expected pace in July. Consumer prices climbed 2.3 percent year-over-year in July, faster than the 2.0 percent increase in June. Also, Consumer confidence in the United Kingdom weakened further in July. The latest survey from GfK revealed this with an index score of -10. The markets extended the losses further as the UK manufacturing sector expanded at the slowest pace in three months in July. The survey data from IHS Markit and Chartered Institute of Procurement & Supply showed that the manufacturing Purchasing Managers' Index dropped to 54.0 in July from 54.3 in June. However, any reading above 50 indicates growth in the sector. Moreover, Eurozone manufacturing activity remained subdued at the start of the third quarter, as initially estimated. As per final data from IHS Markit, the factory Purchasing Managers' Index rose to 55.1 in July, in line with flash estimate, from 54.9 in June. Meanwhile, Eurozone producer prices climbed at a faster pace on energy prices in June. The figures from Eurostat showed that producer prices advanced 3.6 percent annually in June, faster than the 3 percent rise in May. This was also faster than the expected 3.5 percent. Asian market All the Asian equity benchmarks, barring KLSE composite ended in the negative terrain during the passing week, as trade tensions intensified and the US Federal Reserve signaled it stayed on course to increase borrowing costs in September and likely again in December. Investors also remained cautious ahead of the release of the US jobs data for July. Seoul stocks fell after a private survey showing that South Korea’s factory activity contracted for a fifth consecutive month in July and marked the worst slump since November 2016, as both new orders and output shrank. Chinese Shanghai remained the top loser, tumbling over four and half percent, after a survey from Caixin showed that China's services sector continued to expand in July, albeit at a slower pace. The PMI stood at 52.8, down from 53.9 in the previous month as new orders expanded at their weakest rate in more than two and a half years. Some pessimism also came with report that China’s manufacturing sector grew at its slowest pace in eight months in July as export orders declined again in a sign of a darkening outlook for the economy and businesses amid an intensifying trade dispute with the United States. The Caixin/Markit Purchasing Manager's Index came in at 50.8, down from 51.0 in June. Japanese Nikkei too edged lower by around a percent, as the yen strengthened on safe-haven demand after an escalation in the Sino-US trade war. Sentiments remained down-beat with a private survey showing that activity in Japan's services sector cooled slightly in July from the previous month as new orders grew at a slower pace, suggesting the economy may have lost some momentum at the start of the third quarter. Some concern also came with private report indicating that growth in Japan’s manufacturing sector slowed to an 11-month low in July as new orders softened on weaker domestic and international demand.
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