HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Bulls continue to dominate markets for sixth straight week
Mar-29-2019

Bullish trade continued for sixth straight week and key gauges settled above their crucial 36,600 (Sensex) and 11,600 (Nifty) levels. Though, markets started the session on pessimistic note with a private report stating that India’s industrial production is expected to stay muted in the near term, owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome. According to the report, the IIP is likely to have grown by 3-3.2 per cent during February 2019. Adding some worries on the street, Vice President of India M. Venkaiah Naidu called for a renewed focus on rural health care and cautioned that the quality of healthcare being delivered cannot be determined by the price being paid. On the very next day, traders turned optimistic and pared all their first day losses with the finance ministry’s statement that the liquidity situation in the economy was comfortable, and it will improve further with the central bank’s move to infuse Rs 35,000 crore through the rupee-dollar swap arrangement, announced last week. Some anxiety kept markets in check after former RBI Governor Raghuram Rajan expressed doubts over Indian economy growing at 7% when not enough jobs were being created. Rally in final two days of trade helped markets to settle past their crucial psychological levels buoyed by the India Meteorological Department director general, K.J. Ramesh’s statement that India's monsoon is likely to be a robust and healthy one this year provided there is not a surprise El Nino phenomenon. Some support also came with Commerce Minister Suresh Prabhu’s statement that the country’s merchandise and services export would touch about $540 billion mark in the current fiscal year ending March 31, 2019. He added that exports are growing at a healthy pace and shipments of goods would reach over $330 billion, similarly, services exports would touch about $200 billion.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 508.30 points or 1.33% to 38,672.91 during the week ended March 29, 2019. The BSE Midcap index gained 402.73 points or 2.67% to 15,479.62 and Smallcap index surged 268.56 points or 1.82% to 15,027.36. On the sectoral front, S&P BSE PSU was up by 290.81 points or 3.96% to 7640.47, S&P BSE Consumer Durables was up by 714.66 points or 3.09% to 23856.65, S&P BSE Oil & Gas was up by 456.83 points or 3.08% to 15269.70, S&P BSE BANKEX was up by 991.14 points or 2.99% to 34141.94 and S&P BSE Finance was up by 164.99 points or 2.63% to 6432.87 were the top gainers on the BSE sectoral front, while there were no losers.

NSE movement for the week

The Nifty surged 167.00 or 1.46% to 11,623.90. On the National Stock Exchange (NSE), Bank Nifty soared 844.30 points or 2.85% to 30,426.80, Nifty IT gained 77.10 points or 0.50% to 15,628.20, Nifty Mid Cap 100 increased 517.35 points or 2.92% to 18,258.50 and Nifty Next 50 was up by 521.90 points or 1.88% to 28,281.90.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 36131.98 crore and gross sales of Rs 29575.60 crore, leading to a net inflow of Rs 6556.38 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 15180.40 crore against gross sales of Rs 13965.79 crore, resulting in a net inflow of Rs 1214.61 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 2782.76 crore and gross sales of Rs 3.23 crore, leading to a net inflow of Rs 2779.53 crore.

Industry and Economy

The Central Board of Direct Taxes (CBDT) has rung alarm bells and asked the Income Tax Department to go for a major assault as the direct tax collection target remains short of about 15 percent, as just few days left for the end of the financial year, i.e., March 31. As per to the internal estimate of the department, against the budget collection target of Rs 12,00,000 crore, only 85.1 percent of the target at Rs 10,21,251 crore has been collected as on March 23. CBDT Member Neena Kumar has underlined the areas that are sluggish vis-a-vis direct tax collections obtained from personal, corporate and advance tax categories. 

Outlook for the coming week

In the passing week, Indian equity markets ended March on green terrain, with Nifty and Sensex capturing their crucial psychological levels of 11,600 and 38,600, tracking gains in global peers amid revived hopes of progress in US-China trade talks. The coming week is going to be a start of a new month and both cement and auto stocks in the next week would be buzzing on reporting monthly sales figures.

In the coming week, investors would be keeping an eye on the Monetary Policy Committee (MPC) meet which is scheduled from April 2 to 4. The street expects that the Reserve Bank of India (RBI) is likely to cut repo rate by 25 basis points due to weak economic activity, benign inflation and soft global growth. Additionally, traders would also looking forward to commerce ministry meeting of stakeholders on April 5, including export promotion councils and other government departments to discuss ways to increase exports to China.

Market-men will also be waiting for the release of Nikkei Services PMI data for the month of March which is slated to be announced on April 4. The Nikkei India Services PMI rose to 52.5 in February 2019 from a three-month low of 52.2 in January, matching market consensus.

On the global front from the US, traders will be eyeing important macro-economic data, starting with Retail Sales, PMI Manufacturing Index on April 1, followed by Redbook on April 2, Jobless Claims, Fed Balance Sheet, Money Supply on April 4 and finally Baker-Hughes Rig Count and Consumer Credit on April 5.

Top Gainers

  • Yes Bank up by 8.91% was the top gainer on Nifty for the week - Yes bank continued to trade northward from past several session after the Ravneet Gill taken charge as MD and CEO from March 1 for a tenure of three years. Moreover, stocks related to banking space edged higher during the passing week amid hopes of an end to the NPA provisioning cycle and a strong recovery in the banking space. Another reasons for this rally in the banking space is due to the positive FII sentiments, which is expected to continue till the Lok Sabha election results are announced.
  • State Bank of India (SBI) up by 7.62% was another top gainer on Nifty for the week - SBI gained on raising Rs 1,251.30 crore by issuing Basel III-compliant bonds. The Committee of Directors for Capital Raising at its meeting held on 22 March 2019 deliberated and accorded approval to allot 12,513 non-convertible, taxable, perpetual, subordinated, unsecured Basel III-compliant additional tier-I bonds, for inclusion in additional tier-I capital of the bank. The bonds with a face value of Rs 10 lakh each bears a coupon rate of 9.45 per cent per anum payable annually with call option after 5 years.

Top Losers

  • Eicher Motors down by 4.19% was the top loser of the week on Nifty - Select automobile industry stocks came under pressure amid report that the impact of muted demand is going to hit the revenue of final quarter (Q4) of the automobile industry hardest in the financial year 2019-2020. It is expected to be slowest in the last three fiscals to a marginal 1.8%. During the same quarter, industry saw a revenue growth of 7.3% and 27% in FY17 and FY18 respectively. As per the report, poor demand for key categories - PVs and CVs, was one of core reasons for contraction in the revenue of the sector.
  • Wipro down by 2.21% was another top loser of the week on Nifty - Most of the Information and Technology (IT) sector stocks witnessed selling pressure amid rising headwinds to the global economy and the related risk to business momentum. Besides, Wipro and Indian Institute of Technology Kharagpur (IIT Kharagpur) have signed a Memorandum of Understanding (MOU) to collaborate on high-impact, industry-focused applied research in the areas of 5G and AI. Research outcomes from this partnership will be leveraged by Wipro to develop solutions for its customers, across industry verticals.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 11,630.35 on March 29 and lowest level of 11,311.60 on March 25. On the last trading day, the Nifty closed at 11,623.90 with weekly gain of 167.00 points or 1.46 percent. For the coming week, 11,413.55 followed by 11,203.20 are likely to be good support levels for the Nifty, while the index may face resistance at 11,732.30 and further at 11,840.70 levels.

US Market

The US markets ended higher during the passing week as trade talks between China and the U.S. restarted. Chinese officials made unprecedented offers regarding force technology transfers as well as other major sticking points. The report comes as U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived in Beijing for further negotiations. Trade between China and the U.S. has been a key issue for markets as investors fear a prolonged standoff between the world's largest economies could hinder corporate profits and economic growth. However, gains remain limited as the Commerce Department revealed the increase in U.S. gross domestic product in the fourth quarter was downwardly revised by more than anticipated. The Commerce Department said GDP climbed by 2.2 percent in the fourth quarter compared to the previously reported 2.6 percent increase. Street had expected the pace of growth to be downwardly revised to 2.4 percent.

The slower than previously estimated fourth quarter GDP growth was partly due to a downward revision to consumer spending, which climbed by 2.5 percent compared to the previously reported 2.8 percent increase. The Commerce Department also said the slower GDP growth compared to the previous quarter reflected decelerations in private inventory investment, consumer spending, and federal government spending and a downturn in state and local government spending. Meanwhile, pending home sales in the U.S. unexpectedly decreased in the month of February, according to a report released by the National Association of Realtors (NAR). NAR said its pending home sales index slumped by 1.0 percent to 101.9 in February after soaring by 4.3 percent to a downwardly revised 102.9 in January. Street had expected pending home sales to climb by 0.7 percent compared to the 4.6 percent spike originally reported for the previous month.

Besides, the Labor Department released a report unexpectedly showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended March 23rd. The report said initial jobless claims dipped to 211,000, a decrease of 5,000 from the previous week's revised level of 216,000. The drop came as a surprise to market participants, who had expected jobless claims to rise to 225,000 from the 221,000 originally reported for the previous week. The Labor Department said the less volatile four-week moving average also slipped to 217,250, a decrease of 3,250 from the previous week's revised average of 220,500. However, the Commerce Department released a report showing the U.S. trade deficit narrowed by much more than anticipated in the month of January. The Commerce Department said the trade deficit narrowed to $51.1 billion in January from a revised $59.9 billion in December.

European Market

European markets ended the passing week on optimistic note. The markets made a weak start of the week, as Germany's consumer confidence is set to slightly weaken in April, driven by some easing in households' income expectations and the propensity to buy. The survey results from the GfK showed that the forward-looking consumer confidence index fell to 10.4 from a revised 10.7 in March. The income expectations index fell 4.1 points to reach 55.9 in March and the propensity to buy index decreased 3.4 points to 50.2, which was the lowest reading in over two years. Adding some anxiety among traders, France's manufacturing confidence weakened slightly in March, after remaining stable in the previous two months. According to survey data from the statistical office INSEE, the factory confidence indicator fell to 102 from 103 seen in each of the previous three months. In November, the index reading was 105. The overall business climate indicator, however, rose to 104 from 103 in February.

But, key indices staged recovery during the week, after Sweden consumer confidence rose to its highest level in three-months. The survey data from the National Institute of Economic Research showed that the consumer confidence index rose to 94.0 in March from 93.0 in February. The latest reading was the highest since December, when it was 96.3. Separately, Germany's business confidence strengthened in March, after weakening in the previous six months, as businesses were more optimistic regarding the future and the economy's resilience. The data from the Munich-based Ifo Institute revealed that the ifo business confidence index rose to 99.6 from a revised 98.7 in February. The street had expected the reading to remain unchanged at February's original score of 98.5. The ifo index rose for the first time since August 2018.

On the inflation front, Germany's consumer price inflation slowed in March, defying expectations for stability. The preliminary figures from the Federal Statistical Office showed that the consumer price index rose 1.3 percent year-on-year following a 1.5 percent climb in February. In January, inflation was 1.4 percent. However, Spain's consumer price inflation rose further in March. The flash data from the statistical office INE showed that the consumer price index rose 1.3 percent year-on-year in March, following a 1.1 percent rise in January. The rise in inflation was led by rise in price of fuels and also by a fall in electricity prices. Compared to the previous month, consumer prices rose 0.4 percent in March, which was less than the expected 0.6 percent.

Asian market

All the Asian equity indices, barring Straits Times, ended in red during the passing week, as sliding US bond yields rekindled growth concerns and the British Parliament failed to agree on an alternative to Prime Minister Theresa May's withdrawal plan.

Japanese Nikkei tumbled by around two percent, as a stronger yen weighed on exporters' shares. Sentiments remained down-beat with data showing that that retail sales in Japan were up a seasonally adjusted 0.2 percent on month in February. That missed expectations for an increase of 1.0 percent following the 1.8 percent decline in January. However, losses were limited with data showing that industrial production in Japan perked 1.4 percent on month in February, in line with expectations following the 3.4 percent slide in January.  Also, the unemployment rate in Japan came in at a seasonally adjusted 2.3 percent in February. That was beneath expectations for 2.5 percent, which would have been unchanged from the previous month.

Chinese Shanghai too edged lower by around half a percent, as investors remained concerned with a possible recession in the US and the next round of China-US trade talks. Seoul stocks too fell after official data showing that industrial production in South Korea fell a seasonally adjusted 2.6 percent month on month in February, following the 0.2 percent increase in January. On a yearly basis, industrial output sank 2.7 percent after easing 0.2 percent in the previous month.
  RELATED NEWS >>
Most Viewed >>
April 19 , 2024
JPMorgan bullish on Indian stocks, suggests ma
April 19 , 2024
Is it time to take small bets in FMCG stocks?
April 18 , 2024
Mutual fund industry assets grow 35% in FY24
April 19 , 2024
Lok Sabha Elections 2024: How will they impact
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.