Bulls which woke up later part of the week, helped Indian equity benchmarks to end with a gain of over a percentage point. Markets started the week on pessimistic note, as India industrial production measured by IIP contracted to 0.1% in March 2019, the lowest in 21 months. It had grown by 5.3% in March 2018. As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of March 2019 stood at 140.2, which is 0.1% lower as compared to the level in the month of March 2018. Afterwards, markets witnessed roller coaster ride on reports that foreign investors pulled out a net Rs 3,207 crore from the Indian capital markets in the first seven trading sessions of May amid the US-China trade tensions and uncertainty over the election results. Sentiments also weighed down with CSO data showing that retail inflation inched up to a six-month high of 2.92% in April due to a spike in food prices, including vegetables, meat, fish and eggs. Inflation based on the CPI was at 2.86% in the previous month and 4.58% in April 2018. However, traders took some solace with data showing that WPI for the month of April eased to 3.07 percent compared to 3.18 percent in March led by fall in prices of manufacturing products. Some support also came with Chief Economic Advisor (CEA) Krishnamurthy V. Subramanian’s statement that the Indian economy will grow at 7% range in the current fiscal. But, rally in final two days of the week mainly helped markets to recapture their crucial 37,900 (Sensex) and 11,400 (Nifty) levels. Sentiments turned optimistic on reports that Finance Commission held discussions with the finance ministry on fiscal and economic management as well as rationalisation of expenditure related to centrally sponsored schemes. BSE movement for the week The Bombay Stock Exchange (BSE) Sensex surged 467.78 points or 1.25% to 37,930.77 during the week ended May 17, 2019. The BSE Midcap index losses 81.40 points or 0.57% to 14,308.36, while Smallcap index slipped 218.59 points or 1.55% to 13,887.14. On the sectoral front, S&P BSE Finance was up by 121.64 points or 1.98% to 6263.12, S&P BSE Consumer Durables was up by 446.35 points or 1.91% to 23759.21, S&P BSE Fast Moving Consumer Goods was up by 197.36 points or 1.73% to 11601.02, S&P BSE BANKEX was up by 493.81 points or 1.52% to 32878.92 and S&P BSE Realty was up by 12.25 points or 0.63% to 1955.95 were the top gainers on the BSE sectoral front, while S&P BSE Healthcare was down by 596.12 points or 4.32% to 13201.18, S&P BSE Metal was down by 241.68 points or 2.26% to 10459.50, S&P BSE Power was down by 27.90 points or 1.48% to 1862.39, S&P BSE TECK was down by 46.09 points or 0.61% to 7570.28 and S&P BSE Information Technology was down by 93.34 points or 0.60% to 15409.12 were the top losers on the BSE sectoral front. NSE movement for the week The Nifty surged 128.25 or 1.14% to 11,407.15. On the National Stock Exchange (NSE), Nifty IT was down by 106.25 points or 0.67% to 15,843.35, Nifty Mid Cap 100 decreased 154.05 points or 0.90% to 16,875.40 and Nifty Next 50 was down by 332.45 points or 1.25% to 26,226.50. On the other side, Bank Nifty was up by 409.65 points or 1.41% to 29,450.15. FII transactions during the week Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 18940.57 crore and gross sales of Rs 25071.67 crore, leading to a net outflow of Rs 6131.10 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 7858.39 crore against gross sales of Rs 4918.81 crore, resulting in a net inflow of Rs 2939.58 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 2317.38 crore and gross sales of Rs 55.59 crore, leading to a net inflow of Rs 2261.79 crore. Industry and Economy Chief Economic Advisor (CEA) Krishnamurthy V. Subramanian has said that the Indian economy would grow at 7% range in the current financial year (FY20) powered by the effects of the strong structural reforms such as bankruptcy laws, Goods and Services Tax (GST), crackdown on shell companies and the fiscal prudence undertaken in the last five years. He also stated that India would be able to maintain the fastest growing economy tag ahead of China. India still has significant potential and scope to grow strongly given the reforms that have been undertaken. Outlook for the coming week In the passing week Indian equity markets ended in positive terrain with gains of over a percent each with Sensex and Nifty settling above their crucial 37,900 and 11,400 levels, respectively. The coming week would be a very crucial for the local markets, as this would set the tone for Dalal Street since the results of seven week long elections will be unveiled on May 23, 2019 amidst hopes that Prime Minister Narendra Modi-led NDA seeking a fresh five-year term and Congress hoping to gain ground after its recent victory in three states. Although, investors, prior to this would like to keep an eye on the seventh and final phase of election in 8 states for 59 seats which is schedule to be held on May 19. Followed by this the much awaited exit polls, slated to be announced by various media organizations from Sunday evening, broadly indicating how India has voted, soon after the last phase of elections gets over. In the ongoing earning season, market-participants would be majorly looking for earnings from industry’s big-wigs such as, J.K. Cement, Shree Cement, Bharat Forge, Bharat Petroleum Corporation, HEG, Hindustan Petroleum Corporation, Tata Motors, Torrent Pharmaceuticals, United Breweries, Bajaj Electricals, Bank Of Baroda, Canara Bank, Cipla, I G Petrochemicals, Indusind Bank, MOIL, Symphony, Indraprastha Gas, Ashok Leyland, Bata India, Coffee Day Enterprises, JSW Steel etc. On the global front, investors will be eyeing slew of important economic data from world’s largest economy, United States, starting with Redbook on May 21, followed by MBA Mortgage Applications, FOMC Minutes on May 22, Jobless Claims, Fed Balance Sheet, Money Supply on May 23 and finally Baker-Hughes Rig Count on May 24. Top Gainers Bajaj Finance up by 11.10% was the top gainer on Nifty for the week - Bajaj Finance gained traction on reporting better-than-expected result for the quarter ended March 31, 2019. The company reported 57.32% rise in its consolidated net profit at Rs 1,176.06 crore for Q4FY19 as compared to Rs 747.55 crore for Q4FY18. Total income of the company increased by 52.04% at Rs 5,308.47 crore for Q4FY19 as compared Rs 3,491.59 crore for Q4FY18. Besides, the company reported 60.03% rise in its consolidated net profit at Rs 3,994.99 crore for FY19, as compared to Rs 2,496.37 crore for FY18.
Titan Company up by 7.79% was another top gainer on Nifty for the week - Tata Steel gained on reporting 14.42% rise in its consolidated net profit at Rs 348.30 crore for the quarter ended March 31, 2019, as compared to Rs 304.41 crore for the same quarter in the previous year. Total income of the company increased by 19.86% at Rs 4,945.06 crore for Q4FY19 as compared Rs 4,125.69 crore for Q4FY18. Besides, the company reported 26.02% rise in its consolidated net profit at Rs 1,388.65 crore for the year ended March 31, 2019, as compared to Rs 1,101.91 crore for the previous year.
Top Losers Yes Bank down by 21.23% was the top loser of the week on Nifty - Yes Bank continued to remain under pressure amid report that Ind-Ra downgraded the Bank’s long-term ratings to ‘AA’ with negative outlook. Besides, the RBI appointed its former Deputy Governor R. Gandhi as an additional director on the board of Yes Bank with immediate effect. There are reports that shareholders are wary of the possibility of further erosion in Yes Bank's stock as the bank is set to dilute equity to add to its loan loss provisions. The bank had reported net loss of over Rs 1,506 crore in Q4FY19, driven by a near ten-fold spike in provisions.
Tata Steel down by 9.57% was another top loser of the week on Nifty - Tata Steel witnessed pressure amid S&P Global Ratings’ report that Tata Steel and Thyssenkrupp's decision to cease efforts on their proposed Europe joint venture is marginally credit negative for Tata Steel. It said the cancellation of the JV will leave Tata Steel exposed to the weaker and more volatile performance of the European operations until it identifies an alternative strategy to deconsolidate the European operations. Both the companies had decided to call off the proposed JV, saying it was unlikely to receive the European Commission’s nod.
Technical viewpoints During the week, CNX Nifty touched the highest level of 11,426.15 on May 17 and lowest level of 11,108.30 on May 14. On the last trading day, the Nifty closed at 11,407.15 with weekly gain of 128.25 points or 1.14 percent. For the coming week, 11,201.58 followed by 10,996.02 are likely to be good support levels for the Nifty, while the index may face resistance at 11,519.43 and further at 11,631.72 levels. US Market The US markets ended lower during the passing week on account of US-China trade tensions. Sentiments got dampened after China announced plans to raise tariffs on $60 billion worth of US goods. The move by China comes in retaliation for Trump’s recent decision to raise tariffs on approximately $200 billion worth of Chinese goods to 25 percent from 10 percent. China said increased tariffs on a total of 5,140 US products would take effect June 1, with the tariffs ranging from 5 percent to 25 percent. China is following through on its pledge to take necessary countermeasures in response to the US tariff increase even though Trump warned the situation will only get worse if China retaliates. Meanwhile, Trump has repeatedly argued that the US is in a stronger position than China in the negotiations, citing the recent strength of the US economy. On the economic front, the Federal Reserve Bank of Philadelphia in its report has said that growth in Philadelphia-area manufacturing activity has seen a significant acceleration in the month of May. The Philly Fed said its diffusion index for current general activity surged up to 16.6 in May after falling to 8.5 in April, with a positive reading indicating growth in regional manufacturing activity. Street had expected the index to inch up to 9.0. The jump by the headline index was partly due to a significant increase by the shipments index, which spiked to 27.6 in May from 18.4 in April. The number of employees’ index also climbed to 18.2 in May from 14.7 in April, indicating a notable acceleration in the pace of job growth. On the other hand, the new orders index tumbled to 11.0 in May from 15.7 in April, although the positive reading still indicates growth. Meanwhile, a report released by the Labor Department showed first-time claims for U.S. unemployment benefits dropped more than expected in the week ended May 11th. The report said initial jobless claims slid to 212,000, a decrease of 16,000 from the previous week's unrevised level of 228,000. Street had expected jobless claims to dip to 220,000. On the other hand, the Labor Department said the less volatile four-week moving average climbed to 225,000, an increase of 4,750 from the previous week's unrevised average of 220,250. A reading on the number of people receiving ongoing unemployment assistance known as continuing claims fell by 28,000 to 1.660 million in the week ended May 4th. The four-week moving average of continuing claims still edged up to 1,668,250, an increase of 1,500 from the previous week's revised average of 1,666,750. European Market European markets snapped the passing week on optimistic note. Markets made a negative opening of the week, as Eurozone industrial production fell for the second straight month in March. The figures from Eurostat showed that industrial production declined 0.3 percent month-on-month in March, following a 0.1 percent fall in February. The latest decline was driven by 1.0 percent fall in non-durable consumer goods and a 0.3 percent decline in energy production. Trading sentiments were also subdued, amid reports that Germany's economic sentiment weakened unexpectedly in May. As per survey data from the ZEW-Leibniz Centre for European Economic Research, the economic sentiment index fell to -2.1 in May from +3.1 in April. The reading was expected to rise to 5.0. However, key indices soon gained traction to rally during the week, after Eurozone's quarterly economic growth rate doubled in the first three months of the year. The latest figures from Eurostat showed that gross domestic product grew 0.4 percent from the fourth quarter of 2018, when the euro area economy expanded 0.2 percent. The pace of growth was the strongest since the second quarter of 2018, when the economy expanded at the same rate. Separately, Germany's economy expanded for the first time in three quarters, driven by domestic demand. The preliminary data from Destatis showed that gross domestic product advanced 0.4 percent sequentially in the first quarter, after staying flat in the fourth quarter and contracting 0.2 percent in the third quarter of 2018. The latest growth rate was in line with expectations. On the inflation front, Germany's consumer price inflation accelerated as initially estimated to its highest level in five months in April. The final data from Destatis showed that consumer price inflation rose to 2 percent in April from 1.3 percent in March. The rate came in line with the flash estimate published on April 30. This was the highest rate since November, when prices were up 2.1 percent. Month-on-month, consumer price inflation increased to 1 percent, as estimated, from 0.4 percent. Besides, Italy's consumer price inflation also rose marginally in April. As per data from the statistical office ISTAT, the consumer price index rose 1.1 percent year-on-year in April, following a 1.0 percent increase in March. Inflation was driven by a surge in prices of transport, recreation and of non-regulated energy products. Core inflation, which excludes energy and unprocessed food prices, rose to 0.6 percent from 0.4 percent in March. Asian market Extending their southward journey for second straight week, Asian equity indices ended in the red terrain during the passing week, as worries about US-China trade tensions continued to weigh on investor sentiment after the Trump administration banned Chinese telecom giant Huawei Technologies from buying US technology without prior approval from the US government. Chinese Shanghai tumbled by around two percent, as country’s industrial production and retail sales growth eased more-than-expected in April, suggesting weak economic activity at the start of second quarter. Industrial production advanced 5.4 percent year-on-year in April, following March's 8.5 percent increase. The growth rate was forecast to slow moderately to 6.5 percent. Likewise, annual growth in retail sales eased to 7.2 percent from 8.7 percent a month ago. Sales were expected to expand 8.6 percent. However, losses remain capped on expectations that the government will roll out measures to support growth amid external uncertainties. Japanese Nikkei too edged lower by around half percent, as a stronger yen weighed on exporters' shares. Sentiments remained down-beat with data showing that Japan posted a current account surplus of 2,847.9 billion yen in March, down 10.6 percent from last year. That missed forecasts for a surplus of 3,007.2 billion yen but was still up from 2,676.8 billion yen in February. The trade balance showed a surplus of 700.1 billion yen, also missing expectations for 838.9 billion yen and up from 489.2 billion yen in the previous month.
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