Indian equity benchmarks ended the passing week with a gain of around a percentage points as tensions in the Middle East eased, coupled with strong quarterly earnings from companies. Markets started the week on an optimistic note as traders reacted positively to report that India's net direct tax collections surged by 17.7 per cent year-on-year to Rs 19.58 lakh crore in the fiscal year ended March 2024 and exceeded the revised estimates by Rs 13,000 crore. Adding more optimism among traders, Union Finance Minister Nirmala Sitharaman said that the Centre has tailored policies to make India an attractive destination for manufacturing and services, and the aim was to produce not just for the domestic market but for exports as well. Some support also came after Employees' Provident Fund Organisation (EPFO) in its latest ‘Provisional payroll data’ report showed that 15.48 lakh net members have been added in the month of February 2024. The data further indicated that around 7.78 lakh new members have been enrolled during February 2024. Traders also took some support with Union Minister Piyush Goyal’s statement that the Modi government has provided a corruption free regime in the last 10 years and the country in the next few years will become the world's third largest economy. Sentiments remained positive with a survey showing that India's business activity expanded at its fastest pace in nearly 14 years in the month of April thanks to robust demand. It also showed easing input inflation and positive jobs growth. That suggests India is well placed to remain the fastest growing major economy this year after posting strong expansion over the past few quarters. HSBC's flash India Composite purchasing managers' Index INPMCF=ECI, compiled by S&P Global, rose to 62.2 this month from March's final reading of 61.8. The reading has been consistently above the 50-mark separating expansion from contraction since August 2021. Markets extended northward journey taking support from RBI Monetary Policy Committee (MPC) member Shashanka Bhide’s statement that sustaining the economic growth momentum of 7 per cent in 2024-25 and beyond is feasible on the back of favorable monsoon, higher farm productivity and improved global trade. Sentiments continue to remain upbeat during the week as traders took some support with a private report that India's GDP growth is likely to average 7% from 2024-25 to 2029-30. Some support also came with report stating that the government is formulating action plans for as many as 20 agricultural products including banana, mangoes, potato and baby corn with a view to further boost export of these commodities. Sentiments remained positive with the Comprehensive Economic Partnership Agreement (CEPA) Council Director Ahmed Aljneibi’s statement that the trade between India and UAE increased 15 per cent since the implementation of the free trade agreement in May 2022 and the both are on track to surpass the target of $100 billion in non-oil trade by 2030. However, traders booked some of their weekly gains on final day of the trade amid report that World Bank said that interest rates could remain higher than expected in 2024 and 2025 as global commodity prices level off. Traders were cautious amid reports that India's central bank plans to soon change guidelines to permit banks to temporarily freeze accounts suspected of being used to commit cyber-crimes, as it battles a rising wave of online crime.
BSE movement for the week
The Bombay Stock Exchange (BSE) Sensex surged 641.83 points or 0.88% to 73,730.16 during the week ended April 26, 2024. The BSE Midcap index gained 1583.25 points or 3.96% to 41,587.77 and Smallcap index surged 1805.5 points or 3.97% to 47,239.29. On the sectoral front, S&P BSE PSU was up by 1,016.95 points or 5.41% to 19,808.82, S&P BSE Consumer Durables was up by 2,612.31 points or 4.99% to 54,995.94, S&P BSE Realty was up by 320.82 points or 4.40% to 7,608.31, S&P BSE Metal was up by 1,150.72 points or 3.80% to 31,394.57 and S&P BSE Capital Goods was up by 2,079.66 points or 3.41% to 63,115.05 were the top gainers, while there were no losers on the BSE.
NSE movement for the week
The Nifty surged 272.95 points or 1.23% to 22,419.95. On the National Stock Exchange (NSE), Bank Nifty was up by 626.90 points or 1.32% to 48,201.05, Nifty IT was up by 297.90 points or 0.89% to 33,666.20, Nifty Mid Cap 100 increased 1927.15 points or 3.96% to 50,624.10 and Nifty Next 50 increased 2246.65 points or 3.63% to 64,134.55.
FII transactions during the week
Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 76,306.16 crore and gross sales of Rs 75,851.26 crore, leading to a net inflow of Rs 454.90 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 7,189.41 crore against gross sales of Rs 11,655.28 crore, resulting in a net outflow of Rs 4,465.87 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 167.79 crore and gross sales of Rs 148.29 crore, leading to a net inflow of Rs 19.50 crore.
Industry and Economy
United Nations Conference on Trade and Development (UNCTAD) in its latest report has said that India's services exports jumped 11.4 per cent to $345 billion in 2023 despite global economic uncertainties, while China's shipments from the sector contracted by 10.1 per cent to $381 billion. Sectors that contribute to India's services export growth include travel, transport, medical and hospitality. It stated with an 8.9 per cent annual rise in current dollar value terms, the world services exports surpassed $7.9 trillion in 2023. It added the leading exporters among developing economies include India, China, Singapore, Turkiye, Thailand, Mexico, and Saudi Arabia.
Outlook for the coming week
The passing week turned optimistic one for Indian equity markets amid positive data from HSBC Flash India Composite PMI. HSBC's flash India Composite purchasing managers' Index INPMCF=ECI, compiled by S&P Global, rose to 62.2 this month from March's final reading of 61.8.
In the coming holiday truncated week, which marks the start of new month, market-participants would be watching out Infrastructure output, scheduled to be released on April 30. Infrastructure output in India increased 6.7% year-on-year in February 2024, following an upwardly revised 4.1% rise in January. Stock markets would be shut for trade on May 1 on account of Maharashtra Day. On May 02, investors will be eyeing on HSBC Manufacturing PMI Final data. Bank loan growth, Deposit growth and Foreign Exchange Reserves data to be out on May 03. Further, auto and cement companies would be in focus for the coming week as these companies will report their monthly sales figures.
In the ongoing result season, traders will be eyeing earnings of prominent companies, including Tata Chemicals, UltraTech Cement, Havells India, Indian Oil Corporation, Adani Power, Ambuja Cements, Adani Enterprises, Adani Ports, Blue Star, Coal India, Dabur India, Adani Green Energy, Godrej Properties, MRF, Titan Company, Kotak Mahindra Bank etc.
On the global front, investors would be eyeing few economic data from world’s largest economy, United States (US), starting from Dallas Fed Manufacturing Index on April 29, Redbook, Chicago PMI, CB Consumer Confidence, Dallas Fed Services Index on April 30, S&P Global Manufacturing PMI, ISM Manufacturing PMI, JOLTs Job Openings, ISM Manufacturing Employment, ISM Manufacturing New Orders, Fed Interest Rate Decision on May 01, Fed Press Conference, Balance of Trade, Initial Jobless Claims on May 02, Non-Farm Payrolls, Unemployment Rate, Government Payrolls, S&P Global Composite PMI Final, S&P Global Services PMI Final, ISM Services PMI, ISM Services Business Activity, ISM Services Employment, Baker Hughes Oil Rig Count on May 03, Fed Goolsbee Speech and Fed Williams Speech on May 04.
Top Gainers
- Axis Bank up by 10.38% was the top gainer on Nifty for the week - Axis Bank traded with traction on turning black in Q4. The bank reported consolidated net profit of Rs 7,613.55 crore for fourth quarter ended March 31, 2024 as against net loss of Rs 5,371.18 crore for the same quarter in the previous year. However, total income of the bank increased by 26.04% at Rs 37,836.10 crore for Q4FY24 as compared Rs 30,018.03 crore for the corresponding quarter previous year. On standalone basis, the bank has reported net profit of Rs 7,129.67 crore for Q4FY24 as compared to net loss of Rs 5,728.42 crore for Q4FY23.
- Tech Mahindra up by 8.40% was another top gainer on Nifty for the week - Tech Mahindra traded higher on strong management commentary after Q4 earnings. Its Chief Financial Officer, Rohit Anand said ‘With another quarter of robust cash generation, we have reported improvement in deal wins and operating margins in Q4FY24, which has enabled consistent dividend distribution. We are confident that our actions will lead to steady earnings growth in the coming years.’ Tech Mahindra reported 40.96% fall in consolidated net profit at Rs 664.20 crore for Q4FY24 as compared to Rs 1125.00 crore for Q4FY23.
Top Losers
- Kotak Mahindra Bank down by 9.98% was the top loser of the week on Nifty - The RBI directed Kotak Mahindra Bank to cease and desist, with immediate effect, from onboarding of new customers through its online and mobile banking channels and issuing fresh credit cards. The bank shall continue to provide services to its existing customers, including its credit card customers. These actions are necessitated based on significant concerns arising out of RBI’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner.
- HDFC Life Insurance by 2.94% was another top loser of the week on Nifty - HDFC Life Insurance declined post Q4 numbers. The company reported 13.72% rise in its consolidated net profit at Rs 411.64 crore for Q4FY24 as compared to Rs 361.97 crore for the same quarter in the previous year. Net premium income of the company increased by 5.47% at Rs 20,533.71 crore for Q4FY24 as compared Rs 19,468.60 crore for the corresponding quarter previous year. Meanwhile, HDFC Life Insurance Company entered into a corporate agency tie-up with Peerless Financial Products Distribution (PFPDL).
Technical viewpoints
During the week, CNX Nifty touched the highest level of 22,625.95 on April 25 and lowest level of 22,198.15 on April 22. On the last trading day, the Nifty closed at 22,419.95 with weekly gain of 272.95 points or 1.23 percent. For the coming week, 22,203.42 followed by 21,986.88 are likely to be good support levels for the Nifty, while the index may face resistance at 22,631.22 and further at 22,842.48 levels.
US Market
The U.S. markets ended higher during the passing week amid easing fears of a wider Middle East conflict after Iran and Israel completed measured counterattacks that were calibrated to avoid any casualties. Sentiments got boost after a report released by the Commerce Department showed a substantial increase in new home sales in the U.S. in the month of March. The Commerce Department said new home sales spiked by 8.8 percent to an annual rate of 693,000 in March after plunging by 5.1 percent to a revised rate of 637,000 in February. Street had expected new home sales to rise to an annual rate of 668,000 from the 662,000 originally reported for the previous month. New home sales in the Northeast helped lead the way higher, skyrocketing by 27.8 percent during the month to an annual rate of 46,000. New home sales in the West and South also surged by 8.6 percent and 7.7 percent, respectively, while new home sales in the Midwest jumped by 5.3 percent.
Further, with orders for transportation equipment showing a substantial increase, the Commerce Department released a report showing new orders for U.S. manufactured durable goods surged by more than expected in the month of March. The report said durable goods orders soared by 2.6 percent in March after climbing by a downwardly revised 0.7 percent in February. Street had expected durable goods orders to spike by 2.3 percent compared to the 1.3 percent jump that had been reported for the previous month. Meanwhile, the Labor Department released a report showing an unexpected decrease by first-time claims for U.S. unemployment benefits in the week ended April 20th. The report said initial jobless claims fell to 207,000, a decrease of 5,000 from the previous week's unrevised level of 212,000. The dip surprised participants, who had expected jobless claims to inch up to 214,000.
However, some cautiousness prevailed in the markets after a report released by the Commerce Department showed the U.S. economy grew by much less than expected in the first quarter of 2024. The Commerce Department said gross domestic product increased by 1.6 percent in the first quarter after surging by 3.4 percent in the fourth quarter of 2023. Street had expected GDP to jump by 2.5 percent. The GDP growth in the first quarter reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending. But, the positive contributions were partly offset by a decrease in private inventory investment and an increase in imports, which are a subtraction in the calculation of GDP. The Commerce Department said the notable slowdown in GDP growth compared to the previous quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending.
European Market
European markets remained higher during the passing week. The start of the week was in green terrain, as Germany's private sector expanded for the first time in ten months in April driven by a solid rise in services activity. The survey results from S&P Global showed that the flash composite output index rose more-than-expected to 50.5 in April from 47.7 in the previous month. The reading was seen at 48.6. The services Purchasing Managers' Index posted a ten-month high reading of 53.3 in April, up from 50.1 in the previous month. Besides, France's private sector activity moved closer to stabilization in April on renewed expansion in the service sector. The survey data from S&P Global showed that the flash HCOB composite output index hit an 11-month high of 49.9 from 48.3 in the previous month. The score signaled a broad stabilization of business activity across the private sector economy.
Firm trade continued in the markets towards end of the week, after the UK private sector economy grew at the quickest pace in nearly a year in April amid a robust growth in service sector output. The flash survey results from S&P Global showed that the composite output index rose to 54.0 in April from 52.8 in March. A reading above 50.0 indicates expansion in the private sector. Service sector growth was the fastest in eleven months on the back of rising business and consumer spending. Moreover, the euro area private sector expanded the most in nearly a year in April as the continuing downturn in the manufacturing activity was offset the strength in the service sector. The flash survey results from S&P Global showed that the composite output index registered 51.4 in April, up from 50.3 in March. The private sector expanded for the second month in a row in April after a continual decline over the nine months to February. The score signaled the strongest growth since last May.
On the inflation front, Finland's producer prices continued their declining trend in March. The data from Statistics Finland showed that the producer price index fell 4.5 percent year-over-year in March, following a 5.1 percent decline in the previous month. Prices have been falling since April 2023. The decrease in producer prices for manufactured products was particularly caused by the fall in prices of basic metals, paper and paper products, and electricity, the agency said. Domestic producer prices declined 3.5 percent annually, and those of export products slid by 5.9 percent. On a month-on-month basis, producer prices dropped 0.1 percent after a 0.2 percent decrease. Data also showed that the export price index logged a decline of 5.9 percent, and import prices dropped by 4.6 percent. The decrease in the export price index was especially due to lower prices of basic metals, paper and paper products, and chemicals and chemical products.
Asian Market
Asian markets, barring Shanghai Composite Index, ended in green during the passing week, following the broadly positive cues from global markets, as data showing a slowdown in U.S. manufacturing activity in the month of April raised hopes the US Fed will start thinking of cutting interest rates soon. Besides, Microsoft and Google's parent company Alphabet both beat Wall Street's Q1 expectations, offsetting Meta Platforms' disappointing forward guidance. Investors also looked ahead to the release of U.S. GDP data for the first quarter as well as earnings reports from major companies across various sectors. Seoul stocks ended higher as data showed that the South Korean economy grew at the fastest pace in more than two years in the first quarter on robust exports.
Japanese Nikkei rose by over one and half percent after the Bank of Japan expressed confidence that inflation was on track to durably hit 2 percent in coming years. Market participants also reacted to Tokyo's inflation figures. The Ministry of Internal Affairs and Communications said consumer prices in the Tokyo region of Japan were up 1.8 percent on year in April. That was beneath estimates for an annual gain of 2.6 percent, which would have been unchanged from the March reading. Core CPI, which excludes the volatile costs of food prices, advanced 1.6 percent on year - also well shy of forecasts for an increase of 2.2 percent and slowing from 2.4 percent in the previous month.
Bucking the trend, Chinese Shanghai ended lower by around half percent after reports that the head of its central bank wants creditors engaged in debt restructurings for emerging market countries to agree on how to fairly share the burden of relief. However, losses remain capped as some major investment banks, Goldman Sachs and UBS, have raised its ratings on China and Hong Kong's equities citing potential reforms, strong earnings, and fiscal support. Investors also braced the news that China is to facilitate Hong Kong listings by leading Chinese firms and expand the stock connect cross boarder investment scheme.
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