Bulls make come back on Dalal Street
Bulls make comeback on Dalal Street with frontline gauges hitting fresh highs throughout during the passing week and settling above their crucial 56,100 (Sensex) and 16,705 (Nifty) levels. Markets made an optimistic start as traders took encouragement with the government’s statement that the country’s agri-exports are estimated to grow 15% in FY22, adding that export of products like rice, meat, cereals and dairy items rose 44.3% on-year to $4.81 billion during April-June 2021. Their exports were $3.33 billion in the year ago period. Sentiments were upbeat as investments in the Indian capital markets through participatory notes (P-notes) rose to Rs 1.02 lakh crore till July-end, making it the highest level in last 40 months. Markets extended rally after SBI research report Ecowrap has showed that country's gross domestic product (GDP) is expected to grow at around 18.5 percent with an upward bias in the first quarter of the current financial year. Higher growth in the second quarter of 2022, or Q1 FY22 is mainly on account of a low base. Some optimism also came with Icra Ratings’ report stated that with the easing of COVID-19-related restrictions by the states, the roots of the economic recovery deepened in July 2021. The report said the unlocking in the country has manifested itself in improving performance across various high frequency industrial and service sector indicators, mobility and toll collections in July 2021. Key gauges witnessed some consolidation during mid of the week as traders turned wary with the Asian Development Bank (ADB) stating that the coronavirus pandemic may have pushed as many as 80 million people in developing Asia into extreme poverty last year, threatening to derail progress on global goals to tackle poverty and hunger by 2030. Some cautiousness also crept in with rating agency Moody’s stating that India's second Coronavirus (Covid-19) wave is increasing asset risks for banks in retail and the SME loan segment. Buying on final day of the week helped markets to settle near all-time highs as Reserve Bank extended the scheme for encouraging deployment of Point of Sale (PoS) infrastructure to street vendors covered under the PM SVANidhi programme in tier 1 and 2 centres.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 795.40 points or 1.44% to 56,124.72 during the week ended August 27, 2021. The BSE Midcap index gained 575.52 points or 2.54% to 23,255.39 and Smallcap index surged 526.04 points or 2.04% to 26,284.15. On the sectoral front, S&P BSE Oil & Gas was up by 813.50 points or 5.16% to 16,563.75, S&P BSE Power was up by 136.60 points or 5.09% to 2,821.94, S&P BSE Capital Goods was up by 922.06 points or 3.92% to 24,470.52, S&P BSE Metal was up by 472.30 points or 2.44% to 19,811.74 and S&P BSE Finance was up by 166.39 points or 2.09% to 8,145.91 were the top gainers on the BSE sectoral front, while on the sectoral front, S&P BSE Consumer Durables was down by 236.08 points or 0.65% to 36,111.24, S&P BSE Auto was down by 106.01 points or 0.48% to 22,071.80 and S&P BSE Consumer Discretionary Goods & Services was down by 0.19 points to 5,066.18 were the few losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 254.70 or 1.55% to 16,705.20. On the National Stock Exchange (NSE), Bank Nifty was up by 593.95 points or 1.70% to 35,627.80, Nifty IT was up by 958.45 points or 2.87% to 34,309.80, Nifty Mid Cap 100 increased 580.80 points or 2.14% to 27,705.55 and Nifty Next 50 was up by 1022.05 points or 2.60% to 40,403.90.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 42,797.24 crore and gross sales of Rs 46,811.98 crore, leading to a net outflow of Rs 4,014.74 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 12,934.97 crore against gross sales of Rs 2,141.10 crore, resulting in a net inflow of Rs 10,793.87 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 325.91 crore and gross sales of Rs 201.01 crore, leading to a net inflow of Rs 124.90 crore.

Industry and Economy

Finance Minister Nirmala Sitharaman has discussed with her BRICS counterparts the key areas of cooperation that would be crucial in supporting recovery of the grouping's economies and maintaining macroeconomic stability, while protecting against future uncertainties posed by the COVID-19 pandemic.  Sitharaman highlighted that BRICS (Brazil, Russia, India, China and South Africa) has been playing and will continue to play a crucial role in dealing with crises such as the pandemic.

Outlook for the coming week

In the passing week markets ended with massive gains supported by dip in daily Covid-19 cases, record coronavirus vaccination numbers and suitable global market and ample liquidity support.

The coming week marks the start of a fresh month and is expected to be a data heavy week starting with release of Infrastructure Output data for the month of July on August 31. In stock-specific activity, auto and cement companies would grab some attention, as these companies will declare their monthly sales figures in the up-coming week. Also, Gross Domestic Product (GDP) data for the second quarter of FY22 will be released on August 31.

Markets participants will also be looking forward Markit Manufacturing PMI, schedule to be release on September 01. The IHS Markit India Manufacturing PMI surged to 55.3 in July 2021 from 48.1 a month earlier and above market consensus of 50.5.

On September 03, Markit Services PMI will be released. The IHS Markit India Services PMI increased to 45.4 in July of 2021 from 41.2 in the previous month. The reading pointed to the third straight month of contraction in the sector, due to the COVID-19 pandemic and local restrictions.

On the global front from the US, traders will first be eyeing Dallas Fed Manufacturing Index on 30 August followed by Redbook, Chicago on 31 August, Markit Manufacturing PMI Final, ISM Manufacturing PMI on 01 September, Balance of Trade, Initial Jobless Claims, Factory Orders on 02 September and finally Unemployment Rate, Markit Services PMI Final, Baker Hughes Total Rig Count on 03 September.

Top Gainers
  • Hindalco Industries up by 8.49% was the top gainer on Nifty for the week – Hindalco Industries gained traction as its chairman, Kumar Mangalam Birla said it has earmarked $2.5-3 billion of growth Capital expenditures (CapEx) on a consolidated basis for the next five years. Meanwhile, Hindalco Industries has started FY'22 at a strong pace and continues to see strong demand across business verticals despite the impact of the second wave of COVID-19.
  • Bajaj Finserv up by 8.13% was another top gainer on Nifty for the week - Bajaj Finserv has received in-principle approval from the Securities and Exchange Board of India (SEBI) for setting up a mutual fund (MF). Accordingly, the company will be setting up an asset management company and the trustee company directly or indirectly, that is itself or through its subsidiary in accordance with applicable SEBI regulations and other applicable laws.
Top Losers
  • Maruti Suzuki down by 3.30% was the top loser of the week on Nifty - Maruti Suzuki India came under pressure as Competition Commission of India (CCI) imposed a penalty of Rs 200 crore on the company. CCI has passed an order on August 23, 2021 for the alleged contravention of Section 3 of the Competition Act, 2002 against the Company in relation to implementing discount control policy vis-a-vis its dealers. The Company will take necessary steps under the law after examining the order fully.
  • Bharti Airtel down by 3.02% was another top loser of the week on Nifty - Bharti Airtel edged lower amid profit-booking and after the telecom services major announced fundraising plans. Its board will meet on August 29 to approve fundraising via equity, equity-linked or debt instruments or a combination thereof. Meanwhile It added 38,12,530 customers in June 2021. Following this, the company’s total customer base has increased to 35.21 crore as on June 30, 2021.
Technical viewpoints

During the week, CNX Nifty touched the highest level of 16,722.05 on August 27 and lowest level of 16,395.70 on August 23. On the last trading day, the Nifty closed at 16,705.20 with weekly gain of 254.70 points or 1.55 percent. For the coming week, 16,493.25 followed by 16,281.30 are likely to be good support levels for the Nifty, while the index may face resistance at 16,819.60 and further at 16,934.00 levels.

US Market

The U.S. markets ended higher during the passing week on firm commodity prices and hopes that the FDA's approval of the Pfizer/BioNTech covid-19 vaccine could boost vaccination rates in the U.S. and spur economic growth contributed as well to market's uptick. Further, Sentiments got a boost amid continued optimism about growth and on hopes the Federal Reserve might not begin tapering its bond-buying program anytime soon. Investors awaited a highly-anticipated speech by Fed Chairman Jerome Powell during the virtual Jackson Hole Symposium on Friday for more clarity on the Fed's tapering timeline. On the economic data front, The Commerce Department released a report showing a rebound in U.S. new home sales in the month of July. The report showed new home sales increased by 1.0 percent to an annual rate of 708,000 in July after slumping by 2.6 percent to an upwardly revised rate of 701,000 in June.

Street had expected new home sales to jump by 3.6 percent to a rate of 700,000 from the 676,000 originally reported for the previous month. While new home sales in June were upwardly revised, the annual rate still represented the lowest level since April of last year. The increase in new home sales came as new home sales in the West skyrocketed by 14.4 percent to an annual rate of 215,000. The Commerce Department released a report showing a modest decrease in new orders for U.S. manufactured durable goods in the month of July. The report said durable goods orders edged down by 0.1 percent in July following a 0.8 percent increase in June. Street had expected orders to decrease by 0.3 percent. Excluding a steep drop in orders for transportation equipment, durable goods orders climbed by 0.7 percent in July after rising by 0.6 percent in June. Ex-transportation orders were expected to increase by 0.5 percent.

First-time claims for U.S. unemployment benefits edged slightly higher in the week ended August 21st, according to a report released by the Labor Department. The report said initial jobless claims inched up to 353,000, an increase of 4,000 from the previous week's revised level of 349,000. Street had expected jobless claims to tick up to 350,000 from the 348,000 originally reported for the previous week. Meanwhile, the Labor Department said the less volatile four-week moving average fell to 366,500, a decrease of 11,500 from the previous week's revised average of 378,000. With the decrease, the four-week moving average dropped to its lowest level since hitting 225,500 in the week ended March 14, 2020. The report also said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, edged down by 3,000 to 2.862 million in the week ended August 14th.

European Market

European markets ended passing week on a lower note. The start of the week was in green terrain, as the German economy continued to grow strongly in August despite further constraints on manufacturing production. The flash survey results from IHS Markit showed that the composite output index dropped to 60.6 from 62.4 in July. The score was forecast to fall to 62.2. By sector, services activity grew at a sharp rate that was only just shy of July's peak. On the other hand, manufacturing showed a more notable loss of momentum. Besides, Eurozone private sector logged one of the strongest growth seen over the past two decades in August as the further reopening of the economy underpinned expansion in the services activity. The flash survey results from IHS Markit showed that the flash composite output index declined to 59.5 from a 15-year high of 60.2 in the previous month. The reading was forecast to fall marginally to 59.7. 
Markets cut gains towards the end of the trading session, after the UK private sector growth eased sharply in August largely due to staff shortages and supply chain issues. The flash survey results from IHS Markit and the Chartered Institute of Procurement & Supply showed that the flash composite output index decreased to a six-month low of 55.3 in August from 59.2 in July. The score was forecast to drop to 58.4. Further, German business confidence weakened for the second straight month in August mainly due to significantly less optimism in companies' expectations. The survey results from ifo Institute showed that the business climate index fell to 99.4 in August from 100.7 in July. The score was expected to ease moderately to 100.4. Expectations among companies deteriorated to a six-month low in August. By contrast, companies assessed their current situation as somewhat better than in the previous month.

On the inflation front, Spain's producer prices continued to increase at a sharper pace in July. The statistical office INE said that producer prices grew sharply by 15.3 percent year-on-year in July. However, this was slightly slower than the 15.4 percent increase posted in June. Excluding energy, producer prices were up 7.9 percent, faster than the 7.5 percent increase seen in June. Besides, Sweden's producer prices increased to the highest level in thirty years in July. The figures from Statistics Sweden showed that the producer price index grew 13.5 percent year-on-year in July, following a 9.7 percent rise in June. Prices rose for the seventh month in a row. Import prices increased 8.9 percent yearly in July and rose 1.9 percent from a month ago. Export prices grew 13.5 percent annually in July and increased 2.7 percent from the previous month.

Asian market

Asian equity benchmarks, barring Straits Times Index, ended in green terrain during the passing week, as traders remain optimistic about the global economic recovery ahead of the Fed Chair Jerome Powell's remarks at the Fed's annual Jackson Hole gathering for clues on the timing of a tapering of monetary stimulus. However, traders continue to be anxious amid the rapid spread of the delta variant of the coronavirus in the region and in several countries, particularly in Japan and the U.S., which continues to stifle economic activity.

Japanese Nikkei edged higher by over two percent, even as the nation struggles to contain the domestic coronavirus infection rates, with more prefectures and cities under the state of emergency and experts calling for expanding it to the whole country. Meanwhile, the final reading of the index of leading economic indicators published by the Cabinet Office of Japan, came in at 104.1 in June, as compared to 102.6 in the previous month.

Chinese Shanghai rose by over two and half percent, as liquidity infusion by PBoC to counter challenges to growth and reports of meetings proposed between Wall Street and Chinese Officials lifted investor sentiment. Some support also came after reports emerged that the U.S. Securities and Exchange Commission has begun issuing new disclosure requirements to Chinese firms looking to list in New York. Seoul stocks too ended higher even as the Bank of Korea delivered its first pandemic-era rate hike to control inflation and household debt. Traders also paid no heed towards latest survey from the Bank of Korea's sentiment index showing that Consumer confidence in South Korea dipped slightly in August, which came in with a score of 102.5 - down from 103.2 in July.