Markets extend winning streak for third straight week
Indian equity benchmarks managed to extend winning streak for third straight week with frontline gauges settling above 58,300 (Sensex) and 17,350 (Nifty) levels. Markets made an optimistic start to the holiday truncated week as traders took encouragement with a private report that recovering from the economic slump caused by the pandemic, hiring trends saw an improvement in August. The previous month saw a 26% on-year increase in hiring activity to 2.78 lakh. Some support also came as the RBI data showed that the country's foreign exchange reserves soared by $16.663 billion to touch a lifetime high of $633.558 billion in the week ended August 27, mainly due to an increase in Special Drawing Rights (SDR) holdings. Sentiments also remained positive with Income Tax Department of India’s statement that the Central Board of Direct Taxes (CBDT) has issued refunds of over Rs 67,401 crore to more than 23.99 lakh taxpayers between April 1 and August 16. It further said that the income tax refunds of Rs 16,373 crore have been issued in 22,61,918 cases and corporate tax refunds of Rs 51,029 crore have been issued in 1,37,327 cases. However, traders book some profit off the table as some concern occurred with a private report projecting a real gross value added (GVA) growth of 7 to 8 per cent year-on-year in the second quarter of current fiscal year versus 20.1 per cent growth in Q1 FY22. It said estimates suggest some moderation in economic activity index (EAI)-GVA growth in July, largely on account of weaker fiscal spending. Also, traders got anxious with Fitch Ratings’ statement that India continues to lag way behind in COVID vaccination, and the negative outlook on sovereign rating signifies the rising debt-to-GDP ratio. In April 2021, Fitch affirmed India's sovereign rating at 'BBB-' with a negative outlook. The outlook was changed to 'negative' from 'stable' in June last year on grounds that the pandemic had significantly weakened the country's growth outlook and exposed the challenges associated with a high public-debt burden. Buying on final day of trade made sure that key gauges will end in green as S&P Global Ratings said India is expected to post strong economic growth in the coming quarters, even as inflation, led by food prices, is likely to remain elevated. It said the economy is expected to clock 9.5 per cent growth in the current fiscal year, followed by 7 per cent expansion in the next year.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 175.12 points or 0.30% to 58,305.07 during the week ended September 09, 2021. The BSE Midcap index gained 323.10 points or 1.33% to 24,705.29 and Smallcap index surged 339.79 points or 1.24% to 27,645.10. On the sectoral front, S&P BSE Consumer Durables was up by 1,361.56 points or 3.50% to 40,243.24, S&P BSE Power was up by 45.20 points or 1.51% to 3,043.56, S&P BSE Consumer Discretionary Goods & Services was up by 70.96 points or 1.33% to 5,403.66, S&P BSE Fast Moving Consumer Goods was up by 135.59 points or 0.92% to 14,942.18 and S&P BSE Capital Goods was up by 207.13 points or 0.81% to 25,767.11 were the top gainers on the BSE sectoral front, while S&P BSE Healthcare was down by 239.75 points or 0.90% to 26,515.03, S&P BSE Oil & Gas was down by 124.79 points or 0.71% to 17,427.22, S&P BSE Information Technology was down by 90.24 points or 0.26% to 34,319.67, S&P BSE BANKEX was down by 67.69 points or 0.16% to 41,814.36 and S&P BSE Realty was down by 2.35 points or 0.07% to 3,322.18 were the top losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 45.65 or 0.26% to 17,369.25. On the National Stock Exchange (NSE), Nifty Mid Cap 100 increased 281.05 points or 0.97% to 29,341.10 and Nifty Next 50 gained 215.40 points or 0.51% to 42,774.50. On the other side, Bank Nifty was down by 77.95 points or 0.21% to 36,683.20 and Nifty IT was down by 88.85 points or 0.25% to 34,802.30.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 28,542.21 crore and gross sales of Rs 28,944.41 crore, leading to a net outflow of Rs 402.20 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 3,950.84 crore against gross sales of Rs 4,116.07 crore, resulting in a net outflow of Rs 165.23 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 125.64 crore and gross sales of Rs 129.80 crore, leading to a net outflow of Rs 4.16 crore.

Industry and Economy

S&P Global Ratings in its latest report has said that India is expected to post strong economic growth in the coming quarters, even as inflation, led by food prices, is likely to remain elevated. It noted that the economy is expected to clock 9.5 percent growth in the current fiscal year (FY22), followed by 7 percent expansion in the next year, and added that high nominal GDP growth would be important for ensuring fiscal consolidation going forward.

Outlook for the coming week

In the passing week, markets ended on positive terrain amid gains in global markets on hopes of recovery from the damage caused by the coronavirus pandemic.

On the economy front, market-participants would be eyeing the data of Consumer Price Index (CPI) which is scheduled to be release on September 13. CPI rate eased to 5.59 percent year-on-year in July 2021, from 6.26 percent in the previous month. It was the first time since April that inflation remained within the central bank's 2-6 percent target range, as the food cost rate slowed sharply to 3.96 percent from 5.15 percent in June.

Traders will also be looking forward toward the Wholesale Price Index (WPI) data for the month of August, scheduled to be release on September 14. The wholesale price inflation rate in India eased to 11.16 percent year-on-year in July 2021, from 12.07 percent in the previous month.

On the global front from the US, traders will first be eyeing Consumer Inflation Expectations on September 13 followed by Inflation Rate, Redbook on September 14, Industrial Production, Import & Export Prices on September 15, Retail Sales on September 16 and finally Michigan Consumer Expectations and Baker Hughes Oil Rig Count on September 17.

Top Gainers
  • Shree Cement up by 7.70% was the top gainer on Nifty for the week - Shree Cement continued its bull run for yet another week on account of bargain hunting after recent fall. Some of the cement industry stocks were on buyers’ radar. The buying interest at these counters can be attributed to expected rise in cement demand as per market participants, post easing of localised curbs and monsoon. In Q1FY22, localised curbs in majority of the states impacted sales volume that were down 19.6% Q-o-Q.
  • Grasim Industries up by 7.53% was another top gainer on Nifty for the week - Grasim Industries informed that the Scheme of Arrangement between the company (Transferor Company) and Indorama India (Transferee Company) and their respective shareholders and creditors has been sanctioned by the National Company Law Tribunal, Indore Bench at Ahmedabad (NCLT Indore) in an open court hearing on September 2, 2021. Grasim Industries has appointed Hari Krishna Agarwal as its Managing Director with effect from December 1, 2021.
Top Losers
  • SBI Life Insurance down by 3.88% was the top loser of the week on Nifty - SBI Life Insurance came under pressure amid private reports that Canada Pension Plan Investment Board (CPPIB) is set to sell nearly 2.3 crore shares of the insurance company equalling 2.3% equity, for around Rs 2,800 crore in a block deal. CPPIB reportedly mandated BNP Paribas to execute the transaction through block deals. CPPIB held 2.85 crore shares (equivalent to 2.86% stake) of the company as on 30 June 2021.
  • Divi's Lab down by 2.84% was another top loser of the week on Nifty - Divi's Lab stocks witnessed selling pressure on account of profit booking amid recent surge. In the recently held Divi AGM is reiterated its focus on driving sustainable growth while maintaining its strong margins. Divi’s management in the AGM reiterated its commitment to continue to work on these fronts - new tech, automation, revisiting processes, improving yields, green chemistry, lower waste and atom efficiency helped drive healthy margin expansion in FY21.
Technical viewpoints

During the week, CNX Nifty touched the highest level of 17,436.50 on September 7 and lowest level of 17,254.20 on September 8. On the last trading day, the Nifty closed at 17,369.25 with weekly gain of 45.65 points or 0.26 percent. For the coming week, 17,270.13 followed by 17,171.02 are likely to be good support levels for the Nifty, while the index may face resistance at 17,452.43 and further at 17,535.62 levels.

US Market

The U.S. markets ended lower during the passing week as investors reassess the economic growth outlook following a smooth ride in the market so far this year. Economic growth downshifted slightly to a moderate pace in early July through August, according to the Federal Reserve's Beige Book released. The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said the deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most districts. The deceleration in those sectors reflected safety concerns due to the rise of the Delta variant of the coronavirus, and, in a few cases, international travel restrictions. Meanwhile, the Fed said other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand.

The Fed said ‘in particular, weakness in auto sales was widely ascribed to low inventories amidst the ongoing microchip shortage, and restrained home sales activity was attributed to low supply.’ The Beige Book also said inflation was reported to be steady at an elevated pace, as half of the districts characterized the pace of price increases as strong, while half described it as moderate. Looking ahead, the Fed said businesses in most districts remained optimistic about near-term prospects, though there continued to be widespread concern about ongoing supply disruptions and resource shortages. Besides, weakness also prevailed in the markets on lingering concerns about the delta variant’s impact on the economic reopening. Goldman Sachs downgraded its economic outlook over the weekend, citing the delta variant and fading fiscal stimulus. Goldman now sees 5.7% annual growth in 2021, below the 6.2% consensus.

The firm cut its fourth-quarter GDP outlook to 5.5%, down from 6.5%. Goldman stated the hurdle for strong consumption growth going forward appears much higher: the delta variant is already weighing on Q3 growth, and fading fiscal stimulus and a slower service sector recovery will both be headwinds in the medium term. Meanwhile, the Labor Department released the Job Openings and Labor Turnover Survey, which showed job openings rose to a record 10.9 million in July. Job openings outnumbered the unemployed by more than 2 million in July as companies struggled to fill a record number of vacancies.

European Market

European markets ended passing week on a lower note. The start of the week was in green terrain, as Germany's factory orders grew unexpectedly in July driven by foreign demand. The data from Destatis revealed that factory orders grew 3.4 percent on a monthly basis, confounding expectations for a decline of 1 percent. However, the pace of growth was weaker than June's 4.6 percent. Besides, Germany's industrial production recovered in July. The data from Destatis showed that industrial production grew 1 percent month-on-month in July, offsetting a revised 1 percent fall in June. Compared with February 2020, the month before restrictions were imposed due to the corona pandemic, production in this July was 5.5 percent lower in seasonally and calendar adjusted terms.

But, markets failed to hold gains toward end of the week, after France's trade deficit widened in July on falling exports. The data published by customs office revealed that the trade deficit increased to EUR 6.96 billion from EUR 6.05 billion in June. In the same period last year, the shortfall totaled EUR 6.79 billion. Data showed that exports dropped 2 percent on a monthly basis in July and imports gained only 0.1 percent. Further, Sweden's industrial production growth eased in July. The data from Statistics Sweden showed that industrial production grew a calendar-adjusted 13.3 percent year-on-year in July, after a 15.5 percent rise in June. The overall private sector output rose 10.5 percent yearly in July, after a 10.6 percent increase in the previous month.

On the inflation front, Hungary's consumer price inflation increased in August. The data from the Hungarian Central Statistical Office showed that the consumer price index rose 4.9 percent year-on-year in August, after a 4.6 percent increase in July. Besides, Ireland's consumer price inflation rose in August. The data from the Central Statistics Office showed that the consumer price index increased 2.8 percent year-on-year in August, after a 2.2 percent rise in July. Prices for housing, water, electricity, gas and other fuels grew 7.3 percent yearly in August and those of transport increased 10.2 percent. Prices for restaurants and hotels, and alcoholic beverages and tobacco gained by 3.4 percent and 2.4 percent, respectively.

Asian market

Asian equity benchmarks ended in mostly in red terrain during the passing week, following the broadly negative cues from Wall Street, amid concerns that the rapid spread of the delta variant of the coronavirus may slow the global economic recovery. The U.S. Federal Reserve's Beige Book said U.S. economic growth downshifted slightly to a moderate pace in early July through August.

Japanese Nikkei edged higher by over three percent, on hopes the Liberal Democratic Party will compile additional economic stimulus to recover from the continued impact of the virus. Sentiments remained up-beat after the Cabinet Office said Japan's gross domestic product was up 1.9 percent on year in the second quarter of 2021. That exceeded expectations for an increase of 1.6 percent following the 3.7 percent contraction in the previous three months. On a seasonally adjusted quarterly basis, GDP was up 0.5 percent - again exceeding expectations for 0.4 percent after sinking 0.9 percent in the three months prior. Capital expenditure rose 2.3 percent on quarter, beating forecasts for 2.0 percent after slipping 1.3 percent in the first quarter. Besides, the Ministry of Finance said Japan had a current account surplus of 1.910 trillion yen in July, up 24.5 percent on year. That was shy of expectations for a surplus of 2.30 trillion following the 905.1 billion yen surplus in June.

Chinese Shanghai rose by over three percent after government data showed Chinese exports advanced 25.6 percent year-on-year in August, bigger than the economists' forecast of 17.1 percent and July's 19.3 percent increase. Imports increased 33.1 percent annually after rising 28.1 percent in July. As a result, the trade balance showed a surplus of $58.34 billion, which was above the expected level of $51.05 billion. Some support also came as data showed consumer prices in the country rose 0.8 percent year-on-year in August - shy of expectations for an increase of 1.0 percent, which would have been unchanged from the previous month. Another report showed that producer prices jumped an annual 9.5 percent, exceeding expectations for an increase of 9.0 percent - which would have been unchanged from the month earlier.