Bulls on Dalal Street in party mode; Senex surpasses 60k mark
Bulls completely outclassed bears on Dalal Street during the passing week with frontline gauges settling above 60,000 (Sensex) and 17,850 (Nifty) for the first time ever. Markets started the week on pessimistic note as traders got anxious with report that the country’s foreign exchange reserves declined by $1.34 billion to $641.113 billion in the week ended September 10, 2021, according to RBI data. During the reporting week ended September 10, the fall in the reserves was on account of a decline in Foreign Currency Assets (FCAs), a major component of the overall reserves. Some cautiousness also prevailed in the markets with President Ram Nath Kovind’ statement the Covid pandemic hit the country's economy hard and the government has taken various fiscal measures to alleviate distress and help the poor. Key bourses made splendid recovery on the very next day as market participants found support with private report stating that investors have been pouring money into India’s stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years. Some support also came with Apex exporters' body Federation of Indian Export Organisations (FIEO) said it will focus on new products and markets for diversification with a view to boosting the country's outbound shipments. Markets witnessed some consolidation after Asian Development Bank (ADB) has revised down India's GDP growth forecast to 10 percent for FY22 from 11 percent predicted earlier, citing the adverse impact of the second wave of the pandemic. Adding to the pessimism, India recorded a spike of 27,333 new Covid-19 cases in the past 24 hours. The country also witnessed 385 deaths, taking the death toll to 445,801. But, rally on final two days of the week helped markets to end above their respective crucial levels as sentiments got a boost with the commerce and industry ministry’s statement that foreign direct investment equity inflow into the country more than doubled to $20.42 billion during the April-July period of the current fiscal. Traders also took a note of Union Minister Nitin Gadkari’s statement that India is committed to an eminently achievable clean energy-based economy, and added that the country will soon have a policy for flex-fuel engines.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 1032.58 points or 1.75% to 60,048.47 during the week ended September 24, 2021. The BSE Midcap index gained 148.36 points or 0.59% to 25,194.84 and Smallcap index surged 16.55 points or 0.06% to 28,023.34. On the sectoral front, S&P BSE Realty was up by 703.16 points or 21.31% to 4,002.46, S&P BSE TECK was up by 618.26 points or 4.00% to 16,080.23, S&P BSE Information Technology was up by 1,228.99 points or 3.53% to 36,079.18, S&P BSE Consumer Discretionary Goods & Services was up by 148.64 points or 2.70% to 5,659.93 and S&P BSE Capital Goods was up by 314.94 points or 1.21% to 26,356.30 were the top gainers on the BSE sectoral front, while S&P BSE Metal was down by 713.72 points or 3.49% to 19,764.00, S&P BSE Power was down by 81.46 points or 2.63% to 3,012.91, S&P BSE PSU was down by 131.28 points or 1.61% to 8,022.42, S&P BSE Healthcare was down by 345.31 points or 1.30% to 26,207.36 and S&P BSE Consumer Durables was down by 129.44 points or 0.32% to 40,776.48 were the top losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 268.05 or 1.52% to 17,853.20. On the National Stock Exchange (NSE), Bank Nifty was up by 18.35 points or 0.05% to 37,830.30, Nifty IT was up by 1456.75 points or 4.09% to 37,103.25 and Nifty Mid Cap 100 was up by 244.20 points or 0.82% to 30,143.60. On the other side, Nifty Next 50 lost 85.60 points or 0.20% to 43,071.65.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 66,158.07 crore and gross sales of Rs 63,909.10 crore, leading to a net inflow of Rs 2,248.97 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 6,314.70 crore against gross sales of Rs 3,587.57 crore, resulting in a net inflow of Rs 2,727.13 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 238.96 crore and gross sales of Rs 448.22 crore, leading to a net outflow of Rs 209.26 crore.

Industry and Economy

ICRA Ratings in its latest report has said that with the benefits of unlocking measures tapering out, the performance of the high-frequency indicators have become ‘uneven’ since August 2021 especially when compared to the pre-COVID levels. It appears that the temporary boost, provided by the easing of state-wise restrictions after the second wave of COVID-19 ebbed, petered out. However, it said the upcoming festive season will see a rise in confidence-boosting demand, and added that it is ‘cautiously optimistic’ about it.

Outlook for the coming week

In the passing week, Indian equity markets have been on a dream run as benchmark indices hit fresh record highs amid strong global cues after the US Federal Reserve hinted that it may begin scaling down asset purchases in November and complete the process by mid-2022.

The coming week is expected to be a volatile one for local equity markets on account of F&O expiry, which is scheduled to take place on September 30, 2021. Meanwhile, trend in investment by foreign institutional investors and the movement of rupee against the dollar will be also be closely watched by the market-participants.

On economic front, investors will be eyeing the data of core sector growth, schedule to be release on 30 September. On the same, Government Budget Value and External Debt are also schedule to be released. External Debt in India increased to $570000 million in the first quarter of 2021 from $563487 million in the fourth quarter of 2020.

Market-men will also be waiting for Markit Manufacturing PMI scheduled to be release on October 01. The IHS Markit India Manufacturing PMI declined to 52.3 in August 2021 from 55.3 a month earlier and below market consensus of 55, indicating a softer rate of growth that was subdued in the context of historical survey data.

On the global front, investors will be eyeing macro-economic reports from world’s largest economy, United States, starting with Dallas Fed Manufacturing Index on September 27 followed by Goods Trade Balance, Redbook on September 28, GDP Price Index, Initial Jobless Claims, Chicago PMI on September 29 and finally Core PCE Price Index, Baker Hughes Oil Rig Count on October 01.

Top Gainers
  • Bajaj Finserv up by 10.72% was the top gainer on Nifty for the week - Bajaj Finserv group’s lending company -- Bajaj Finance has invested an amount of Rs 195.54 crore in Bajaj Finserv Direct (BFSD). Further, the balance investment of around Rs 89 crore is expected to be completed in one or more tranches by the end of the current financial year. Meanwhile, Bajaj Finserv is offering up to 33 percent discount on smartwatches across brands. Customers planning to purchase a top-tier smartwatch with all the latest features can now grab their favourite gadgets without worrying about the price tags.
  • HCL Technologies up by 7.53% was another top gainer on Nifty for the week - HCL Technologies gained on entering into a five-year, digital transformation deal with MKS Instruments Inc., a global provider of instruments, systems, subsystems and solutions for advanced manufacturing processes, to improve performance, productivity and speed to market. Meanwhile, HCL Technologies has selected RISE with SAP offering to further modernize its enterprise digital landscape. This expanded partnership will see HCL taking the role of a consumer and global strategic service partner for RISE with SAP.
Top Losers
  • Tata Steel down by 11.46% was the top loser of the week on Nifty - Some of the metal stocks came under pressure after iron ore futures in China hit a nine-month low as China, the world's top steelmaker, indicated it could expand strict air pollution controls to more cities. Also, steel output in the world's biggest steel producer continued to slide, compounding concerns around demand for the raw material. China's monthly crude steel production slipped for the third straight month to 83.24 million tonnes in August.
  • Bharat Petroleum Corporation (BPCL) down by 5.52% was another top loser of the week on Nifty - Oil marketing companies (OMCs) stocks came under pressure as crude oil futures remained mostly higher during the week amid prospects for a surge in energy demand and tighter supplies due to the slow recovery in the restoration of output in the Gulf of Mexico following the disruptions caused by recent hurricanes. Further, OPEC and allies, collectively known as OPEC+, will meet on October 4.
Technical viewpoints

During the week, CNX Nifty touched the highest level of 17,947.65 on September 24 and lowest level of 17,326.10 on September 21. On the last trading day, the Nifty closed at 17,853.20 with weekly gain of 268.05 points or 1.52 percent. For the coming week, 17,470.32 followed by 17,087.43 are likely to be good support levels for the Nifty, while the index may face resistance at 18,091.87 and further at 18,330.53 levels.

US Market

The U.S. markets ended higher during the passing week even as the Fed hinted tapering of its asset purchases could begin in the near future amid continued progress towards it goals of maximum employment and price stability. The Fed said in the announcement of its latest monetary policy decision that a moderation in the pace of asset purchases may soon be warranted if progress towards its dual goals continues broadly as expected. The central bank currently plans to continue its bond purchases at a rate of at least $120 billion per month but is expected to begin scaling back later this year. Fed Chair Jerome Powell indicated the central bank could begin tapering its asset purchases as soon as its next meeting in early November. Powell said ‘While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate.’

Powell said substantial further progress has been achieved with regard to the Fed's inflation goal, while the test for substantial further progress on employment is all but met. The comments about tapering asset purchases came as the Fed announced its widely expected decision to keep the target range for the federal funds rate at 0 to 0.25 percent. The Fed also reiterated that it expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with maximum employment and inflation is on track to moderately exceed 2 percent for some time. However, the latest projections from the Fed showed a majority of officials now expect interest rates to be raised next year compared to previous forecasts calling for the first rate hike in 2023. Fed officials also downwardly revised forecasts for U.S. GDP growth in 2021 to 5.9 percent from 7.0 percent, while forecasts for GDP growth in 2022 were upwardly revised to 3.8 percent from 3.3 percent.

Besides, some support came in as the Conference Board released a report showing a bigger than expected increase by its index of leading U.S. economic indicators in the month of August. The report said the leading economic index advanced by 0.9 percent in August after climbing by 0.8 percent in July. Street had expected the index to rise by 0.6 percent. Meanwhile, traders largely shrugged off a report from the Labor Department showing first-time claims for U.S. unemployment benefits unexpectedly increased for the second straight week in the week ended September 18th. The Labor Department said initial jobless claims rose to 351,000, an increase of 16,000 from the previous week's revised level of 335,000. With the uptick, jobless claims climbed further off the pandemic-era low of 312,000 set in the week ended September 4th.

European Market

European markets ended passing week on a higher note. The start of the week was in red terrain, as Switzerland's exports decreased in August after rising in the previous month. The data from the Federal Customs Administration showed that exports declined by a real 0.4 percent month-on-month in August, after a 1.1 percent growth in July. Imports grew 0.2 percent monthly in August, following a 1.0 percent increase in the previous month. Exports of jewelry and watchmaking decreased in August and imports of energy products, and textiles, clothing and footwear rose. Besides, Italy's industrial turnover increased at a softer pace in July. The data from the statistical office Istat showed that industrial turnover grew 0.9 percent month-on-month in July, after 3.1 percent increase in June. Domestic turnover rose 1.7 percent in July, after a 2.2 percent gain in June. Foreign turnover declined 0.8 percent, after a 4.9 percent growth.

However, markets added gains towards end of the week, after the German economy is projected to grow faster than previously estimated next year but trimmed its outlook for 2021 citing the impact of supply-side bottleneck on the manufacturing sector. In its Autumn forecast, the think tank lifted its growth outlook for 2022 to 5.1 percent from 4.3 percent. Further, Euro area consumer confidence improved in September for the first time in three months. The preliminary data from the European Commission showed that the DG ECFIN flash consumer confidence index for Eurozone rose to -4.0 from -5.3 in August. The consumer confidence index for the EU rose 1.1 points to -5.2 in September. That was also the first strengthening in three months.

On the inflation front, Germany's producer prices increased in August at the fastest pace since 1974. The data from Destatis revealed that producer price inflation rose to 12 percent in August from 10.4 percent in July. This was the biggest growth since December 1974, when prices were up 12.4 percent amid the first oil crisis. On a monthly basis, producer prices advanced 1.5 percent, but slower than the 1.9 percent increase seen in July. Besides, Finland's producer price inflation accelerated in August. The data from Statistics Finland showed that producer prices increased 15.5 percent year-on-year in August, after a 14.8 percent rise in July. The increase in the producer prices for manufactured products was particularly attributable to risen prices of oil products, basic metals and timber from August last year.

Asian market

Asian equity benchmarks ended in red terrain during the passing week, as no tangible progress was noted on the Evergrande scenario and no clarifications were forthcoming form the company on the payment of coupon on the debt-ridden company's dollar denominated bonds. Traders remain concerned about the impact of the rapid spread of the delta variant of coronavirus in the region and in several countries, particularly in the U.S., which continues to stifle economic activity.

Japanese Nikkei edged lower by over half percent, after data released by Japan's Ministry of Internal Affairs and Communications showed that in August, consumer prices declined by 0.4 percent on a year-on-year basis versus 0.3 percent decline in the previous period amidst slack demand due to the ongoing pandemic. Some concern also came with report that Japan’s factory activity grew at the slowest pace in eight months in September as output and orders contracted, while that of the services sector remained in its downturn, underscoring the protracted impact of the coronavirus pandemic. Meanwhile, Bank of Japan maintained the status quo on short-term interest rates and issued a bleak commentary on factory output and exports.

Seoul stocks fell around half percent amid reports showing that Producer Prices in South Korea rose 0.4 percent on a month-on-month basis and 7.3 percent on a year-on-year basis. Besides, Chinese Shanghai too ended marginally lower as Evergrande jitters dampened any aggressiveness in stocks. However, losses remain capped after China’s central bank PBoC pumped in 110 billion yuan ($17 billion) of cash with seven- and 14-day reverse repurchase agreements in a show of support for the country’s financial markets and the economy.