Final day rally helps markets to end week in green terrain

Buying on final day of the week helped markets to end the passing week in green terrain with frontline gauges recapturing their crucial 18,100 (Nifty) and 60,600 (Sensex) levels. Markets made an optimistic start as traders took support with industry chamber PHDCCI stating that India's economic recovery gained momentum in recent months on the back of rapid progress in vaccinations, festive season and consequent improvement in consumer and industry sentiments. The PHDCCI Economy GPS Index for October 2021 increased to 131 as compared with 113.1 in the previous month. Additional support also came after RBI in its latest report showed that India's forex reserves have increased by $1.919 billion to $642.019 billion for the week ended October 29 on a healthy increase in the currency assets and value of gold. On the very next day, traders turned pessimistic and markets took U-turn as traders got anxious with Rating agency Crisil’s latest report stated that higher diesel prices will shave off the overall profitability of transporters despite an improvement in freight rates since last month following the withdrawal of the monsoons, consumption recovery and higher infrastructure activity. Some concern also came with report that India, speaking on behalf of the BASIC group, warned that lack of a serious approach to climate finance will jeopardise the enhanced mitigation and adaptation ambition as well as net zero pledges of parties. Markets extended losses on following two trading sessions as sentiments remain dampened with Revenue Secretary Tarun Bajaj’s statement that excise duty cut on diesel and petrol prices will burden the government's coffers, but it has no plans to increase the borrowing immediately. Sentiments also weighed down on report that India’s widening current account deficit (CAD), driven by the massive spike in commodity prices led by crude oil, is set to put pressure on the fragile recovery. However, considerable buying on final day of the week took markets in green terrain for the week as traders opted to buy risky assets after RBI’s Governor Shaktikanta Das said that RBI Retail Direct Scheme and Reserve Bank Integrated Ombudsman Scheme will provide further impetus to India's journey towards a more inclusive and responsive financial system.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 619.07 points or 1.03% to 60,686.69 during the week ended November 12, 2021. The BSE Midcap index gained 376.50 points or 1.45% to 26,368.78 and Smallcap index surged 331.6 points or 1.15% to 29,232.53. On the sectoral front, S&P BSE Oil & Gas was up by 698.14 points or 3.80% to 19,088.96, S&P BSE Capital Goods was up by 1,002.27 points or 3.57% to 29,105.32, S&P BSE Power was up by 110.57 points or 3.21% to 3,553.47, S&P BSE TECK was up by 429.88 points or 2.80% to 15,799.04 and S&P BSE Information Technology was up by 931.85 points or 2.71% to 35,351.35 were the top gainers on the BSE sectoral front, while S&P BSE BANKEX was down by 911.05 points or 2.02% to 44,235.06, S&P BSE Realty was down by 54.44 points or 1.25% to 4,310.71, S&P BSE Metal was down by 207.17 points or 1.01% to 20,259.94, S&P BSE Healthcare was down by 158.27 points or 0.63% to 25,158.06 and S&P BSE PSU was down by 42.73 points or 0.48% to 8,859.02 were the top losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 185.95 or 1.04% to 18,102.75. On the National Stock Exchange (NSE), Nifty Mid Cap 100 increased 483.20 points or 1.54% to 31,925.85, Nifty Next 50 gained 1143.20 points or 2.65% to 44,242.55 and Nifty IT was up by 998.00 points or 2.82% to 36,332.25. On the other side, Bank Nifty was down by 840.35 points or 2.12% to 38,733.35.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 50,604.15 crore and gross sales of Rs 50,715.04 crore, leading to a net outflow of Rs 110.89 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 2,240.27 crore against gross sales of Rs 2,643.49 crore, resulting in a net outflow of Rs 403.22 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 127.36 crore and gross sales of Rs 93.82 crore, leading to a net inflow of Rs 33.54 crore.

Industry and Economy

Expressing optimism over India’s economic growth, Niti Aayog Vice-Chairman Rajiv Kumar has said that the country’s economy is likely to grow by more than 10 per cent in the current fiscal (FY22) supported by a record kharif crop and bright rabi prospects. He added that this will boost rural demand and spur the revival in the manufacturing sector with improving capacity utilization. Though, he cautioned that inflation is emerging as a key risk to sustainable global economic recovery with supply chain constraints and rising energy prices.

Outlook for the coming week

In the passing week, Indian equity markets garnered over a percent gains on the back of buying on last day of the week amid firm global cues.

On November 15, traders will be looking forward toward the Wholesale Price Index (WPI) data for the month of October. The annual wholesale price inflation rate in India fell to a six-month low of 10.66 percent in September of 2021 from 11.39 percent in the previous month.

Balance of Trade Final, Import & Export data will going to release on November 15. India’s trade deficit widened markedly to $19.9 billion in October of 2021, from $9.2 billion in the same period last year.

In the coming week, PSU banks will be in buzz as Finance Minister Nirmala Sitharaman is scheduled to meet heads of public sector banks (PSBs) next week to review performance of the lenders and progress made by them to support the economy battered by the COVID-19 pandemic.

On the global front, investors will be eyeing macro-economic reports from world’s largest economy, United States, starting with Retail Sales, Redbook on November 16 followed by Initial Jobless Claims on November 18 and finally Baker Hughes Oil Rig Count on November 19.

Top Gainers

  • Mahindra & Mahindra (M&M) up by 7.44% was the top gainer on Nifty for the week - M&M gained traction on planning to launch 16 EVs by 2027 across SUV and light commercial vehicle categories to strengthen its leadership position in India's electric mobility segment. The company, which has set a cumulative revenue growth target of 15-20 per cent by 2025, is keeping its options open to either bring in private equity investors or carve out its EV business into a separate entity to drive its growth. Additionally, the company has secured 5-star Global NCAP rating for XUV700.
  • Bharti Airtel up by 6.05% was another top gainer on Nifty for the week - Bharti Airtel and Oracle have extended their partnership to support the growth of India’s digital economy by bringing a range of industry leading cloud solutions to more than 1 million enterprise customers. As part of the collaboration, Airtel Business and Oracle will also jointly market Oracle Cloud solutions to enterprise customers in the private and public sectors. Recently, the company has reported consolidated net profit at Rs 1998.10 crore for Q2FY22 as compared to net loss of Rs 33.90 crore for Q2FY21.

Top Losers

  • Indusind Bank down by 12.79% was the top loser of the week on Nifty - Indusind Bank came under pressure amid private report that nearly 84,000 loans were disbursed by its microfinance arm without the consent of customers due to a technical glitch in May 2021. As per the report, out of the above, only 26,073 clients were active with the loan outstanding at Rs 34 crore, which is 0.12% of the September-end portfolio. The loans were disbursed through IndusInd Bank’s microfinance arm Bharat Financial Inclusion (BFIL).
  • Divi's Lab down by 6.99% was another top loser of the week on Nifty - Divi's Lab witnessed selling pressure despite reporting 16.72% rise in its consolidated net profit at Rs 606.46 crore for Q2FY22 as compared to Rs 519.59 crore for Q2FY21. Total income of the company increased by 13.82% at Rs 2,006.62 crore for Q2FY22 as compared Rs 1,762.94 crore for Q2FY21. On standalone basis, the company has reported a rise of 18.14% in its net profit at Rs 606.39 crore for Q2FY22 as compared to Rs 513.30 crore for Q2FY21.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 18,123.00 on November 12 and lowest level of 17,798.20 on November 11. On the last trading day, the Nifty closed at 18,102.75 with weekly gain of 185.95 points or 1.04 percent. For the coming week, 17,892.97 followed by 17,683.18 are likely to be good support levels for the Nifty, while the index may face resistance at 18,217.77 and further at 18,332.78 levels.

US Market

The U.S. markets ended lower during the passing week as the Labor Department released a highly anticipated report showing U.S. consumer prices increased by more than expected in the month of October, lifting the annual rate of price growth to its highest level in over thirty years. The report said the consumer price index jumped by 0.9 percent in October after rising by 0.4 percent in September. Street had expected consumer prices to climb by 0.6 percent. The bigger than expected increase in consumer prices was partly due to a surge in energy prices, which spiked by 4.8 percent in October after jumping by 1.3 percent in September. Gasoline prices soared by 6.1 percent. Food prices also continued to see notable growth in October, advancing by 0.9 percent for the second consecutive month. Excluding the higher prices for food and energy, core consumer prices still increased by 0.6 percent in October after inching up by 0.2 percent in September. Core prices were expected to rise by 0.4 percent.

Meanwhile, a report released by the Labor Department showed U.S. producer prices increased by slightly more than anticipated in the month of October. The Labor Department said its producer price index for final demand advanced by 0.6 percent in October after climbing by 0.5 percent in September. Street had expected another 0.5 percent increase. The slightly stronger than expected producer price growth was partly due to a continued surge in energy prices, which spiked by 4.8 percent in October after jumping by 2.8 percent in September. Core producer prices, which exclude prices for food, energy, and trade services, rose by 0.4 percent in October after inching up by 0.1 percent in September. Core prices were expected to edge up by 0.2 percent. The report showed prices for transportation and warehousing services shot up by 1.7 percent in October after plunging by 4.0 percent in September.

However, the Labor Department revealed that initial jobless claims saw another modest decrease in the week ended November 6th. The report said initial jobless claims edged down to 267,000, a decrease of 4,000 from the previous week's revised level of 271,000. Street had expected jobless claims to dip to 265,000 from the 269,000 originally reported for the previous week. Jobless claims decreased for the sixth consecutive week, once again falling to their lowest level since hitting 256,000 in the week ended March 14, 2020. The Labor Department said the less volatile four-week moving average also fell to a pandemic-era low of 278,000, a decrease of 7,250 from the previous week's revised average of 285,250. Meanwhile, the report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, rose by 59,000 to 2.160 million in the week ended October 30th.

European Market

European markets ended passing week with notable gains. The start of the week was on a lower note, as Germany exports declined unexpectedly in September, while imports logged a marginal growth. Exports were down by seasonally adjusted 0.7 percent on a monthly basis in September, confounding expectations for an increase of 0.5 percent. Besides, France's external trade deficit increased in September. The data from customs office revealed that the visible trade deficit widened to EUR 6.77 billion from EUR 6.65 billion in August. In the same period last year, the shortfall was EUR 5.69 billion. Exports decreased 0.9 percent on a monthly basis in September, but advanced 15.4 percent from September 2020.

However, key indices gained traction towards end of the week, after Sweden's industrial production increased in September. The data from Statistics Sweden showed that industrial production grew a calendar-adjusted 3.9 percent year-on-year in September, after a 1.2 percent rise in August. The overall private sector output rose 6.0 percent yearly in September, after a 4.1 percent increase in the previous month. Further, Italy's industrial production rose in September after falling in the previous month. The data published by the statistical office Istat showed that industrial production grew 0.1 percent monthly in September, after a 0.3 percent rise in August. Among components, energy output gained 1.3 percent monthly in September and consumer goods rose 3.3 percent. Intermediate goods output increased 0.9 percent.

On the inflation front, Spain's consumer price inflation rose slightly less than estimated in October but was the fastest since 1992. The final data from the statistical office INE showed that consumer price inflation rose to 5.4 percent in October from 4 percent in September. The rate was marginally below the 5.5 percent estimated on October 28. Besides, Germany consumer price inflation rose at the fastest pace since 1993 on energy prices. The final data from Destatis revealed that consumer price inflation advanced to 4.5 percent in October, as initially estimated, from 4.1 percent in September. A higher inflation rate of 4.6 percent was last measured in August 1993.

Asian market

Asian equity benchmarks ended mostly in green terrain during the passing week , following the positive cues from Wall Street, as traders reacted positively to news that the House of Representatives has passed a $1 trillion infrastructure bill over the weekend and support from higher crude oil prices. The recent data showing acceleration in the rate of consumer price inflation has raised the possibility of the Federal Reserve hiking rates by mid-2022. There are also reports from China that several bondholders had received overdue coupon payments from cash-strapped developer China Evergrande Group.

Chinese Shanghai ended higher by over a percent during the passing week, after reports suggesting the government will take steps to ease the cash crunch for embattled developers. Market sentiments also improved after exports data showed exports from China beat forecasts in October to deliver a record trade surplus. China's exports rose 27.1% in dollar terms last month from a year earlier, and exceeded expectations of a 22.8% gain. While, imports increased 20.6%, leaving a trade surplus of $84.54 billion. Traders took a note of the National Bureau of Statistics stating that consumer prices in China were up 1.5 percent year-on-year in October. That exceeded expectations for an increase of 1.4 percent following the 0.7 percent gain in September. The bureau also said that producer prices jumped an annual 13.5 percent, exceeding forecasts for an increase of 12.4 percent following the 10.7 percent gain a month earlier.

Japanese Nikkei too ended marginally higher as traders were upbeat about the stimulus package and spending plan to revive the economy from the coronavirus pandemic. Traders also took some support with the Bank of Japan stating that producer prices in Japan were up 1.2 percent on month in October, accelerating from the 0.3 percent increase in September. On a yearly basis, producer prices spiked 8.0 percent - up from 6.3 percent in the previous month. Export prices were up 2.1 percent on month and 13.7 percent on year in October, while import prices spiked 4.1 percent on month and 38.0 percent on year. The foreign exchange rate was up 2.7 percent on month. Investors shrugged off data showing that the country's wholesale inflation hit a four-decade high in October.