Markets end last week of CY’21 on positive note

Indian equity benchmarks ended the last week of Calendar Year 2021 on an optimistic note with Sensex and Nifty reclaiming their crucial 58,200 and 17,350 levels, respectively. Markets made a positive start to the last week of the year as traders took encouragement after a member of the Monetary Policy Committee (MPC) of the Reserve Bank, Jayanth R Varma expressed hope that in a few quarters from now, capital investment would begin to pick up even in the old economy, and said the next fiscal year is also expected to witness a decent growth. Traders took note of report that the GST regime will see a host of tax rate and procedural changes coming into effect from January 1, including liability on e-commerce operators to pay tax on services provided through them by way of passenger transport or restaurant services. Markets extended gains on report that India’s exports in the first three weeks of December rose 36.20% on-year at $23.82 billion. Outbound shipments were 27.7% higher than the same period of 2019-20. Export excluding petroleum, oil and lubricants increased 28.08% over the corresponding period last year. Market participants also got support with private report stating that the Indian economy is likely to maintain a real GDP growth of 9 percent each in FY2022 and FY2023 amid uncertainty triggered by the Omicron variant of corona virus. Afterwards, markets witnessed consolidation as caution prevailed among investors with the finance ministry’s report stating that the government's total liabilities (including liabilities under the 'Public Account') stood at Rs 125.71 lakh crore in the September quarter (Q2FY22), up 3.97 per cent from the previous quarter. The total liabilities of the government were Rs 120.91 lakh crore in the three months ended June (Q1FY22). Anxiety also remained on the street as authorities in various parts of India said the third wave of infections has begun. Virus cases more than doubled in Delhi and Mumbai in a single day, forcing the governments to enforce more restrictions. Rally on final day of trade enlarged weekly gains for markets as India Ratings and Research (Ind-Ra) said that higher tax and non-tax revenue collections this fiscal are expected to more than offset the shortfall in disinvestment revenue, leading to the fiscal deficit coming in at 6.6 per cent of GDP in FY22, or 20 basis points lower than the budgeted target.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 1129.51 points or 1.98% to 58,253.82 during the week ended December 31, 2021. The BSE Midcap index gained 612.81 points or 2.52% to 24,970.08 and Smallcap index surged 1091.21 points or 3.85% to 29,457.76. On the sectoral front, S&P BSE Healthcare was up by 1,322.11 points or 5.31% to 26,205.73, S&P BSE Consumer Durables was up by 1,935.65 points or 4.52% to 44,768.10, S&P BSE Auto was up by 747.32 points or 3.10% to 24,817.60, S&P BSE Consumer Discretionary Goods & Services was up by 172.14 points or 3.06% to 5,797.82 and S&P BSE Capital Goods was up by 718.15 points or 2.56% to 28,750.72 were the top gainers on the BSE sectoral front, while S&P BSE Power was down by 0.67 points or 0.02% to 3,481.71 were the only losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 350.30 or 2.06% to 17,354.05. On the National Stock Exchange (NSE), Bank Nifty was up by 624.65 points or 1.79% to 35,481.70, Nifty IT was up by 973.20 points or 2.58% to 38,701.00, Nifty Mid Cap 100 increased 830.05 points or 2.80% to 30,442.90 and Nifty Next 50 gained 708.85 points or 1.71% to 42,217.90.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 18,444.80 crore and gross sales of Rs 19,645.65 crore, leading to a net outflow of Rs 1,200.85 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 1,724.80 crore against gross sales of Rs 6,166.64 crore, resulting in a net outflow of Rs 4,441.84 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 20.53 crore and gross sales of Rs 72.43 crore, leading to a net outflow of Rs 51.90 crore.

Industry and Economy

Expressing hope that in a few quarters from now, capital investment would begin to pick up even in the old economy, a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), Jayanth R Varma has said ‘I am quite optimistic about the Indian economy and its growth prospects... The next year (2022-23) is also expected to witness decent growth’. He added that inflation is a matter of concern, but as of now it is the persistence of inflation rather than its level that is a matter of concern.

Outlook for the coming week

The passing week was the last full week of the calendar year 2021 and Indian equity markets posted significant gains with Nifty and Sensex ending near their crucial levels of 17,350 and 58,200 respectively.

In the coming week, which marks the start of the new month and also the New Year, investors would see a lot of economic data pouring in. Auto and cement stocks will be in the focus as both Indian automobile and cement companies will report their sales number for the month of December 2021. India’s export data for the month of December 2021 too would be announced next week.

Further, India’s manufacturing and Services PMI data is also due to be released in next week. IHS Markit India Manufacturing PMI unexpectedly rose to 57.6 in November from 55.9 in October, beating market consensus of 55.1, while IHS Markit India Services PMI inched down to 58.1 in November of 2021 from 58.4 in October.

On the global front, investors will be eyeing macro-economic reports from world’s largest economy, United States, starting with Markit Manufacturing PMI Final on January 03, followed by Redbook, JOLTs Job Openings on January 04, Markit Services PMI Final on January 05, Challenger Job Cuts, Balance of Trade, Initial Jobless Claims, Factory Orders on January 06 and finally Unemployment Rate, Baker Hughes Oil Rig Count on January 07.

Top Gainers

  • Titan Company up by 8.26% was the top gainer on Nifty for the week - Titan Company gained traction amid private report that Jewellery sector outlook remains good, given the healthy festive season commentary. Besides, Titan's topline increased 64.60 percent at Rs 7490 crore in Q2FY22, in line with the street expectations. Moreover, the company is increasing market share across every region and city and that the industry also saw good growth in recent months.
  • HCL Technologies up by 7.47% was another top gainer on Nifty for the week - HCL Technologies gained as it wholly owned step-down subsidiary -- HCL America Inc., has acquired the balance 19.6% stake in HCL Technologies SEP Holdings Inc., the sole parent entity of the operating company, Actian Corporation. This would help HCL in increasing its presence in a high margin, recurring revenue IP business in data analytics, integration and management products.

Top Losers

  • Grasim Industries down by 2.25% was the top loser of the week on Nifty - Grasim Industries continue to witness selling pressure despite successfully commissioning projects in Rehla in Jharkhand and Balabhadrapuram in the state of Andhra Pradesh. The ongoing expansion project at Rehla has been completed and the company has successfully commissioned the second phase of the expansion project at Rehla (80 TPD Caustic Soda Lye), taking overall Caustic Soda Lye capacity of Rehla Unit to 550 TPD.
  • Power Grid Corporation down by 1.90% was another top loser of the week on Nifty - Power Grid Corporation of India came under pressure despite it received approval from board of director for expansion of POWERGRID Telecom into Data Centre Business and to establish a Data Centre at Manesar, Haryana at an estimated cost of about Rs 322 crore (including GST). Earlier, in November Company’s board had approved investments proposals worth around Rs 552 crore.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 17,400.80 on December 31 and lowest level of 16,833.20 on December 27. On the last trading day, the Nifty closed at 17,354.05 with weekly gain of 350.30 points or 2.06 percent. For the coming week, 16,991.23 followed by 16,628.42 are likely to be good support levels for the Nifty, while the index may face resistance at 17,558.83 and further at 17,763.62 levels.

US Market

The U.S. markets ended higher during the passing week amid easing concerns about the economic impact of the Omicron variant of the coronavirus.  With early indications that the Omicron variant causes milder symptoms, traders seemed optimistic the new strain will not derail the economic recovery. Meanwhile, the Centers for Disease Control and Prevention (CDC) has shortened the recommended isolation time for asymptomatic people with Covid-19 to 5 days from 10 days. The CDC said the change is motivated by science demonstrating that the majority of Covid transmission occurs early in the course of illness, generally in the 1-2 days prior to onset of symptoms and the 2-3 days after. On the economic data front, after reporting a slowdown in the pace of growth in Chicago-area business activity in the previous month, MNI Indicators released a report showing growth picked back up in the month of December.

MNI Indicators said its Chicago business barometer rose to 63.1 in December from 61.8 in November, with a reading above 50 indicating growth. Street had expected the business barometer to inch up to 62.0. The modest rebound by the business barometer came as the new orders index jumped to 66.5 in December from 58.3 in November, nearly recovering to October's level. The production index also showed slight increase during the month, reaching its highest reading since July. Meanwhile, the Labor Department released a report unexpectedly showing a modest drop in first-time claims for U.S. unemployment benefits in the week ended December 25th. The report said initial jobless claims dipped to 198,000, a decrease of 8,000 from the previous week's revised level of 206,000. The slight pullback surprised participants, who had expected jobless claims to inch up to 208,000 from the 205,000 originally reported for the previous week.
Besides, revised data released by the University of Michigan showed consumer sentiment in the U.S. improved by slightly more than initially estimated in the month of December.

The report showed the consumer sentiment index for December was upwardly revised to
70.6 from the preliminary reading of 70.4. The revised reading is even further above the ten-year low of 67.4 seen in November. However, a report released by the National Association of Realtors (NAR) showed an unexpected pullback in U.S. pending home sales in the month of November. NAR said its pending home sales index slid 2.2 percent to 122.4 in November after spiking 7.5 percent to 125.2 in October. The decrease surprised participants, who had expected pending home sales to rise by 0.5 percent. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. The unexpected pullback came after the pending home sales index reached its highest level since last December in the previous month.

European Market

European markets ended passing week on a higher note. The start of the week was in green terrain, as Spain's retail sales grew at the fastest pace in six months in November after declining in the previous month. The preliminary data from the statistical office INE showed that retail sales rose a seasonally and calendar-adjusted 4.9 percent year-on-year following a 0.7 percent fall in October. The increase was the strongest since May, when retail sales surged nearly 20 percent. Further, Norway's retail sales grew at a steady pace in November. The figures from Statistics Norway showed that retail sales gained 0.9 percent month-on-month in November, same as seen in October. Sales not in stores rose 6.1 percent monthly in November. Sales of other household equipment increased 6.5 percent and those of information, communication and technology gained 3.9 percent.

Markets remained higher during trading session, after Eurozone banks approved loans to households and businesses at a faster annual pace in November. The preliminary data from the European Central Bank showed that the annual growth rate of loans to households climbed to 4.2 percent from 4.1 percent in October. Loans to non-financial corporations grew 2.9 percent annually after a 2.5 percent increase in the previous month. Besides, Russia's service sector continued to shrink in December but the pace of contraction slowed from the previous month. The survey results from IHS Markit showed that the services Purchasing Managers' Index rose to 49.5 from 47.1 in November. However, a reading below 50.0 indicates contraction.

On the inflation front, Spain consumer prices grew at the fastest pace since March 1992. The flash data from the statistical office INE showed that consumer price inflation rose to 6.7 percent in December from 5.5 percent in November. Prices advanced at the fastest pace since March 1992 and also far exceeded the expected rate of 5.7 percent. Core inflation came in at 2.1 percent in December, up from 1.7 percent in November. Further, Greece producer price inflation accelerated sharply in November. The data from the Hellenic Statistical Authority showed that producer prices increased 24.5 percent year-on-year in November after rising 23.5 percent in the previous month. The PPI for non-domestic market grew 32.4 percent annually and that for domestic market climbed 22.2 percent.

Asian market

Asian markets, barring KOSPI Composite Index, ended in green during the passing week amid easing concerns about the economic impact of the Omicron variant of the coronavirus. While Omicron seems to be more transmissible, the new strain purportedly causes milder symptoms and could accelerate the end of the pandemic. Seoul stocks ended lower as the Bank of Korea showing that consumer confidence in the country weakened for the first time in four months in December. Investors shrugged off Central bank data showed sentiment among South Korean businesses over the economic situation improved this month due to export growth.

Chinese Shanghai edged higher by over half percent, after the government pledged to focus on a consumption recovery and reduce certain income tax rates. Some support also came as authorities unveiled sweeping regulations governing overseas share sales by the country's firms and the People's Bank of China injected 200 billion yuan ($31.39 billion) into the banking system through seven-day reverse repos.

Japanese Nikkei too edged marginally higher as the Ministry of Economy, Trade and Industry said industrial production in Japan climbed a seasonally adjusted 7.2 percent on month in November. That beat expectations for an increase of 4.8 percent and was up from the 1.8 percent gain in October. However, gains remain capped as the Ministry of Internal Affairs and Communications said the unemployment rate in Japan came in at a seasonally adjusted 2.8 percent in November. That missed expectations for 2.7 percent, which would have been unchanged from the October reading.