It turned out to be a favorable week of trade for Indian equity benchmarks with frontline gauges recapturing their crucial 62,000 (Sensex) and 18,300 (Nifty) levels, as traders remained encouraged after US inflation data showed signs of easing. Markets started the week on an optimistic note as traders cheered Commerce & Industry Minister Piyush Goyal’s statement that India-US partnership is at a ‘defining stage’ and the two countries will continue to work towards diversifying and deepening trade and investment ties for mutual growth and prosperity. Some support also came with private report that India will likely grow at a moderate pace between 6 per cent and 6.5 per cent in FY2023-24 while the global economy continues to struggle. Adding to the optimism, Reserve Bank of India said India’s foreign exchange reserves jumped $4.532 billion to $588.78 billion for the week ended April 28. The overall reserves had dropped $2.164 billion to $584.248 billion in the previous reporting week. Markets continued the gaining momentum during the week but gains remain capped as market participants closely awaited the macro-economic data i.e. Consumer Price Index (CPI) for the month of April and Index of Industrial Production (IIP) scheduled to be release on May 12, 2023. Sentiments remained up-beat after Fitch Ratings affirmed India's sovereign rating with a stable outlook and said that the country has a robust growth outlook and resilient external finances. It has affirmed the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook and added that strong growth potential is a key supporting factor for the sovereign rating. Traders also took support from a report that the free trade agreement between India and the UAE has transformed the partnership between the two countries by promoting two-way commerce at a healthy rate. Markets added some more gains after private report stating that India's consumer inflation likely cooled to an 18-month low in April as rises in food and fuel prices moderated, keeping it below the Reserve Bank of India's upper tolerance limit for the second consecutive month. Cooling US inflation data too aided sentiments with the US consumer price dipping to an annual rate of 4.9 per cent, its lowest level since April 2021. The street had expected it to remain steady at 5 per cent. Markets managed to end the last day with modest gain as traders waiting for CPI and IIP data to come coupled with Q4 earning from many mid and small cap companies.
BSE movement for the week
The Bombay Stock Exchange (BSE) Sensex increased 973.61 points or 1.59% to 62,027.90 during the week ended May 12, 2023. The BSE Midcap index gained 348.89 points or 1.35% to 26,200.75 and Smallcap index surged 332.74 points or 1.14% to 29,616.61. On the sectoral front, S&P BSE Auto was up by 1,330.19 points or 4.33% to 32,041.90, S&P BSE BANKEX was up by 1,295.46 points or 2.67% to 49,768.18, S&P BSE Consumer Discretionary Goods & Services was up by 149.85 points or 2.57% to 5,970.12, S&P BSE Finance was up by 209.37 points or 2.35% to 9,123.49 and S&P BSE Realty was up by 61.39 points or 1.72% to 3,625.71 were the top gainers, while S&P BSE Metal was down by 519.67 points or 2.57% to 19,675.06, S&P BSE Capital Goods was down by 632.74 points or 1.70% to 36,541.95 and S&P BSE PSU was down by 38.74 points or 0.38% to 10,268.58 were the few losers on the BSE.
NSE movement for the week
The Nifty surged 245.80 or 1.36% to 18,314.80. On the National Stock Exchange (NSE), Bank Nifty was up by 1132.35 points or 2.65% to 43,793.55, Nifty IT was up by 308.45 points or 1.11% to 28,028.40, Nifty Mid Cap 100 increased 319.60 points or 0.99% to 32,468.45 and Nifty Next 50 increased 709.85 points or 1.77% to 40,801.10.
FII transactions during the week
Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 51,674.51 crore and gross sales of Rs 39,372.69 crore, leading to a net inflow of Rs 12,301.82 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 5,362.00 crore against gross sales of Rs 2,833.04 crore, resulting in a net inflow of Rs 2,528.96 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 64.08 crore and gross sales of Rs 239.07 crore, leading to a net outflow of Rs 174.99 crore.
Industry and Economy
Fitch Ratings has affirmed India's sovereign rating with a stable outlook and said that the country has a robust growth outlook and resilient external finances. It has affirmed the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook and added that strong growth potential is a key supporting factor for the sovereign rating. It also said ‘India's rating reflects strengths from a robust growth outlook compared with peers and resilient external finances, which have supported India in navigating the large external shocks over the past year’.
Outlook for the coming week
Indices ended the passing week over a percent higher, as US inflation in April eased to 4.90 per cent. In coming week, traders will be reacting to the April CPI and March IIP data, slated to be released after market hours on May 12, 2023.
On the economy front, traders will be looking forward toward Exports and Imports data, Wholesale Price Index (WPI) data which scheduled to be release on May 15. India's merchandise trade deficit widened to $19.70 billion in March 2023 from $18.51 billion in the same month last year. Meanwhile, India’s annual wholesale price inflation rate declined for the tenth consecutive month to 1.34% in March 2023, the lowest since October 2020, compared to 3.85% in the prior period and market forecasts of 1.87%. Foreign Exchange Reserves and India Deposit Growth data to be announced on May 19.
In the ongoing result season, traders will be eyeing earnings of prominent companies, including Coromandel International, Patel Engineering, Pfizer, PVR INOX, Skipper, Subex, Aurionpro Solutions, Bank of Baroda, Bharti Airtel, Granules India, Indian Oil Corporation, Jindal Steel and Power, JK Paper, Max Healthcare Institute, Metropolis Healthcare, Oberoi Realty, Deepak Fertilisers, Jindal Saw, JK Tyre & Industries, Jindal Stainless, JSW Ispat Special Products, Jubilant FoodWorks, Quess Corp, Railtel Corporation of India, REC, Zydus Wellness, Bata India, GAIL, Interglobe Aviation, ITC, PI Industries, Ramco Cements, State Bank of India, Thomas Cook, Trident, Glenmark Pharma, Godrej Industries, Hindustan Copper, JSW Steel, NTPC, Power Grid Corporation of India, Zomato, Bharat Electronics etc. On the global front, investors would be eyeing few economic data from world’s largest economy, Fed Bostic Speech, Fed Barkin Speech, NY Empire State Manufacturing Index on May 15, Net Long-term TIC Flows, Retail Sales Ex Autos, Redbook Index, Industrial Production, Manufacturing Production on May 16, Building permits on May 17, Initial Jobless Claims on May 18 and Baker Hughes Total Rig Count on May 19.
Top Gainers
- Eicher Motors up by 8.60% was the top gainer on Nifty for the week - Eicher Motors traded with traction after reporting 48.42% rise in its consolidated net profit at Rs 905.58 crore for fourth quarter ended March 31, 2023 as compared to Rs 610.14 crore for the same quarter in the previous year. Total income of the company increased by 21.09% at Rs 4009.83 crore for Q4FY23 as compared to Rs 3311.34 crore for the corresponding quarter previous year. On standalone basis, the company has reported 34.96% rise in its net profit at Rs 746.86 crore for Q4FY23 as compared to Rs 553.38 crore for Q4FY22.
- Tata Motors up by 7.31% was another top gainer on Nifty for the week - Tata Motors traded higher ahead of its Q4 result on May 12, 2023. There are expectations that the company will report healthy numbers for the quarter. As per report, its board will also consider a dividend for the shareholders after a span of seven years. Besides, Tata Motors launched an extension to its bestselling EV in the personal mobility segment, the new Nexon EV MAX in Nepal. With this launch, it is taking the lead to enhance the appeal of EVs and expand the market with a new offering for customers who are looking for longer intercity travel.
Top Losers
- Dr. Reddy's Lab down by 10.10% was the top loser of the week on Nifty - Dr. Reddy's Lab witnessed profit booking after reporting lower than expected Q4 numbers. The company reported around 10-fold jump in consolidated net profit at Rs 960.10 crore for Q4FY23 as compared to Rs 97.00 crore for the same quarter in the previous year. Total income of the company increased by 15.31% at Rs 6,453.70 crore for Q4FY23 as compared to Rs 5,596.80 crore for Q4FY22. Meanwhile, recently, the USFDA completed a routine GMP inspection at the company’s API manufacturing facility (CTO 1) in Bollaram, Hyderabad and issued a Form 483 with one observations.
- Hindalco Industries down by 9.15% was another top loser of the week on Nifty - Hindalco came under selling pressure after its US subsidiary - Novelis reported-lower-than-expected March quarter results. Noveli's net income from continuing operations sans special items was $175 million, down 7% YoY. The adjusted EBITDA stood at $403 million - down by 6% YoY. Shipments of 936 kilotonnes for the reporting quarter were down 5% YoY. Meanwhile, aluminium prices in international markets hit a seven-month low. This has led to a sharp fall in the shares of some of India's metal companies including Hindalco.
Technical viewpoints
During the week, CNX Nifty touched the highest level of 18,389.70 on May 11 and lowest level of 18,100.30 on May 8. On the last trading day, the Nifty closed at 18,314.80 with weekly gain of 245.80 points or 1.36 percent. For the coming week, 18,146.83 followed by 17,978.87 are likely to be good support levels for the Nifty, while the index may face resistance at 18,436.23 and further at 18,557.67 levels.
US Market
The US markets ended the passing week largely in green terrain as traders reacted positively to the Labor Department’s highly anticipated report on consumer price inflation in the month of April. The Labor Department said its consumer price index climbed by 0.4 percent in April after inching up by 0.1 percent in March. The street had expected consumer prices to rise by 0.4 percent. Excluding food and energy prices, core consumer prices also rose by 0.4 percent in April, matching the increase seen in March as well as street’s estimates. The report also showed the annual rate of consumer price growth edged down to 4.9 percent in April from 5.0 percent in March. The street had expected the year-over-year growth to be unchanged. The annual rate of core consumer price growth also slipped to 5.5 percent in April from 5.6 percent in March. With the annual consumer price growth marking the smallest 12-month increase since April 2021, the data added to optimism about the Federal Reserve pausing its interest rate hikes.
On the economic data front, the Commerce Department released a report showing U.S. wholesale inventories were unexpectedly unchanged in the month of March. The report said wholesale inventories were virtually unchanged in March, while revised data showed inventories were also unchanged in February. Street had expected wholesale inventories to inch up by 0.1 percent, matching the uptick originally reported for the previous month.
Traders also took encouragement with easing concerns about the outlook for interest rates following the release of the Labor Department’s report on producer price inflation in the month of April. The Labor Department said its producer price index for final demand inched up by 0.2 percent in April after falling by a revised 0.4 percent in March. The street had expected producer prices to rise by 0.3 percent compared to the 0.5 percent drop originally reported for the previous month. The report also showed the annual rate of producer price growth slowed to 2.3 percent in April from 2.7 percent in March. The pace of growth was expected to slow to 2.4 percent. A separate Labor Department report showed initial jobless claims climbed to their highest level in well over a year in the week ended May 6th. The report said initial jobless claims rose to 264,000, an increase of 22,000 from the previous week's unrevised level of 242,000. The street had expected jobless claims to inch up to 245,000. With the much bigger than expected advance, jobless claims reached their highest level since hitting a matching number in the week ended October 30, 2021.
European Market
European markets ended passing week on a lower note. Markets made a negative start of the week, as Germany's industrial production declined more than expected in March. The data from Destatis showed that industrial output slid 3.4 percent in March from February, when production increased 2.1 percent. On a yearly basis, industrial production growth improved to 1.8 percent from 0.7 percent in the previous month. In the first quarter, industrial production increased 2.5 percent from the previous quarter. Besides, Eurozone investor confidence weakened notably in May wiping out expectations for an economic revival after the war in Ukraine, although the currency bloc weathered the winter months. A closely watched survey revealed that the investor confidence index unexpectedly fell to -13.1 in May from -8.7 in April. The score was forecast to improve to -8.0.
Markets extended their losses towards end of the week, after Italy's industrial production declined for the third successive month in March. The data from the statistical office ISTAT showed that industrial production fell 0.6 percent month-over-month in March, following a 0.2 percent drop in February. Among components, both the production of consumer goods and energy fell by 1.4 percent. Intermediate goods output slid 0.4 percent over the month. Meanwhile, output produced in the capital goods sector was 0.7 percent higher compared to a month ago. Further, the Bank of England decided to lift the benchmark interest rate by a quarter-point as expected to address the risk of more persistent strength in domestic price pressures. The nine-member Monetary Policy Committee decided to lift the bank rate by 25 basis points to 4.50 percent, the highest since 2008. Seven members of the panel voted for a quarter point hike, while Swati Dhingra and Silvana Tenreyro again sought to maintain the status quo.
On the inflation front, Germany's consumer price inflation softened as initially estimated in April largely due to base effects. The final data from Destatis showed that consumer price inflation slowed to 7.2 percent in April from 7.4 percent in March. The rate matched the estimate published on April 28. Food prices surged 17.2 percent annually but this was slower than the 22.3 percent gain in March. Energy product prices were 6.8 percent higher than in the same period last year. Energy prices accelerated again in April following a marked slowdown in March. Moreover, Hungary's consumer price inflation moderated slightly more-than-expected in April to the lowest level in five months, though it remained strong overall. The data from the Hungarian Central Statistical Office showed that the consumer price index, or CPI, climbed 24.0 percent year-on-year in April after a 25.2 percent rise in March.
Asian Market
Asian markets ended the passing week in red on lingering worries over the health of U.S. banks, ongoing impasse over the U.S. debt ceiling and Chinese economic recovery. However, Federal Reserve Governor Michelle Bowman said that policy rate will need to remain sufficiently restrictive for some time to bring inflation down and create conditions that will support a sustainably strong labor market.
Chinese benchmarks edged lower by over half percent as a measure of Chinese consumer price inflation reached its lowest level in more than two years in April and factory gate deflation deepened, raising fresh worries about weak demand in the country. Data showed Chinese consumer price inflation rose an annual 0.1 percent in April, marking the lowest rate since February 2021. Producer prices declined 3.6 percent from a year earlier, marking the fastest rate since May 2020. Some concern also came as fresh data showed Chinese imports contracted sharply in April and exports grew at a slower pace, reinforcing signs of feeble domestic demand.
Japanese Nikkei too ended marginally lower as investors reacted to a mixed bag of corporate earnings from Japan and signs of growing deflationary pressures in China. Some pessimism came as government data showing Japanese household spending fell 1.9 percent in March from a year earlier. Traders also took a note of the Ministry of Finance stating that Japan had a current account surplus of 2.278 trillion yen in March, down 29.6 percent on year. That was shy of expectations for a surplus of 2.947 trillion yen and up from 2.197 trillion yen in February. However, losses remain capped as some support came with the Bank of Japan stating that overall bank lending in Japan was up 3.2 percent on year in April, coming in at 603.295 trillion yen. That exceeded expectations for an increase of 2.9 percent and was up from 3.0 percent in March.
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