Weekly Market Wrap: D-Street surged for third straight week. What lies ahead?

Extending the winning streak for the third straight week, Indian equity benchmarks ended the passing week with a gain of around two per cent. Supported by better-than-expected macro-economic data, such as easing retail inflation, a jump in forex reserves, and a rise in industrial output has boosted invertors’ sentiments which helped markets to hit all-time highs.  

Retail inflation based on the Consumer Price Index (CPI) declined to 6.83 per cent in August from 7.44 per cent in July, mainly due to softening prices of vegetables. While India’s forex reserves jumped by $4.039 billion to $598.897 billion for the week ended September 01. Besides, India’s industrial production measured in the Index of Industrial Production (IIP) jumped to 5.7 per cent in July 2023 from 3.7 per cent in June 2023. However, rising global crude oil prices are making investors jittery as this could fuel inflation and force central banks worldwide to maintain the rate hike regime. 

The BSE Sensex surged 1240 points, or 1.86 per cent, at 67,839 during the week ended September 15, while the Nifty jumped 372 points, or 1.88 per cent, to 20192. Sector-wise, the BSE Teck index surged the most (3.2 per cent) during the week gone by. While BSE Bankex and BSE Information Technology indices have registered a gain of 2.5 per cent, and 2.4 per cent, respectively. On the other hand, the BSE Power index has registered a weekly decline of 1.2 per cent. 

As many as 39 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 7.8 per cent, Bajaj Auto emerged as the top gainer in the index. It was followed by Grasim Industries (6.7 per cent), Bharti Airtel (5.7 per cent), Axis Bank (4.7 per cent), and UPL (4.6 per cent). Tata Consultancy Services, Hindalco Industries, and Dr. Reddy's Laboratories also advanced by over four per cent. On the other hand, Bharat Petroleum Corporation, HDFC Life Insurance Company, and Hindustan Unilever declined 2.6 per cent, 1.9 per cent, and 1.8 per cent, respectively. 

Market Macros 

Vinod Nair, Head of Research at Geojit Financial Services said, the elevated crude oil prices and concerns about inflation initially cast a shadow over the market. However, this negative sentiment was offset by robust domestic industrial and manufacturing production data, as well as a decline in inflation, which propelled the market to new highs.  

The market also received support from a set of positive global cues. “Some of the positive global cues include China's recovery from deflation, cooling core inflation in the US, which supports the idea of a rate pause, and hints from the ECB about a potential pause in rates due to receding inflation”. 

He added: “However, mid and small-cap indices faced pressure as profit booking set in, driven by overvaluation concerns and after reaching all-time highs”. Investors are now closely focused on upcoming data releases and central bank meetings scheduled for the next week, including decisions from the U.S. Fed Reserve, Bank of England, and Bank of Japan, Nair said. 

Technical Outlook  

Deepak Jasani, Head of Retail Research at HDFC Securities said, Nifty scaled fresh life highs on Friday rising for the third consecutive session to end at a record close. Sensex rose for the 11th day, the longest streak of gains since October 2007. At close, Nifty was up 0.44 per cent or 89.3 points at 20192.4. Volumes on the NSE continued to be on the lower side. Broad market indices rose less than the Nifty even as the advance-decline ratio fell but remained above par at 1.26:1. 

Global equities rose Friday after better-than-expected Chinese economic data added to expectations that tightening campaigns by the world’s biggest central banks were close to over. The Arm IPO optimism and China’s further stimulus measures boosted sentiments. 

Nifty continued its gradual move up on Friday with a 93 points intraday high-low range. Post the making of fresh life highs, Nifty’s upward momentum has been calibrated. On weekly charts, Nifty gained 1.88 per cent almost matching the previous week’s rise. Nifty could now stay in the 19979-20340 band for the near term. 

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