Weekly Market Wrap: Bears tighten grip on D-Street amid weak macros. What lies ahead?
Indian equity benchmarks declined for a fourth straight week amid weak domestic macroeconomic data.
- Aug 19, 2023,
- Updated Aug 20, 2023 8:25 AM IST
Bears tightened their grip on Dalal Street with Indian equity benchmarks ending the passing week with a cut of more than half a per cent. Stock markets declined for a fourth straight week amid weak domestic macroeconomic data. The selling pressure increased as retail inflation spiked to a 15-month high of 7.44 per cent in July much higher than 4.87 per cent in June, overshooting Reserve Bank’s comfort level for the first time in the current fiscal.
Besides the Index of industrial production (IIP) slipped to a three-month low of 3.7 per cent in June from 5.2 per cent in May. Some pessimism also came as India's trade deficit rose to USD20.67 billion in July as compared to USD20.13 billion in June.
Amid these weak macro signals, the BSE Sensex tumbled 374 points, or 0.57 per cent, at 64,949 during the week ended Aug 18, while the Nifty slipped 118 points, or 0.61 per cent, to 19,310. Sector-wise, the BSE Metal index declined the most (3.9 per cent) during the week gone by. BSE Oil & Gas and BSE Bankex indices have registered a fall of 1.3 per cent, and 0.8 per cent, respectively. On the other hand, the BSE Power index has registered a weekly gain of 0.5 per cent.
As many as 19 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 4.4 per cent, Adani Ports emerged as the top gainer in the index. It was followed by Hindustan Unilever (2.1 per cent), Infosys (1.2 per cent), Maruti Suzuki India (1.2 per cent), and Ultratech Cement (1.1 per cent). Titan Company, NTPC, and Dr. Reddy's Labs also advanced by over one per cent. On the other hand, Hindalco Industries, JSW Steel, and Tata Steel declined 4.9 per cent, 4 per cent, and 3.8 per cent, respectively.
Market Macros
Vinod Nair, Head of Research at Geojit Financial Services said, Indian indices encountered a week of vulnerability due to adverse global and domestic cues, accompanied by a shift towards safer assets by investors like the US Dollar. “Discouraging domestic industrial production, negative wholesale inflation, and elevated CPI inflation contributed to market volatility”.
He added additional strains emerged from stronger-than-expected US retail sales data adding to Fed rate hike fears, concerns about US bank rating downgrades, and a sudden Chinese central bank rate cut hindered recovery and sustained selling pressure.
Escalating US bond yields are predicted to restrict foreign investments in India, further impacting market dynamics. With moderate core inflation & transitory July retail CPI data, the market did not foresee a rate hike. “The metal sector bore the brunt this week due to sluggish industrial data and concerns about Chinese demand. Investor sentiment remains subdued due to the high volatility of the global currency market, leading to a high depreciation of EM currencies, which affects the performance of equities”, Nair said.
Technical Outlook
Devarsh Vakil, Deputy Head Retail Research, at HDFC Securities said, the Nifty fell for the second day, dropping 0.3 per cent, or 55 points to 19310. The index dropped to the lowest closing level since June 30. China’s Evergrande Group filed for Chapter 15 bankruptcy protection in New York late Thursday and that marred sentiments for equities around the globe. With this week’s fall, Nifty has declined for the fourth consecutive week. Declining shares outnumbered the advancing shares as the advance-decline ratio stood at 0.73 on BSE. NSE Cash market volumes were lower as compared to the recent average.
From a technical standpoint, “There is a possibility of downside breakout of the immediate support of 19250 levels and the Nifty could slide down to another base area of 19100-19000 levels in the near term. The recent swing high of 19482 is expected to act as a short-term resistance for the Nifty, Vakil said.
Also read: Up 100% from recent lows! JM Financial sees Zomato stock at Rs 115; is it a good time to buy?
Also watch: Hot stocks for next week: Reliance Industries, RailTel, Finolex Industries, Monte Carlo Fashions and more
Bears tightened their grip on Dalal Street with Indian equity benchmarks ending the passing week with a cut of more than half a per cent. Stock markets declined for a fourth straight week amid weak domestic macroeconomic data. The selling pressure increased as retail inflation spiked to a 15-month high of 7.44 per cent in July much higher than 4.87 per cent in June, overshooting Reserve Bank’s comfort level for the first time in the current fiscal.
Besides the Index of industrial production (IIP) slipped to a three-month low of 3.7 per cent in June from 5.2 per cent in May. Some pessimism also came as India's trade deficit rose to USD20.67 billion in July as compared to USD20.13 billion in June.
Amid these weak macro signals, the BSE Sensex tumbled 374 points, or 0.57 per cent, at 64,949 during the week ended Aug 18, while the Nifty slipped 118 points, or 0.61 per cent, to 19,310. Sector-wise, the BSE Metal index declined the most (3.9 per cent) during the week gone by. BSE Oil & Gas and BSE Bankex indices have registered a fall of 1.3 per cent, and 0.8 per cent, respectively. On the other hand, the BSE Power index has registered a weekly gain of 0.5 per cent.
As many as 19 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 4.4 per cent, Adani Ports emerged as the top gainer in the index. It was followed by Hindustan Unilever (2.1 per cent), Infosys (1.2 per cent), Maruti Suzuki India (1.2 per cent), and Ultratech Cement (1.1 per cent). Titan Company, NTPC, and Dr. Reddy's Labs also advanced by over one per cent. On the other hand, Hindalco Industries, JSW Steel, and Tata Steel declined 4.9 per cent, 4 per cent, and 3.8 per cent, respectively.
Market Macros
Vinod Nair, Head of Research at Geojit Financial Services said, Indian indices encountered a week of vulnerability due to adverse global and domestic cues, accompanied by a shift towards safer assets by investors like the US Dollar. “Discouraging domestic industrial production, negative wholesale inflation, and elevated CPI inflation contributed to market volatility”.
He added additional strains emerged from stronger-than-expected US retail sales data adding to Fed rate hike fears, concerns about US bank rating downgrades, and a sudden Chinese central bank rate cut hindered recovery and sustained selling pressure.
Escalating US bond yields are predicted to restrict foreign investments in India, further impacting market dynamics. With moderate core inflation & transitory July retail CPI data, the market did not foresee a rate hike. “The metal sector bore the brunt this week due to sluggish industrial data and concerns about Chinese demand. Investor sentiment remains subdued due to the high volatility of the global currency market, leading to a high depreciation of EM currencies, which affects the performance of equities”, Nair said.
Technical Outlook
Devarsh Vakil, Deputy Head Retail Research, at HDFC Securities said, the Nifty fell for the second day, dropping 0.3 per cent, or 55 points to 19310. The index dropped to the lowest closing level since June 30. China’s Evergrande Group filed for Chapter 15 bankruptcy protection in New York late Thursday and that marred sentiments for equities around the globe. With this week’s fall, Nifty has declined for the fourth consecutive week. Declining shares outnumbered the advancing shares as the advance-decline ratio stood at 0.73 on BSE. NSE Cash market volumes were lower as compared to the recent average.
From a technical standpoint, “There is a possibility of downside breakout of the immediate support of 19250 levels and the Nifty could slide down to another base area of 19100-19000 levels in the near term. The recent swing high of 19482 is expected to act as a short-term resistance for the Nifty, Vakil said.
Also read: Up 100% from recent lows! JM Financial sees Zomato stock at Rs 115; is it a good time to buy?
Also watch: Hot stocks for next week: Reliance Industries, RailTel, Finolex Industries, Monte Carlo Fashions and more