Market Wrap: Robust economic data propelled D-street higher for second consecutive week as FPIs return

Indian equity benchmarks ended the holiday truncated week with gains of around one and a half percentage points as the market cheered better-than-expected macro-economic data. The indices started the week on an optimistic note and traded in green all three days of the week as traders went for value buying amid reports that India's manufacturing sector activity improved in March, as the growth of factory orders and production surged to the highest in three months. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) surged to 56.4 in March from 55.3 in February, signalling the strongest improvement in operating conditions in 2023 so far. 

Meanwhile, India’s services sector growth eased in March. It remained in growth territory (above 50.0) for the twentieth successive month, amid favourable demand conditions and new business gains. The seasonally adjusted S&P Global India Services PMI Business Activity Index fell to 57.8 in March from 59.4 in February. Traders also took support with a report that GST collection grew 13 per cent in March to Rs 1.60 lakh crore - the second-highest mop-up since the rollout of the indirect tax regime. These signals led the BSE Sensex to jump 841 points, or 1.43 per cent, at 59,833 during the week ended April 06, while the Nifty gained 239 points, or 1.38 per cent, to 17599.

Shrikant Chouhan, Head of Equity Research (Retail), at Kotak Securities said “Both Nifty and Sensex jumped over 1 per cent aided by improved overseas fund inflows and positive global cues. While, Indian equity markets remained concerned about growth prospects, even as inflation continued its downward trajectory both globally and domestically. It was a positive session for all sectors except for Power. BSE IT, BSE Capital Goods, BSE Realty, Nifty Pharma, Nifty Energy, and Nifty Consumer gained between 1.5 per cent to 4 per cent.”

Chouhan added “FPIs were net buyers in the past week, while DIIs were net sellers in the same period. Going forward, D-street will focus on the macro trends. Markets going will be dictated by global news flows and steps taken by different governments to tackle their economy. On the economic front. RBI kept the Repo rate unchanged at 6.5%. The SDF rate is unchanged at 6.25% and the MSF rate is unchanged at 6.75%. All six members voted in favour of the pause.” He said.

As many as 35 stocks in the Nifty 50 index delivered a positive return for investors in the week ending April 6, 2023. With a gain of 5.7 per cent, Bajaj Finance emerged as the top gainer in the index. It was followed by Larsen & Toubro (up 5.1 per cent), Tata Motors (up 4.0 per cent), Housing Development Finance Corporation (up 3.9 per cent), and Bajaj Auto (up 3.8 per cent). Coal India, HDFC Bank, Divi's Laboratories, Hero MotoCorp, and HDFC Life Insurance also advanced by over three per cent. On the other hand, Bharat Petroleum Corporation, Apollo Hospitals, and Cipla declined 3.5 per cent, 2.5 per cent, and 1 per cent, respectively.

Sector-wise, the BSE Realty index surged the most (4.3 per cent) during the week gone by. While BSE Capital Goods, BSE Auto, and BSE Healthcare indices have registered a weekly gain of 3.2 per cent, 1.8 per cent, and 1.5 per cent, respectively. On the other hand, BSE Power has registered a weekly decline of 0.3 per cent.

Market watcher Vinod Nair, Head of Research at Geojit Financial Services said "The surprising policy move to pause interest rate hikes has had a convincing effect on bond yields and the stock market. A plausible peaking of the interest rate will have a positive effect on the financial markets, which was reflected in today’s drop in yield and marginal upside of the domestic stock market when the Asian market was negative. However, the trend to continue during the year will depend on a consistent fall in inflation, which is forecasted to stay elevated above the FY24 target. Given the high gap between current and target inflation, the RBI will have to hold the rates high for a long period, limiting the upside."

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