Extending previous week’s gain, Indian equity benchmarks ended the passing week with a gain of around half a per cent as many corporates of India Inc have posted healthy Q3 numbers during the week. Market also took solace from the RBI report stating that states’ gross fiscal deficit (GFD) is budgeted to decline from 4.1 per cent of gross domestic product (GDP) in Covid-hit 2020-21 to 3.4 per cent of GDP in 2022-23 showing improvement in their fiscal health. It stated the fiscal health of the states has improved from a sharp pandemic-induced deterioration in 2020-21 on the back of a broad-based economic recovery and resulting high revenue collections.
Cooling inflation too aided sentiments after wholesale inflation dropped to a 2-year low in December amid positive global cues. India’s inflation based on wholesale price index (WPI) eased further to 4.95% (provisional) for the month of December 2022 as against 5.85% recorded in November 2022 and 8.39% in October 2022. Also IMF Deputy Managing Director Gita Gopinath’s has said that there's a lot of positive sentiment towards India. She also highlighted areas that need more reforms to attract more manufacturing FDI. These signals led the BSE Sensex to gain 360.6 points, or 0.6 per cent, at 60,621.8 during the week ended January 20, while the Nifty advanced 71 points, or 0.4 per cent, to 18,027.7.
Market watcher Deepak Jasani, Head of Retail Research at HDFC Securities, said, “Most global indices were up on Friday as optimistic investors gauged the potential impact of a week-long Lunar New Year holidays after China lifted its COVID-19 curbs, even as concerns over global economic slowdown continued to sap sentiment.”
“Nifty closed the week 0.4% higher. It formed a sideways doji for the week (though making slightly higher top higher bottom compared to the previous week) after a similar doji in the previous week suggesting a tight fight between bulls and bears. 18184-17774 is the broad range for the Nifty, a breakout of which could decide the direction in the near term," he added.
As many as 19 stocks in the Nifty 50 index delivered a positive return for investors in the week ending January 20, 2023. With a gain of 5.5 per cent, Coal India emerged as the top gainer in the index. It was followed by Tech Mahindra (up 4.5 per cent), Power Grid Corporation Of India (up 4.3 per cent), Larsen & Toubro (up 4.3 per cent) and HDFC Bank (up 3.7 per cent). Housing Development Finance Corporation and Oil & Natural Gas Corporation also advanced over 3 per cent. On the other hand, Bajaj Finserv, Asian Paints and JSW Steel declined 4.2 per cent, 4.2 per cent and 3.6 per cent, respectively.
Sector-wise, the BSE Power index gained the most (2.2 per cent) during the week gone by. BSE Capital Goods has also given a 2.1 per cent return. While, BSE Oil & Gas, BSE Information Technology, BSE Teck and BSE Metal indices also surged more than one per cent during the week. Meanwhile, BSE Auto and BSE Healthcare indices have registered a weekly decline of 1 per cent each.
Joseph Thomas, Head of Research at Emkay Global Financial Services, said: "The equity market continued to trade lower in sync with developments abroad, mainly the US markets. While the probability of the Fed hiking rates further to slay the demon of inflation is quite high, the consequences of the rate action over a period of time translating itself into an economic slowdown is occupying the minds of the investors.”
“While inflation control might be an arduous task in the light of persistently higher fuel prices and the supply issues, it is almost a certainty that a “touch and go” slowdown is most likely. These issues will be relevant in the coming weeks too, with the sole exception of the market drawing some comfort from expectations from the Union Budget due early next month," Thomas added.
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