Weekly Market Wrap: Robust domestic macros, signs of easing global inflation help Dalal Street post modest gains

Encouraging inflation numbers from the US coupled with better-than-expected macro-economic data helped Indian equity benchmarks to end the recently concluded week in green terrain. Buying on final day of the week helped markets to go home with weekly gains of over 0.5 per cent as market participants went for value buying on the back of better-than-expected macro-economic data. Government data showed that India's gross direct tax collection rose 24.58 per cent to Rs 14.71 lakh crore till January 10 this fiscal, buoyed by an upsurge in personal income tax mop-up.

Also, India’s retail inflation or consumer price index (CPI) declined to a one-year low of 5.72 per cent in December 2022. The CPI was at 5.88 per cent in November 2022 and 5.66 per cent in December 2021. Also, India's industrial growth, as per the Index of Industrial Production (IIP), accelerated to 7.1 per cent in November 2022. These signals led the BSE Sensex to gain 360.8 points, or 0.6 per cent, at 60,261.2 during the week ended January 13, while the Nifty advanced 97.2 points, or 0.5 per cent, to 17,956.6.

Market watcher Vinod Nair, Head of Research at Geojit Financial services, said: “Positive triggers like easing inflation numbers and brighter Q3 results projected by the second set of IT majors buoyed the domestic market to close the week on a positive note. India’s retail inflation eased to 5.7% in December, remaining within the RBI’s tolerance band of 2-6%, owing to reduced food prices. Similarly, the US inflation numbers cooled off to 6.5%, fuelling bets that the Fed will pursue a less aggressive tightening policy.”

“US wage growth slowing, service activity contracting, and December payrolls rising higher than anticipated increased the possibility of a softer landing for the US economy. However, cautious growth forecasts by IT majors squeezed out optimism. Relentless selling by FII over the week as a result of premium valuations in the domestic market also weighed on the overall market momentum. Going ahead, with IT earnings out of the way, investors will now focus their attention on the earnings of financials, which are expected to be released over the weekend," he added.

As many as 25 stocks in the Nifty 50 index delivered a positive return for investors in the week ending January 13, 2023. With a gain of 7.7 per cent, Tata Motors emerged as the top gainer in the index. It was followed by Hindalco Industries (up 5.6 per cent), JSW Steel (up 5.4 per cent), Tata Consultancy Services (up 5.1 per cent) and Mahindra & Mahindra (up 5 per cent). HCL Technologies, IndusInd Bank  and Tata Steel also advanced over 4 per cent. On the other hand, Titan Company, Bharti Airtel and Reliance Industries declined 4.7 per cent, 4.1 per cent and 2.8 per cent, respectively.

Sector-wise, the BSE Metal index gained the most (3.9 per cent) during the week gone by. BSE Information Technology has also given a 3.4 per cent return. While, BSE Power, BSE Teck and BSE Capital Goods indices also surged more than 2 per cent during the week. While BSE Fast Moving Consumer Goods index registered a decline of 1 per cent.

Amol Athawale, Deputy Vice President-Technical Research at Kotak Securities Ltd, said: "Reports of cooling inflation and rise in November growth failed to enthuse investors, as higher valuations remain a major concern. Despite improved domestic economic readings, FPI outflows have continued, which has been a major dampener for local traders. Technically, on weekly charts the Nifty has formed a long legged Doji candlestick formation. For the next few trading sessions, the 100-day SMA (Simple Moving Average) or 17,900 would act as sacrosanct support levels.”

“A pullback formation above the same could drive the index to 20-day SMA or 18,075. Further upside may also continue which could lift the index till 18200. On the other hand, a fresh round of selling is possible only after the dismissal of 17800 and below the same, the index could slip till 17,650-17,600," Athawale added.

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