Weekly Market Wrap: D-Street ended in the red terrain amid rising crude, FII selling. What lies ahead?

Indian equity benchmarks ended the passing week in red terrain as traders remained concerned over rising crude oil prices. Selling pressure also increased due to a report by the Reserve Bank of India (RBI) stating that India's current account deficit (CAD) surged to $9.2 billion (1.1 per cent of GDP) in the first quarter of 2023-24, seven times more than $1.3 billion (0.2 per cent of GDP) in the preceding quarter. Continued selling by foreign institutional investors (FII) also dented the investor’s sentiments. However, some respite came as equity markets surged around half a per cent on the last trading day of the week.

These signals led the BSE Sensex to decline 181 points, or 0.27 per cent, at 65828 during the week ended September 29, while the Nifty slipped 36 points, or 0.18 per cent, to 19,638. Sector-wise, the BSE Healthcare index surged the most (2.6 per cent) during the week gone by. While BSE Realty and BSE Capital Goods indices have registered a gain of 2.5 per cent, and 2.2 per cent, respectively. On the other hand, the BSE Information Technology index has registered a weekly decline of 2.8 per cent.

As many as 26 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 4.5 per cent, Bajaj Finance emerged as the top gainer in the index. It was followed by Coal India (4.1 per cent), Oil & Natural Gas Corporation (3.6 per cent), Larsen & Toubro (3.5 per cent), and NTPC (3.2 per cent). Hindalco Industries, Apollo Hospitals Enterprise, and Sun Pharmaceutical Industries also advanced by over two per cent. On the other hand, Tech Mahindra, Infosys, and Titan Company declined 6.3 per cent, 4.1 per cent, and 3.8 per cent, respectively. 

Market Macros  

Vinod Nair, Head of Research at Geojit Financial Services said, Amidst mounting concerns stemming from escalating crude oil prices and inflationary pressures, which were compounded by fears of another rate hike by the Fed. “The domestic market grappled with volatility throughout the week. The increase in US bond yields and volatility in the INR further diminished the attractiveness of domestic indices for foreign investors”. 

He added, that due to low liquidity and a lack of catalysts to stimulate buying, the market is encountering strong resistance at higher levels. “Throughout the week, IT stocks underperformed due to adverse global cues, while the pharma sector witnessed strong buying interest as investors adopted a defensive strategy in response to global uncertainties".  

However, the market concluded the week on a positive note, boosted by healthy momentum in industrial growth, up by 12 per cent YoY. “Volatility is expected to remain elevated in the short term, given the upside risk of domestic inflation on account of higher crude prices. Investors will closely monitor upcoming releases of domestic, US, and Chinese PMI data, among other indicators, as they are expected to shape future market trends”, Nair said.

Technical Outlook  

Rupak De, Senior Technical analyst at LKP Securities said, that Nifty ended the month of September with gains, following a weak August closing. The recent selling pressure was halted around the 50EMA. However, we need to close above 19,750 to witness a decent rally over the short term. “A close or sustained move above 19,750 might take Nifty on a ride towards 20,500-20,700. On the flip side, a fall below 19,470 might trigger the resumption of the downtrend."

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