Inflation rate, rupee, results to steer equity indices (Market Outlook)

Inflation rate, rupee, results to steer equity indices (Market Outlook)

by | May 25, 2021 | Banking, Economy, Markets, News

market, BSE, NSE,By Rohit Vaid,

Mumbai : Key macro-economic inflation data points, combined with the last of first quarter earning results and the direction of foreign fund flows, are expected to drive the Indian equity indices next week.

Analysts opined that the movement of the Indian rupee against the US dollar as welll as global crude oil price volatility and high stock valuations will also affect investor sentiments.

“The domestic markets are likely to witness another eventful week, with more quarterly earnings, trends in global markets, investment by foreign and domestic investors,” SMC Investments & Advisors’ Chairman and Managing Director D.K. Aggarwal told IANS.

In terms of global cues, Delta Global Partners Founder and Principal Partner Devendra Nevgi told IANS: “The risk emanating from a potential Turkey-centred contagion spreading to EU banks will dominate the risk sentiment in the EMs (emerging markets) and Indian markets next week.”

“The USD is higher and the yields lower, indicating a risk-aversion scenario. The Indian rupee’s moves need to be closely watched, since it is already closer to an all-time low. The Turkish Lira’s steep fall and USD’s appreciation would negate the sentiment towards EM currencies in general, including the rupee.”

According to Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, the Indian rupee is expected to range from 68.70 to 69.30 against a US dollar in the coming week.

“We should be prepared for a devaluation. However, lower crude oil prices and the Reserve Bank of India’s (RBI ) invention in defending the Indian rupee against the USD will mitigate the magnitude of devaluation,” Banerjee told IANS.

On the currency front, the rupee closed at 68.83 on August 10, weakened by 22 paise from its previous week’s close of 68.61 per greenback.

Besides the rupee, foreign fund inflows into the country might get impacted due to “global risk aversion”.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) bought scrips worth Rs 992.18 crore in the last week.

Apart from foreign funds, macro-economic inflation data points such as the consumer price index (CPI) and wholesale price index (WPI) for July will set the tone for the key indices.

Company-wise, Abbott India, Cadila Healthcare, Godrej Industries, Greaves Cotton, Oil India, Tata Chemicals, Tata Steel, Allahabad Bank, GMR Infra, Grasim Industries and Sun Pharma are expected to announce their Q1 earning results next week.

On technical charts, the National Stock Exchange (NSE) Nifty50 remains in an uptrend as it has closed at new life highs.

“Technically, while the Nifty has corrected from life highs, the underlying trend of the Nifty remains up,” HDFC Securities’ Retail Research Head Deepak Jasani told IANS.

“The intermediate uptrend is likely to continue once the immediate resistance of 11,495 points is taken out. Crucial supports to watch for any further weakness is at 11,329 points.”

Last week, both the key Indian equity indices — S&P Bombay Stock Exchange (BSE) Sensex and the NSE Nifty 50 — rose on the back of healthy inflow of foreign funds, along with domestic political developments and positive global cues.

Additionally, prediction of healthy economic growth by IMF combined with better-than-expected quarterly results and low crude oil prices aided the two key indices in making substantial gains.

Consequently, the S&P BSE Sensex closed at 37,869.23 points, higher by 313.07 points or 0.82 per cent from its previous close.

The positive sentiment pushed the barometer index to a fresh intra-day record high of 38,076.23 points and a closing high of 38,024.37 points during the trade week ended August 10.

Similarly, the wider Nifty50 on the NSE made gains. It ended at 11,429.50 points, higher by 68.7 points or 0.58 per cent from its previous close.

The Nifty50 made a fresh intra-day record high of 11,495.20 points and closing high of 11,470.70 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)

—IANS

Inflation rate, no-turst vote keep equity indices subdued (Market Review)

Inflation rate, no-turst vote keep equity indices subdued (Market Review)

by | May 25, 2021 | Economy, Markets, News

NSEBy Rituraj Baruah,

Mumbai : Weak global cues, along with higher inflation and a no-trust vote in Parliament, subdued the key Indian indices in the week-ended Friday.

Weakening of the Indian rupee to fresh lows during the week also eroded investor sentiments in the Indian equity market, analysts said.

However, the Indian currency recovered and appreciated on Friday, thereby lifting the indices on a daily basis and restricting further decline in the equity market compared to the previous week’s close.

Significantly, on Wednesday the benchmark BSE Sensex hit a fresh record high of 36,747.87 points, but could not hold on to the gains.

On a weekly basis, Sensex closed at 36,496.37 points — down 45.26 points or 0.12 per cent from the previous close.

The wider Nifty50 on the National Stock Exchange (NSE) settled at 11,010.20 points, down just 8.7 points or 0.08 per cent — from its previous week’s close.

The market breadth was negative in four out of the five trading sessions of the week, according to Deepak Jasani, Head of Retail Research at HDFC Securities.

“Weak global cues and the no-confidence motion in the monsoon session of Parliament dented the sentiment across the street,” said Parteek Jain, Director of Hem Securities.

Moreover, ahead of the F&O expiry in the coming week, traders were seen squaring off their positions, Jain added.

Rahul Sharma, Senior Research Analyst at Equity99 noted: “Stock-specific action continued as sentiment was partially hit after index heavy-weight like Bajaj Auto and Kotak Mahindra Bank missed market expectations.”

The no-confidence motion vote had a limited impact on market sentiments as the ruling party was sure of its majority in Parliament, he said.

Earlier in the week, the rise in the wholesale inflation rate for June depressed the equity indices.

The wholesale inflation rate for June was recorded at 5.77 per cent, compared to 4.43 per cent in the previous month, according to data released on Monday.

On the currency front, the rupee closed at 68.85 on Friday, strengthening by just 3 paise from its previous week’s close of 68.88 per greenback.

On Thursday, the rupee touched a fresh closing low of 69.05 per dollar. Minutes into the trade on Friday, it hit an all-time low of 69.12 against the greenback but eventually bounced back sharply and helped end the currency trade with appreciation on a weekly basis.

According to Jasani: “Strengthening US dollar, weakening Chinese yuan, domestic political uncertainty, buoyant crude prices and capital outflows have all resulted in pressurizing the rupee lately.”

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 1,209.41 crore, while the domestic institutional investors purchased stocks worth Rs 1,300.06 crore in the week bygone.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested Rs 888.70 crore, or $129.80 million from the equities segment on stock exchanges during the week ended on July 20.

Sector-wise the major gainers in the week were energy, public sector banks and IT, while metals, realty, pharma and auto were among the major losers, HDFC Securities’ Jasani told IANS.

The top weekly Sensex gainers were Infosys (up 3 per cent at Rs 1,348.35); Reliance Industries (up 2.90 per cent at Rs 1,128.55); Yes Bank (up 2.72 per cent at Rs 386.65); ONGC (up 2.10 per cent at Rs 157.85); and Asian Paints (up 2.08 per cent at Rs 1,396.90 per share).

The major losers were Tata Steel (down 9.80 per cent at Rs 503.45); Bajaj Auto (down 9.35 per cent at Rs 2,841.10); Tata Motors (DVR) (down 6.32 per cent at Rs 140.80); Kotak Mahindra Bank (down 5.08 per cent at Rs 1,333.45); and Hindustan Unilever (down 4.88 per cent at Rs 1,656.20 per share).

(Rituraj Baruah can be contacted at rituraj.b@ians.in)

—IANS