HDFC Securities weekly bulletin

Markets in the week gone by

Domestic equity indices continued their upward trajectory for the sixth consecutive week. Investors now look forward to the Q1 earnings season that started this week and the upcoming budget announcement scheduled for July 23rd, which could provide further direction for the market. Multiple tailwinds led the market to come out of its range-bound trajectory. The strong result from the IT bellwether and a drop in US inflation to a one-year low added optimism to the market. Sensex advanced 0.65% and Nifty added 0.73% over the week. The markets edged higher in 2 out of 5 trading sessions during the week.

In the broader markets BSE Midcap index was up 0.15% and the BSE Smallcap index fell 0.23%. Market breadth was in favour of losers with 9 shares advancing for every 10 losers.

Average cash turnover on NSE was 6% higher as compared to previous week. Sectoral indices were mixed with Realty down 2.3%, Telecom down 1.6% and Auto down 1.1%. On the positive side IT rallied 3.5%, FMCG was up 3.3%, and Oil & Gas gained 2.9%.

Among Nifty 100 stocks, Zomato surged 7.2%, ONGC was up 6.6%; ITC gained 5.9%; Marico added 5.6%; and Godrej Consumer rose 5.1%. On the downside, Bank of Baroda fell 8.5%; M&M slipped 6.1%; ABB was down 5.4%; Vedanta fell 5.4% and Canara Bank declined 4.3%.

As per provisional figures, FIIs were net buyers of Rs 3844cr in the equity markets during the week and DIIs were net buyers of Rs 5391 crore.

US markets overcame Friday's unpleasant June reading on wholesale prices, climbing to new intraday record highs as the rally kept broadening beyond a handful of tech-focused mega caps. The Dow Jones Industrial Average came close to notching a new record high, as it reclaimed 40,000. For the week, the Dow climbed 1.6% and the S&P 500 gained 0.9%, each scoring back-to-back weekly gains. The Nasdaq booked a 0.2% weekly rise, rising a sixth straight week. World indices kept making new highs.

Crude oil prices fell on Friday, ending a two-day uptrend, amid lower-than-expected US inflation data for June, which bolstered hopes of a Federal Reserve interest rate cut. Despite the slight pullback in oil prices, there are encouraging signs of strong summer demand. For the week, the US oil benchmark was down 1.1% at $82.2/barrel. Gold held the $2,400 mark on Friday, remaining relatively close to record-high levels from late May as markets continued to expect imminent rate cuts by the US Fed. Gold prices were up 0.9% for the week at $2411.1/ounce.

The Indian 10yr G-Sec yield fell 1 bps to 6.99%. The Indian rupee depreciated by 4 paise against the US dollar to Rs 83.54 per USD.

Other economic data

India

·  The annual consumer inflation rate in India rose to 5.08% in June of 2024 from 4.75% in the previous month, to reflect the fastest pace of price growth since February. From the previous month, Indian consumer prices jumped by 1.33%, the largest increase in 11 months. Vegetable inflation due to heatwave was the main contributir to the rise in inflation.

·  Industrial output in India rose by 5.9% on an annual basis in May 2024, marking the highest growth rate since October 2023, following a 5% growth in the previous month.Electricity and Manufacturing contributed majorly to the rise.

US

·  The annual inflation rate in the US fell for a third straight month to 3% in June 2024, the lowest since June 2023, compared to 3.3% in May and 3.1% expected..

·  Producer prices in the United States increased 2.6% year-on-year in June 2024, the most since March 2023, accelerating from an upwardly revised 2.4% gain in May.

·  The University of Michigan consumer sentiment for the US fell for a fourth straight month to 66 in July 2024, the lowest since November, from 68.2 in June.

·  Jerome Powell told Congress that the Fed doesn’t need inflation below 2% before cutting rates and that officials still have more work to do. He noted the labor market has cooled “pretty significantly.”

UK/Eurozone/Germany

·  The UK's trade deficit shrank to £4.89 billion in May 2024, from a downwardly revised £6.42 billion in the prior month. Imports slumped by 2.8% over a month while exports fell by 0.9%.

·  Industrial production in the UK grew 0.2% month-over-month in May 2024, rebounding from a 0.9% fall in the previous month.

·   The British economy expanded 0.4% month-over-month in May 2024 after stalling in April

Japan/China

·  Producer prices in Japan increased by 2.9% yoy in June 2024, quickening from an upwardly revised 2.6% growth in the prior month.

·  Industrial production growth in Japan was revised upward to 3.6% month-over-month in May 2024 from flash data of a 2.8% increase. Yearly, industrial output rose by 1.1% in May, indicating the first expansion in seven months and swinging from a 1.8% decline in April.

·  China's annual inflation rate edged down to 0.2% in June 2024 from 0.3% in the prior two months.

·  China's producer prices fell by 0.8% yoy in June 2024, easing from May's figure of a 1.4% decline.

·  Chinese banks extended CNY 2,130 billion in new yuan loans in June of 2024, a sharp contraction from the CNY 3,050 billion in the previous year.

·  China's trade surplus surged to USD 99.05 billion in June 2024 from USD 69.80 billion in the same period a year earlier. It was the largest trade surplus since July 2022, as Exports grew 8.6% from a year earlier, while imports unexpectedly dropped by 2.3%.

·  Analysts expect the upcoming Third Plenum in China (Mon-Thursday) to focus on areas — such as high local government debt levels and a push for advanced manufacturing

NSE 500 results

·  15-Jul – Angel One, Bank of Maha, HDFC AMC, HDFC Life Insur., Jio Financial

·  16-Jul – Alok Industries, Bajaj Auto, Century Textiles, CRISIL, Himadri Special, Jubilant Ingrev., Just Dial, L&T Finance Ltd, Netwrk.18 Media, TV18 Broadcast

·  17-Jul – Asian Paints, Elecon Engg.Co, LTIMindtree

·  18-Jul – CEAT, CIE Automotive, Dalmia BharatLtd, Grindwell Norton, Havells India, Infosys, JSW Infrast, Karur Vysya Bank, L&T Technology, Mastek, Persistent Sys, Polycab India, Sterling & Wils., Tanla Platforms, Tata Comm, Tata Technolog.

·  19-Jul – Aether Industri., Atul, B P C L, Blue Dart Expres, CreditAcc. Gram., ICICI Lombard, JSW Steel, Jubilant Pharmo, Nippon Life Ind., One 97, Patanjali Foods, Reliance Industr, Route Mobile, Tejas Networks, UltraTech Cem., Union Bank (I), Wipro

·  20-Jul – Can Fin Homes, HDFC Bank, J K Cements, Kotak Mah. Bank, Poonawalla Fin, Yes Bank

Events in the coming week

·  15-Jul – India – WPI, Trade Balance, Passenger Vehicle Sales; China – GDP Growth, Industrial Production, Retail Sales, Unemployment Rate;;

· 16-Jul – US – Retail Sales

·  17-Jul –US – Industrial Production;

·  18-Jul –Eurozone – ECB Monetary Policy

 Outlook

On Friday, Nifty broke out of the range of the last 6-7 sessions and closed at record highs. On weekly charts, Nifty rose 0.73%, rising for the 6th consecutive week. Nifty could now gradually rise towards 24960 while 24174 and later 23993 could provide support in the near term.