Weekly Musings – Index performance for week ended May 26, 2023

28 May 2023 , 06:50 AM

In this segment of weekly musings, we look at the index performance of 4 generic indices and 5 sectoral indices, which capture more than 80% of the sectoral weight of the Nifty.

NIFTY 50 INDEX – BREAKS DECISIVELY ABOVE 18,400 

The table below captures the movement of the Nifty 50 index in the week to 26^th May 2023. 

Date	High	Low	Close
26-May-23	18,508.55	18,333.15	18,499.35
25-May-23	18,338.10	18,202.40	18,321.15
24-May-23	18,392.60	18,262.95	18,285.40
23-May-23	18,419.75	18,324.20	18,348.00
22-May-23	18,335.25	18,178.85	18,314.40
19-May-23	18,218.10	18,060.40	18,203.40
	Weekly Returns	+1.63%

Data Source: NSE

The week saw the Nifty decisively breaking above the resistance of 18,400 and settling almost at the 18,500 mark. The sharp rally in the week has come amidst strong FPI flows, which has now crossed $4 billion in the month of May 2023. Also, the Fed minutes hinted at a possible pause on rates in the June policy and that has gone down well with the markets. The fourth quarter results of Indian companies showed positive traction on a yoy basis and also on a sequential basis as gross margins improved sharply in the quarter. Markets now await the GDP data for Q4 and for FY23 as well as the fiscal deficit data for FY23.

NIFTY NEXT 50 INDEX – DID BETTER THAN NIFTY THIS WEEK

The table below captures the movement of the Nifty Next 50 index in the week to 26^th May 2023.

Date	High	Low	Close
26-May-23	41,710.85	41,186.35	41,684.70
25-May-23	41,275.20	40,944.60	41,213.30
24-May-23	41,122.55	40,897.70	40,984.05
23-May-23	41,194.00	40,968.15	41,010.35
22-May-23	40,938.20	40,465.85	40,923.45
19-May-23	40,630.50	40,090.25	40,546.15
	Weekly Returns	+2.81%

Data Source: NSE

The week saw the Nifty Next 50 actually doing much better than the Nifty with strong 2.81% returns for the week. The Nifty Next 50 index has a 55% exposure to 3 sectors viz., consumer goods, financials, and healthcare and these sectors did perform well in the week. This index represents the 50 companies with the potential to graduate to become Nifty companies in the future. In the recent past, there has been good deal of value hunting in this space and that is showing up in the performance.

NIFTY MID-CAP 100 INDEX – ANOTHER STRONG WEEK

The table below captures the movement of the Nifty Mid-Cap 100 index in the week to 26^th May 2023.

Date	High	Low	Close
26-May-23	33,454.75	33,180.00	33,425.10
25-May-23	33,188.40	32,972.40	33,157.10
24-May-23	33,136.70	32,865.40	33,031.35
23-May-23	33,000.80	32,830.90	32,961.90
22-May-23	32,776.35	32,450.55	32,756.40
19-May-23	32,616.25	32,232.40	32,550.35
	Weekly Returns	+2.69%

Data Source: NSE

The previous week, the Nifty Mid cap index had rallied by a moderate 0.25% but for the week ending 26th May, the returns were decisively positive at 2.69%. Domestic mutual funds and foreign investors have been aggressively lapping up smaller sized stocks in the last few weeks, especially where there has been a sharp correction. The mid-caps are likely to benefit the most from the RBI hinting at a peak on interest rates. A steady rupee can be another edge for mid-cap stocks.

NIFTY SMALL-CAP 100 INDEX – STILL STRUGGLING AT 10,000

The table below captures the movement of the Nifty Small Cap 100 index in the week to 26^th May 2023.

Date	High	Low	Close
26-May-23	10,024.20	9,967.65	10,010.80
25-May-23	9,989.15	9,938.25	9,957.95
24-May-23	10,002.30	9,908.35	9,949.40
23-May-23	10,018.40	9,938.60	9,948.25
22-May-23	9,954.50	9,820.10	9,946.35
19-May-23	9,925.55	9,790.70	9,891.70
	Weekly Returns	+1.20%

Data Source: NSE

Although the small cap index closed the week above the 10,000 levels, that has provided to be a major resistance for this index. Small caps are normally very stock specific plays and while the interest was there in pockets, the focus was more this week on sectoral stories and on mid-cap stocks. To an extent, the lower retail participation has kept the small caps relatively subdued in recent weeks.

BANK NIFTY INDEX – ENDS A RELATIVELY FLAT WEEK

The table below captures the movement of the Nifty Bank index (BANKNIFTY) in the week to 26^th May 2023.

Date	High	Low	Close
26-May-23	44,067.60	43,588.80	44,018.00
25-May-23	43,719.85	43,390.30	43,681.40
24-May-23	44,010.45	43,639.80	43,677.85
23-May-23	44,095.25	43,852.20	43,954.45
22-May-23	44,026.75	43,684.90	43,885.10
19-May-23	44,020.90	43,531.90	43,969.40
	Weekly Returns	+0.11%

Data Source: NSE

In a week when the Nifty is sharply higher, one would expect the Bank Nifty to rally too, considering it has a weight of 38% in the Nifty. However, that was not the case as banks rallied just about 0.11%, or you can call it flat performance for the week. The pressure on the bank index came from the HDFC Twins ahead of their proposed merger. Being the heavyweights they are, they had an oversized impact. Also, most banks have already rallied on the back of positive quarterly results in the last few weeks.

NIFTY IT INDEX – ANOTHER ROBUST WEEK FOR IT STOCKS

The table below captures the movement of the Nifty IT index in the week ending on 26^th May 2023.

Date	High	Low	Close
26-May-23	29,384.85	28,975.95	29,355.90
25-May-23	28,970.95	28,686.20	28,928.75
24-May-23	28,959.35	28,655.00	28,890.80
23-May-23	29,319.90	28,830.00	28,873.70
22-May-23	29,062.05	28,294.25	29,007.30
19-May-23	28,369.40	28,007.05	28,303.65
	Weekly Returns	+3.72%

Data Source: NSE

It was another stellar performance by the IT index in the week to 26^th May 2023. After the Nifty IT Index had gained 0.98% in the previous week, it rallied a full 3.72% in the latest week. Most of the majors like HCL Tech, Infosys and TCS saw aggressive buying. This can be attributed to the sharp correction in IT stocks. With the Indian government largely relying on IT exports to boost the trade balance, markets have summarized that the worst may be over for the IT stocks. It remains to be seen if this bounce can be sustained..

NIFTY OIL & GAS INDEX – RELIANCE LEADS FROM THE FRONT

The table below captures the movement of the Nifty Oil & Gas index in the week ending on 26^th May 2023.

Date	High	Low	Close
26-May-23	7,593.05	7,546.20	7,581.45
25-May-23	7,564.15	7,492.80	7,543.00
24-May-23	7,591.95	7,540.40	7,551.65
23-May-23	7,571.75	7,524.85	7,542.55
22-May-23	7,499.20	7,420.60	7,488.70
19-May-23	7,441.90	7,347.70	7,430.75
	Weekly Returns	+2.03%

Data Source: NSE

Despite fears of a global slowdown, the oil prices managed to remain flat to buoyant in the previous week. The stock that led the pack higher was Reliance Industries, which saw the stock price going above the Rs2,500 mark on a slew of upgrades on the stock. Even the downstream oil companies benefited from lower crude costs and wider marketing margins. The traction was positive in the week for oil stocks.

NIFTY AUTO INDEX – STEADY STATE GROWTH CONTINUES

The table below captures the movement of the Nifty Auto index in the week ending on 26^th May 2023.

Date	High	Low	Close
26-May-23	14,150.00	14,017.65	14,130.45
25-May-23	14,050.85	13,920.75	14,029.50
24-May-23	14,035.40	13,916.25	13,989.60
23-May-23	13,994.60	13,884.70	13,982.60
22-May-23	13,925.15	13,823.40	13,890.50
19-May-23	13,876.55	13,647.60	13,863.55
	Weekly Returns	+1.93%

Data Source: NSE

The Nifty Auto index also rallied by 1.93%. Auto numbers have been really positive with Tata Motors and M&M beating expectations. The M&M has shown good traction in the tractors business and also in the automotive business. Most auto companies have seen order bookings overflowing and that is having a positive impact on the auto index. The auto stocks gained from lower input costs and better sales traction.

NIFTY FMCG INDEX – DOUBLE BOOST FOR FMCG

The table below captures the movement of the Nifty FMCG index in the week ending on 26^th May 2023.

Date	High	Low	Close
26-May-23	50,425.15	49,654.60	50,388.00
25-May-23	49,825.05	49,418.65	49,657.00
24-May-23	49,439.25	49,031.30	49,355.25
23-May-23	49,322.40	49,027.25	49,118.80
22-May-23	49,126.25	48,701.45	49,052.25
19-May-23	48,965.80	48,426.60	48,874.25
	Weekly Returns	+3.10%

Data Source: NSE

FMCG has been one of the star performers of the week with 3.10% returns. It is not just that the input prices are going down on crude and on agri inputs. The real story is the revival in rural demand for most FMCG companies and a unique strategy of positioning the products in smaller quantities for sustaining a wider market.

Here are the major takeaways for the week ended on 26^th May 2023? It was a positive week overall with buying seen across the board.

• The generic indices like the Nifty and the Nifty Next 50 are looking at opportunities and reasons for a break out. The Nifty Next 50 and the mod cap indices gave strongly positive returns in the week. Alpha focus is still quite sharp in the market. 

   

• In terms of sectoral plays, IT and FMCG were the big gainers while autos and oil & gas stocks also gave fairly attractive returns. However, the Bank Nifty was almost flat in the absence of any fresh triggers. This is despite the Bank Nifty having a 38% weight in Nifty.

For June, the RBI policy statement, Fed statement and the FPI flows will hold the key to the trajectory of the markets.