Weekly Musings – Index performance for week ended August 16, 2024

20 Aug 2024 , 09:27 PM

AMIDST THE SELLING; 4 POSITIVE TRENDS WE NOTICED

The week to August 16, 2024 marked the third consecutive week of FPI selling. FPIs have now sold over $2.7 Billion in equities in the last 3 weeks. However, these outflows pale in front of the $9.1 Billion infused by FPIs in the 7 weeks prior to that. However, that is not the big story in the week. In a week that was heavy on data flows pertaining to inflation, industrial growth and global trade, there were 4 trends that were decipherable.

• Private banks appear to be making a comeback, after a long gap. In the last one year, it was the PSU banks that managed to outshine the private banks in terms of performance. In the latest week to August 16, 2024, the overall banking index was in the positive, which is despite the PSU banking index being the worst performer among the indices. Clearly, investors are starting to see value in the private banks at current valuations.
• It appears to be beacon of hope in the market. Just about a few weeks back, IT was seen as the underperforming sector. Things changed in the latest quarter with most IT companies upping their growth guidance. The strong dollar and the volatile rupee has also shifted the terms of investing in favour of the IT stocks.
• The story of alpha versus beta is gradually becoming an outdated story. The investors are looking at very stock specific and sector specific stories. For example, digital companies have been doing well across the board while the PSU stocks are under irrespective of whether they are large caps, mid-caps, or small caps.
• The revival of interest in rate sensitives appears to indicate that the market is expecting a rate cut in the October monetary policy. That is not hard to fathom. The Q1 results saw OPMs going up but net profits falling by 4%. That was clearly due to higher interest costs. That is likely to induce the RBI to push for an early rate cut.

In a week when the inflation data was positive, the VIX fell sharply to around 14.5 levels. However, it is still above the levels where you can expect buy on dips. In the coming week, the minutes of the RBI monetary policy and the minutes of the FOMC will hold the key. The all-important India GDP for Q1FY25 will also be out in the last week of August 2024.

BSE SENSEX 30 INDEX – FRIDAY EFFECT LEADS TO POSITIVE CLOSE

The table captures the movement of the BSE SENSEX 30 for the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	79,754.85	80,518.21	79,306.69	80,436.84
15-Aug-24	79,065.22	79,228.94	78,895.72	79,105.88
14-Aug-24	79,065.22	79,228.94	78,895.72	79,105.88
13-Aug-24	79,552.51	79,692.55	78,889.38	78,956.03
12-Aug-24	79,330.12	80,106.18	79,226.13	79,648.92
09-Aug-24	79,984.24	79,984.24	79,549.09	79,705.91
		Weekly Returns		0.92%

Data Source: BSE

The Sensex closed above the 80,400 mark. Had it not been for the 1,335 points recovery in the Sensex on Friday, the Sensex would have still closed in losses. FPIs continued to be net sellers, but the domestic support from mutual funds and insurance companies was visible. For the week, the Sensex closed with gains of 0.92%. During the week, the Sensex touched a high of 80,518 and a low of 78,889. The Sensex closed the week 731 points higher, largely triggered by the 1,331 points rally on Friday. For now, 80,000-81,000 range remains the immediate range to break out for the BSE Sensex.

NIFTY 50 INDEX – PERSISTENT FPI SELLING LIMITS GAINS

The table captures the movement of Nifty 50 index in the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	24,334.85	24,563.90	24,204.50	24,541.15
15-Aug-24	24,184.40	24,196.50	24,099.70	24,143.75
14-Aug-24	24,184.40	24,196.50	24,099.70	24,143.75
13-Aug-24	24,342.35	24,359.95	24,116.50	24,139.00
12-Aug-24	24,320.05	24,472.80	24,212.10	24,347.00
09-Aug-24	24,386.85	24,419.75	24,311.20	24,367.50
		Weekly Returns		0.71%

Data Source: NSE

FPIs were net sellers for the third week in a row, after 7 weeks of buying. The high VIX at above 14 and the FPI selling of $926 Million had its impact on the Nifty levels, although the Friday buying came as a blessing in disguise. The selling in the week was largely led by the US slowdown fears, and yen carry trade worries. While IT sector flattered the street, other sectors saw marginal gains. For the week, Nifty closed with gains of 0.71%, as the level of 24,500 was taken out towards the close. For the week, the Nifty gained 174 points. During the week, the Nifty touched a high of 24,564 and a low of 24,100, eventually closing the week very close to the high point of the week.

NIFTY NEXT 50 INDEX – ENDS MARGINALLY UP FOR THE WEEK

The table captures the movement of Nifty Next 50 for the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	72,208.55	73,001.85	71,885.20	72,943.20
15-Aug-24	71,840.10	71,921.65	71,100.10	71,642.40
14-Aug-24	71,840.10	71,921.65	71,100.10	71,642.40
13-Aug-24	72,596.85	72,669.00	71,534.25	71,609.80
12-Aug-24	72,401.50	72,736.65	71,965.85	72,434.25
09-Aug-24	72,658.90	72,900.00	72,241.20	72,718.85
		Weekly Returns		0.31%

Data Source: NSE

In a week when the Nifty and the Sensex closed with modest gains, the Nifty Next 50 also saw very marginal gains of 0.31%. The index closed the week gaining 224 points. This week, the Nifty Next 50 touched a high of 73,002 level and a low of 71,100 during the week, before closing the week near to the high point at  72,943. The Nifty Next 50 represents the large cap stocks part of the NSE 100, but not part of the Nifty 50.

NIFTY MID-CAP 100 INDEX – MID CAPS SHINE IN A DULL WEEK

The table captures the movement of Nifty Mid-Cap 100 in the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	56,991.75	57,699.75	56,861.20	57,656.00
15-Aug-24	57,090.20	57,144.10	56,347.10	56,547.05
14-Aug-24	57,090.20	57,144.10	56,347.10	56,547.05
13-Aug-24	57,580.35	57,658.35	56,779.85	56,881.50
12-Aug-24	56,984.65	57,440.95	56,677.85	57,330.60
09-Aug-24	57,227.00	57,427.20	57,019.45	57,174.40
		Weekly Returns		0.84%

Data Source: NSE

After the losses of the previous week, the Nifty Mid Cap index made smart gains in the week to August 16, 2024. In the week, the Nifty Mid-Cap 100 index closed 0.84% up or 482 points higher for the week. However, the mid-cap index is already trading close to its lifetime highs. During the week, the advance / decline ratio turned decisively positive and that worked in favour of these mid-cap stocks. For the week, the Mid-Cap 100 index touched a high of 57,700 and a low of 56,347; with mid-cap IT stocks leading the way.

NIFTY SMALL-CAP 100 INDEX – ALPHA HUNTING TURNS FLAT

The table captures movement of Nifty Small Cap 100 in the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	18,249.80	18,450.55	18,234.90	18,436.85
15-Aug-24	18,292.00	18,312.65	17,972.80	18,087.50
14-Aug-24	18,292.00	18,312.65	17,972.80	18,087.50
13-Aug-24	18,541.15	18,543.10	18,169.60	18,203.65
12-Aug-24	18,388.95	18,528.90	18,236.50	18,444.30
09-Aug-24	18,518.25	18,544.95	18,377.55	18,410.20
		Weekly Returns		0.14%

Data Source: NSE

The week showed alpha hunting still taking a pause. The small cap index gained a marginal 0.14% in the current week, but it comes after a sharp fall in the previous week, with small cap index also trading very close to its all-time highs. This week, the index of small caps closed  with gains of just 27points. For the week, the Nifty Small Cap index touched a high of 18,543 levels and a low of 17,972, with the defence and PSU stocks in the small cap space limiting the gains of the index.

BANK NIFTY INDEX – CLOSES FLAT AMIDST UNCERTAINTY

The table below captures the movement of BANKNIFTY in the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	50,133.00	50,603.40	49,806.05	50,516.90
15-Aug-24	49,887.15	49,959.25	49,654.65	49,727.30
14-Aug-24	49,887.15	49,959.25	49,654.65	49,727.30
13-Aug-24	50,395.35	50,559.25	49,785.10	49,831.85
12-Aug-24	50,412.60	50,830.70	50,149.25	50,577.95
09-Aug-24	50,612.10	50,707.75	50,386.45	50,484.50
		Weekly Returns		0.06%

Data Source: NSE

Bank Nifty closed just 32 points higher in the week to August 16, 2024 as the uncertainty on the monetary policy front and concerns over falling NIMS, kept the banks under pressure. However, there was a dichotomy with the PSU banks underperforming compared to the private banks. However, the rate cut hopes raised by the Fed actually kept the banking stocks in the hunt and closed flat; but the RBI’s ambivalent policy stance this week did not help much. During the week, the Bank Nifty touched a high of 50,831 and a low of 49,655.

NIFTY IT INDEX – REMAINS KING OF THE LARGE CAPS

The table captures the movement of Nifty IT index in the week to August 16, 2024.

Date	Open	High	Low	Close
NIFTY IT	16-Aug-24	40,287.30	40,927.15	40,063.90
NIFTY IT	15-Aug-24	39,259.70	39,767.15	39,177.70
NIFTY IT	14-Aug-24	39,259.70	39,767.15	39,177.70
NIFTY IT	13-Aug-24	39,198.25	39,383.30	38,972.70
NIFTY IT	12-Aug-24	39,038.95	39,329.05	38,747.85
NIFTY IT	09-Aug-24	39,007.70	39,252.40	38,931.85
		Weekly Returns		4.70%

Data Source: NSE

Last week, the IT stocks took a knock on the back of concerns that the US economy could slow down. There was sanity returning this week as the IT index bounced 4.7% to close above the 40K mark for the week. Experts and investors are of the view that the hard landing of the US economy may be more of a myth than a reality. For the week to August 16, 2024, IT index bounced by 1,132 points on the back of hopes that the US IT spend would only deeper and that the dollar would remain strong. The Nifty IT index touched a high of 40,287 and a low of 39,329. After 6 weeks of sterling performance, the IT index had lost over 5.5% in the last two weeks. However, this week appears to have recouped those losses.

NIFTY OIL & GAS INDEX – CAUTIOUS AMIDST VOLATILE OIL PRICES

The table captures the Nifty Oil & Gas index for the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	12,900.20	13,023.75	12,858.00	12,999.75
15-Aug-24	12,923.50	12,967.05	12,785.55	12,808.55
14-Aug-24	12,923.50	12,967.05	12,785.55	12,808.55
13-Aug-24	13,090.10	13,098.05	12,876.40	12,906.00
12-Aug-24	12,920.75	13,122.90	12,834.05	13,043.30
09-Aug-24	12,981.15	13,041.25	12,904.65	12,972.75
		Weekly Returns		0.21%

Data Source: NSE

In the previous week, the oil and gas index had corrected by -1.25%. This week, the oil & gas index could only manage marginal gains of 0.21%. From a longer term perspective, oil & gas index has been the star performer of the last quarter. In the last few weeks, the volatile crude prices hovering just below $80/bbl and the sharply lower gross refining margins (GRMs) and marketing margins of oil companies have put pressure on oil companies. During the week to August 16, 2024, the Oil & Gas index touched a high of 13,123 and a low of 12,786 levels, hinting that the index has been moving independent of the broad market.

NIFTY AUTO INDEX – DEMAND AND COST CONCERNS PERSIST

The table captures the movement of Nifty Auto index in the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	25,344.80	25,635.45	25,261.75	25,597.35
15-Aug-24	25,169.80	25,235.85	25,021.10	25,093.50
14-Aug-24	25,169.80	25,235.85	25,021.10	25,093.50
13-Aug-24	25,330.45	25,362.35	25,041.95	25,081.85
12-Aug-24	25,267.15	25,345.10	25,089.75	25,278.95
09-Aug-24	25,272.90	25,445.00	25,202.75	25,346.65
		Weekly Returns		0.99%

Data Source: NSE

Auto sector was among the star performers in the Indian markets in the last few weeks. However, in the last two weeks, the auto index had lost -3.52%. The auto numbers for July put out by the SIAM showed wholesale dispatches under pressure and now there are fears that an economic slowdown in the US markets could hit the export numbers quite hard of auto ancillary companies. The trade constraints are already putting pressure on two-wheeler exports. Higher inflation expectations and higher input costs remain an overhang for the auto stocks. The saving grace is a sharp recovery in rural demand and that appears to have played out in the week as the Auto Index gained 99 bps. For the week, the Auto Index made a high of 25,635 and a low of 25,021; closing 251 points higher for the week. The auto index is currently still some distance away from its yearly high of 26,934 levels.

NIFTY FMCG INDEX – CLOSES FLAT AFTER A FRENETIC RALLY

The table captures the movement of Nifty FMCG index in the week to August 16, 2024.

Date	Open	High	Low	Close
16-Aug-24	61,450.00	62,303.45	61,315.60	62,213.00
15-Aug-24	61,642.30	61,730.40	61,092.25	61,305.30
14-Aug-24	61,642.30	61,730.40	61,092.25	61,305.30
13-Aug-24	61,768.10	61,978.65	61,326.80	61,495.75
12-Aug-24	61,840.25	62,163.80	61,553.40	61,668.45
09-Aug-24	62,479.55	62,488.40	62,029.85	62,157.35
		Weekly Returns		+0.09%

Data Source: NSE

The last 6 weeks were action-packed for the auto index. They first rallied 10.2% over 4 weeks, then corrected -1.57% and bounced by +0.67% in the previous week. In the latest week, the FMCG  index was flat with just 9 bps of gains. As traders gravitated to safety, FMCG just about managed a flat close. For the week, the FMCG index gained just 56 points, as there was substantial churn in the FMCG stocks. During the week, the FMCG index touched a high of 62,303 and a low of 61,092.

The levels of 25,000 for Nifty and 81,000 for Sensex remain the key resistance levels. However, breaching these levels will need a major impetus from the market triggers.