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Weekly Musings – Index performance for week ended June 07, 2024

9 Jun 2024 , 10:11 PM

ONE OF THE MOST VOLATILE WEEKS IN RECENT MEMORY

Even an intuitive look at the market would tell you that the last week to June 07, 2024 was one of the most volatile weeks in recent memory. That was bound to happen with the election results being announced and the exit polls being proved awfully wrong.

Date	Open	High	Low	Close	H/L Gap	Gain/Loss	Move (%)
31-May-24	74,208.53	74,478.89	73,765.15	73,961.31	713.74
03-Jun-24	76,583.29	76,738.89	75,678.43	76,468.78	1,060.46	2,507.47	3.39%
04-Jun-24	76,285.78	76,300.46	70,234.43	72,079.05	6,066.03	-4,389.73	-5.74%
05-Jun-24	73,027.88	74,534.82	71,879.44	74,382.24	2,655.38	2,303.19	3.20%
06-Jun-24	75,078.70	75,297.73	74,474.94	75,074.51	822.79	692.27	0.93%
07-Jun-24	75,031.79	76,795.31	74,941.88	76,693.36	1,853.43	1,618.85	2.16%

Data Source: BSE

Here are some key takeaways from the BSE Sensex movement for the week to June 07, 2024.

In the last 5 trading days, the average daily move (as measured by current close versus previous close) was 2,302 points per day. Even by Sensex standards that very high.
Another way to look at the volatility is the high/low gap for the day. Over the last 5 trading session, the total high/low trading gap was 12,458 points on the Sensex or approximately 2,492 points of high/low gap per trading day.
Ironically, in a week of so much uncertainty, the markets closed negative only on Tuesday, the day of actual vote counting. On the other 4 days, it closed in the positive. On an average the Sensex moved about 3.08% each day in terms of daily gap.
Despite these vagaries, the Sensex closed the week at life time highs with weekly gains of 3.69%. That is some statement on the resilient of markets in a tumultuous week.

Let us take a quick look at the monetary policy highlights in the week, which largely got lost in the melee surrounding the general elections.

SOME THOUGHTS ON THE RBI MONETARY POLICY

The RBI announced the June monetary policy on Friday, after the MPC had deliberated over the monetary policy issues for 3 days in succession.

The Monetary Policy kept the repo rates unchanged at 6.5%. That retained the reverse repo rate (SDF) at 6.25%, while the MSF and the bank rate stayed at 6.5%. Even the monetary stance was maintained at “gradual withdrawal of accommodation.”
After a very long time, there were two voices of dissent coming from Jayanth Varma and also from Ashima Goyal. Both voted for a 25 bps rate cut and shift in the stance of the monetary policy to neutral, which would be more in sync with current conditions.
The RBI was clearly being conservative and may have also missed out an opportunity to pre-emptively cut rates by 25 bps. The RBI wanted to get clarity on the government formation, the portfolio allocation, and the full budget to get a measure of fiscal policy. That would give a better basis for taking focused monetary policy decisions. The defensive approach was also visible in the RBI just upping GDP growth estimates for FY25 by 20 bps against the street consensus estimate of 50 bps.

One disappointment for the street was that the RBI did not make the best of the opportunity when GDP growth was robust, RBI had paid record dividends to the government and fiscal deficit had been reined in. We have to wait for August policy.

BSE SENSEX 30 INDEX – POSITIVE REACTION TO GROWTH DRIVERS

The table captures the movement of the BSE SENSEX 30 for the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	75,031.79	76,795.31	74,941.88	76,693.36
06-Jun-24	75,078.70	75,297.73	74,474.94	75,074.51
05-Jun-24	73,027.88	74,534.82	71,879.44	74,382.24
04-Jun-24	76,285.78	76,300.46	70,234.43	72,079.05
03-Jun-24	76,583.29	76,738.89	75,678.43	76,468.78
31-May-24	74,208.53	74,478.89	73,765.15	73,961.31
		Weekly Returns		+3.69%

Data Source: BSE

The Sensex rallied sharply despite the confusing election outcome. It was more a celebration of the end of uncertainty and a reaction to robust GDP numbers and low fiscal deficit for FY24. It closed the week at lifetime highs. The Sensex gained 3.69% in the week; reversing the losses of the previous week. During the week, the Sensex touched a high of 76,795 and a low of 70,234. The Sensex closed the week 2,732 points higher. Now, 81,000 looks to be the next big resistance for the Sensex with a clear road till then.

NIFTY 50 INDEX – WHO CARES ABOUT FPI SELLING?

The table captures the movement of Nifty 50 index in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	22,834.80	23,318.20	22,790.95	23,290.15
06-Jun-24	22,798.60	22,910.15	22,642.60	22,821.40
05-Jun-24	22,128.35	22,670.40	21,791.95	22,620.35
04-Jun-24	23,179.50	23,179.50	21,281.45	21,884.50
03-Jun-24	23,337.90	23,338.70	23,062.30	23,263.90
31-May-24	22,588.10	22,653.75	22,465.10	22,530.70
		Weekly Returns		+3.37%

Data Source: NSE

That could be the theme of the Nifty for the week, “Who cares about FPI flows?” During the week, FPI outflows from equities were $1,768 Million but the Nifty closed with 3.37% gains for the week. The Nifty more than erased the losses of -1.86% in the previous week. For the week, the Nifty gained a total of 759 points in the week. During the week, the Nifty touched a high of 23,339 and a low of 21,281, eventually closing the week just above close to 23,300 levels. IT and FMCG led the rally for the week with incredible gains of 7-9%.

NIFTY NEXT 50 INDEX – CLOSES THE WEEK ABOVE 69,000

The table captures the movement of Nifty Next 50 for the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	68,390.20	69,293.15	67,923.35	69,222.25
06-Jun-24	67,597.80	68,782.05	67,597.80	68,224.45
05-Jun-24	65,266.60	67,079.50	62,764.25	66,835.40
04-Jun-24	70,511.30	70,511.30	60,663.40	64,022.15
03-Jun-24	70,871.90	70,871.90	69,492.65	70,620.25
31-May-24	67,799.10	67,926.10	66,816.30	67,527.65
		Weekly Returns		+2.51%

Data Source: NSE

If the Nifty Next 50 index was defying gravity in the last few weeks, this week surely belonged to the Nifty and Sensex. Of course, the Nifty Next 50 index did close the week with 2.51% gains, but much lower than the Nifty index. The Nifty Next 50 is the residual list after Nifty 50 stocks are removed from Nifty 100. Nifty Next-50 offers a mid-point between the boring beta of large caps and the risky alpha of smaller stocks. This week, the index touched a high of 70,872 level and a low of 60,663, before closing the week at 69,222. The volatility was due to the predominance of PSU stocks. The Next 50 gained 1,695 points in the week.

NIFTY MID-CAP 100 INDEX – CLOSES HIGHER, DESPITE VOLATILITY

The table captures the movement of Nifty Mid-Cap 100 in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	52,563.90	53,232.75	52,336.85	53,194.70
06-Jun-24	51,856.90	52,707.20	51,837.60	52,413.70
05-Jun-24	49,730.75	51,414.25	48,379.75	51,266.70
04-Jun-24	53,410.15	53,410.15	47,246.60	49,150.80
03-Jun-24	53,705.30	53,705.30	52,825.65	53,353.35
31-May-24	51,717.00	51,844.50	51,186.35	51,705.70
		Weekly Returns		+2.88%

Data Source: NSE

After the Nifty Mid cap index had lost -1.37% in the previous week, it bounced back to register 2.88% gains in the election counting week. During the week, the advance / decline ratio also turned sharply positive for the overall market. During the week, the Mid-Cap 100 index touched a high of 53,705 and a low of 47,247. After breaking above the 50,000 levels, the Nifty Mid-Cap index has held that level, despite intermittent hiccups.

NIFTY SMALL-CAP 100 INDEX – CLOSES DECISIVELY ABOVE 17K

The table captures movement of Nifty Small Cap 100 in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	16,923.85	17,225.00	16,835.60	17,215.55
06-Jun-24	16,532.05	16,917.90	16,532.05	16,826.10
05-Jun-24	15,872.40	16,334.85	15,371.90	16,289.40
04-Jun-24	17,094.00	17,094.15	14,966.00	15,692.15
03-Jun-24	17,420.55	17,424.15	17,006.35	17,098.70
31-May-24	16,692.20	16,774.35	16,520.85	16,696.70
		Weekly Returns		+3.11%

Data Source: NSE

Even in the previous week, amidst the massive sell-off in markets, the small cap index was relatively subdued and showed strength. In the current week to June 07, 2024, the small caps gained from the sharp fall in VIX to register 3.11% gains for the week. For the week, the Nifty Small Cap index gained lost 519 points. During the week, the index touched a high of 17,424 levels and a low of 14,966, but ended up higher after the sharp volatility.

BANK NIFTY INDEX – BANKS PLAY THE CAUTIOUS GAME

The table below captures the movement of BANKNIFTY in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	49,322.15	49,939.95	49,088.00	49,803.20
06-Jun-24	49,363.10	49,667.75	48,932.75	49,291.90
05-Jun-24	47,486.60	49,362.90	46,446.80	49,054.60
04-Jun-24	50,667.05	50,667.05	46,077.85	46,928.60
03-Jun-24	50,889.85	51,133.20	50,092.65	50,979.95
31-May-24	48,895.15	49,122.55	48,569.05	48,983.95
		Weekly Returns		+1.67%

Data Source: NSE

Bank Nifty gained 819 points this week, gaining 1.67%; although the gains were subdued compared to the generic indices. Bank Nifty has rallied in the last 20 days, after the RBI announced a bumper dividend of ₹2.11 Trillion to the government. However, there are concerns that the NII growth and the NIMs would be tough to sustain in coming quarters. During the week, the Bank Nifty touched a high of 51,133 and a low of 46,078.

NIFTY IT INDEX – YES, HERE IS THE STAR OF THE WEEK

The table captures the movement of Nifty IT index in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	34,286.20	35,245.95	34,285.80	35,169.90
06-Jun-24	33,417.50	34,090.55	33,354.15	34,023.80
05-Jun-24	32,464.05	33,319.60	32,410.80	33,087.95
04-Jun-24	32,575.20	32,594.35	31,320.15	32,315.55
03-Jun-24	33,114.70	33,143.55	32,455.80	32,511.40
31-May-24	32,732.80	32,816.85	32,280.80	32,386.10
		Weekly Returns		+8.60%

Data Source: NSE

Just last week, the Nifty IT index had fallen by -4.25%. The tide turned this week as strong US growth data and strong dollar were expected to revive IT spending to new highs. The Nifty IT index closed with incredible gains of 8.6% for the week. For the week, the Nifty IT index touched a high of 35,246 and a low of 31,320. While the importance of the IT sector stems from being good dollar defensive when the greenback is hardening; this time the IT story was all about aggressively driving the Nifty and Sensex higher.

NIFTY OIL & GAS INDEX – WEAK CRUDE PRICES PLAY SPOILSPORT

The table captures the Nifty Oil & Gas index for the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	11,487.35	11,712.00	11,432.45	11,696.65
06-Jun-24	11,375.05	11,633.05	11,346.10	11,456.30
05-Jun-24	11,235.65	11,237.00	10,680.40	11,191.45
04-Jun-24	12,407.30	12,407.30	10,503.35	10,952.30
03-Jun-24	12,238.25	12,437.75	12,031.80	12,417.10
31-May-24	11,608.05	11,671.45	11,506.20	11,625.00
		Weekly Returns		+0.62%

Data Source: NSE

Reliance Industries was tepid in the week as were the oil upstream companies. That is not surprising with the global crude prices falling below the $80/bbl mark. For the week, the Oil & Gas index was up by just 72 points or +0.62% as the pressure of low crude prices showed up on crude realizations and on GRMs. For the week, the Oil & Gas index touched a high of 12,438 and a low of 10,503 levels.

NIFTY AUTO INDEX – BACK TO ITS WINNING WAYS

The table captures the movement of Nifty Auto index in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	24,339.65	25,041.70	24,286.15	25,020.20
06-Jun-24	24,369.65	24,459.30	24,201.95	24,396.70
05-Jun-24	23,374.15	24,347.90	23,120.65	24,283.75
04-Jun-24	24,000.95	24,001.10	22,026.30	23,193.30
03-Jun-24	24,159.70	24,159.70	23,874.90	23,992.70
31-May-24	23,613.40	23,733.65	23,314.05	23,419.60
		Weekly Returns		+6.83%

Data Source: NSE

The auto index losing -1.97% last week looks more like a side show, if you consider that it gained a full 6.83% in the latest week to June 07, 2024. For the week, the Auto Index made a high of 25,042 and a low of 22,026; closing near to the high point of the week. Strong volumes, favourable input pricing and a gradual revival in rural sales helped the auto story, and there was also short covering in the week. The auto index gained 1,601 points during the current week; making it one of the star indices of the week

NIFTY FMCG INDEX – SURPRISED THE STREET WITH 7.11% GAINS

The table captures the movement of Nifty FMCG index in the week to June 07, 2024.

Date	Open	High	Low	Close
07-Jun-24	57,338.95	58,070.20	57,217.45	57,953.35
06-Jun-24	57,862.00	57,862.00	56,746.70	57,373.60
05-Jun-24	55,799.00	58,832.65	55,646.95	57,567.40
04-Jun-24	54,633.80	55,446.30	53,057.65	55,172.50
03-Jun-24	55,139.00	55,184.85	54,552.15	54,653.60
31-May-24	54,510.80	54,588.70	53,897.70	54,107.35
		Weekly Returns		+7.11%

Data Source: NSE

It is not often that you get to see 7.11% gains in the FMCG index. Just last week, the FMCG index had fallen by -2.42%. The FMCG story this week was helped by hopes of revival in rural demand and lower crude prices helping margins. During the week, the FMCG index touched a high of 58,070 and a low of 53,058. FMCG, along with IT, was the surprise package of the week.

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