Weekly Market Wrap: Despite selloff, D-street closes with marginal gains amid FII selling, global volatility. What lies ahead?

04/05/2024

Indian equity benchmarks ended the volatile week of trade with marginal gains, supported by decent macro-economic data. India’s Goods and Services Tax (GST) collections in gross terms hit a record high in April 2024 at Rs 2.1 lakh crore. The government had collected Rs 1.87 lakh crore as GST in the same period last year.

Besides the output of eight core industries posted a growth of 5.2% in March 2024 as the production of cement, coal, electricity, natural gas, steel and crude oil recorded positive growth in the month.

However, selloff on final day of the week mainly ate most of the weekly gains as traders turned cautious with Reserve Bank data showing that India’s services exports declined 1.3% in March to $30 billion while imports fell by 2.1% to $16.61 billion. While FII selling on Friday stands at Rs 2,392 crore against DII buying of Rs 690.5 crore.

These signals led the BSE Sensex to rose 148 points, or 0.20%, at 73,878.15 during the week ended on May 03, 2024. While the Nifty gained 56 points, or 0.25%, to 22,475.85. Sector-wise, the BSE Power index surged the most (3.3%) during the week gone by. While BSE Auto index registered a gain of 2.4% followed by BSE Bankex, which jumped 1.5%.

As many as 27 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 7.3%, Mahindra & Mahindra emerged as the top gainer in the index. It was followed by Shree Cement (6.6%), Power Grid (6.4%), Grasim Industries (5.8%), and Coal India (4.2%). State Bank of India, BPCL, ICICI Bank, and Bajaj Finance also advanced by over three percent. On the other hand, HCL Technologies, Apollo Hospitals, and Kotak Mahindra Bank declined 8.5%, 4%, and 3.8%, respectively.

Market Macros: Vinod Nair, Head of Research, Geojit Financial Services says, “A marginally better than anticipated Q4 earnings and a correction in oil prices led to a positive start to the domestic market during the week”. However, a mixed trend in the global market after the release of a status quo FED policy with caution about sustaining a high inflation trend led to a broad-based correction in the domestic market.

Nair added further, the positive commentary from the auto companies on recent volume numbers led the sector to outperform. Additionally, stock-specific action was visible in banks and the power sector on account of positive Q4 results and increased power demand. The FIIs continued to remain net sellers in the market, which has impacted the performance of large cap stocks.

“Moving forward, the ongoing results season will be a key detrimental factor for investors to align their portfolios. The market will also remain vigilant about the BoE policy and GDP data from the euro zone. We expect a degree of consolidation in the market due to expensive valuations and any election-led jitters,” Nair Said.

Nifty outlook: According to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, The Nifty index is showing signs of near-term bearishness as it forms a double top pattern on the daily chart, coupled with a bearish engulfing candle. This suggests a sell-on-rise approach in the market.

“Confirmation of the double top pattern would require follow-up selling in the upcoming week. Immediate resistance is noted at the 22,600-22,700 zone, where aggressive call writing has been observed in the options market. On the downside, the index has immediate support at 22,300, and a breach below this level could accelerate the downside momentum”, Shah said.

Bank Nifty: Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates commented, The Bank Nifty opened on a positive tone, but due to severe selling pressure, the index closed on a negative note at 48,924.

Technically, on a weekly scale, the index has formed a shooting star candlestick pattern near the all-time high, indicating strong resistance near 49,975 levels. “A sustained move below 48,342 could lead to further weakness in Bank Nifty. For the short term, 48,500 and 48,300 will act as support points, whereas 49,500 and 50,000 will act as resistance points,” Yedve said.

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