IT WAS A WEEK, ENTIRELY ABOUT RISK
The difference between risk and return is that you can control risk, but you cannot control returns. However, in the current week, traders and investors struggled to come to terms with market risks. Here are 5 risk stories we read for the week ended May 10, 2024.
Amidst this rising tide of risks, there is a positive takeaway for investors. Quite often, VIX acts as a contrarian indicator. A spike in demand for hedging, may be the opposite i.e., institutions and proprietary desks willing to write put options. After all, every buyer needs a seller too and in options, it is the better informed trading desks that are on the sell side.
WHAT SHOULD EQUITY MARKETS TRACK NEXT WEEK?
The coming week has 3 data points to be tracked closely by markets.
With results season over, the focus would be on other factors like US bond yields, crude oil prices and the US dollar index.
BSE SENSEX 30 INDEX – CLOSES BELOW 73,000 FOR THE WEEK
The table captures the movement of the BSE SENSEX 30 for the week to May 10, 2024.
Date | Open | High | Low | Close |
10-May-24 | 72,475.45 | 72,946.54 | 72,366.29 | 72,664.47 |
09-May-24 | 73,499.49 | 73,499.49 | 72,334.18 | 72,404.17 |
08-May-24 | 73,225.00 | 73,684.93 | 73,073.92 | 73,466.39 |
07-May-24 | 73,973.30 | 74,026.80 | 73,259.26 | 73,511.85 |
06-May-24 | 74,196.68 | 74,359.69 | 73,786.29 | 73,895.54 |
03-May-24 | 75,017.82 | 75,095.18 | 73,467.73 | 73,878.15 |
Weekly Returns | -1.64% |
Data Source: BSE
In the previous week, the Sensex had tried and closed above the 75,000 mark. However, all those gains were dissipated in this week as it closed well below the 73,000 mark and the close was very near to the low point of the week. Technically, 72,000 continues to be a major support for the Sensex and only a fall below that will open up sharper downside risks for the Sensitive Index. The close near to the lows is a weak signal for Sensex.
NIFTY 50 INDEX – RISING VIX PLAYS THE SPOILSPORT
The table captures the movement of Nifty 50 index in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 21,990.95 | 22,131.30 | 21,950.30 | 22,055.20 |
09-May-24 | 22,224.80 | 22,307.75 | 21,932.40 | 21,957.50 |
08-May-24 | 22,231.20 | 22,368.65 | 22,185.20 | 22,302.50 |
07-May-24 | 22,489.75 | 22,499.05 | 22,232.05 | 22,302.50 |
06-May-24 | 22,561.60 | 22,588.80 | 22,409.45 | 22,442.70 |
03-May-24 | 22,766.35 | 22,794.70 | 22,348.05 | 22,475.85 |
Weekly Returns | -1.87% |
Data Source: NSE
During the week, the spike in FPI outflows and the rising VIX spoilt the story for Nifty. Nifty below 22,000 in the last 2 days of the week, but managed to just close higher at 22,055 for the week. During the week, the Nifty lost -421 points as FPIs were net sellers of $2,184 Million in the week. The buying support from the domestic mutual funds, LIC did not help much as the VIX spiked close to the 20 mark. However, the fall in Nifty could have been much harder, had it not been for the support provided by the auto sector and the fast moving consumer goods (FMCG) sector.
NIFTY NEXT 50 INDEX – TAKES DEEP CUTS IN THE WEEK
The table captures the movement of Nifty Next 50 for the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 63,788.25 | 64,056.80 | 63,019.00 | 63,934.20 |
09-May-24 | 64,983.00 | 65,063.80 | 63,284.25 | 63,411.10 |
08-May-24 | 63,908.05 | 65,076.00 | 63,562.90 | 64,784.25 |
07-May-24 | 65,179.65 | 65,332.10 | 63,550.25 | 63,937.35 |
06-May-24 | 65,829.50 | 65,865.40 | 64,398.10 | 64,937.40 |
03-May-24 | 66,450.35 | 66,456.25 | 65,190.75 | 65,770.50 |
Weekly Returns | -2.79% |
Data Source: NSE
The Nifty Next 50 like most of the smaller indices, took it on the chin. The Nifty Next 50 is the residual list after Nifty 50 stocks are removed from Nifty 100. In a market where Nifty is more about Beta and smaller stocks are about risky alpha; the Nifty Next-50 offers the middle path. This week, the index lost -2.79% after gaining an impressive 6.3% in the last 2 weeks. During the week, Nifty Next-50 touched a high of 65,865 levels but closed at 63,934, as the sharp spike in the VIX limited the gains in the week. The Next 50 lost -1,836 points during the week.
NIFTY MID-CAP 100 INDEX – HIT BY THE FALLING A/D RATIO
The table captures the movement of Nifty Mid-Cap 100 in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 49,252.35 | 49,585.55 | 48,605.40 | 49,532.30 |
09-May-24 | 50,109.75 | 50,155.50 | 49,016.40 | 49,109.15 |
08-May-24 | 49,588.80 | 50,169.85 | 49,265.60 | 50,036.30 |
07-May-24 | 50,775.95 | 50,788.70 | 49,363.75 | 49,674.45 |
06-May-24 | 51,258.15 | 51,265.80 | 50,342.30 | 50,662.20 |
03-May-24 | 51,284.00 | 51,342.65 | 50,655.15 | 50,935.15 |
Weekly Returns | -2.75% |
Data Source: NSE
The most obvious signal of a sell-off in the mid-cap index was available in the steadily worsening A/D ratio of the market as a whole. In a week when smaller stocks took a hit, the mid-cap index was down -2.75%, or 1,303 points. During the week, the Mid-Cap 100 index touched a high of 51,343 and a low of 48,605. After breaking above the 50,000 levels after a fairly long struggle, the index closed once again below that psychological mark.
NIFTY SMALL-CAP 100 INDEX – SMALL STOCKS HIT THE HARDEST
The table captures movement of Nifty Small Cap 100 in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 16,046.00 | 16,125.10 | 15,782.60 | 16,106.75 |
09-May-24 | 16,487.75 | 16,524.05 | 15,960.75 | 15,995.70 |
08-May-24 | 16,331.40 | 16,558.70 | 16,228.95 | 16,461.05 |
07-May-24 | 16,719.90 | 16,727.35 | 16,254.40 | 16,367.05 |
06-May-24 | 17,057.65 | 17,063.75 | 16,619.40 | 16,683.15 |
03-May-24 | 17,128.80 | 17,135.15 | 16,817.40 | 16,936.50 |
Weekly Returns | -4.90% |
Data Source: NSE
Last week, the Small Cap index gave marginally negative returns, but lost 4.9% in the current week as there was a virtual sell-off in the smaller stocks. The spike in the VIX to above 19 levels hit the smaller stocks the hardest, as they were the most vulnerable to higher risk. For the week, the Nifty Small Cap index lost a total of 830 points or -4.90%. During the week, the index touched a high of 17,135 levels and a low of 15,783; eventually closing the week near to the lows of the week.
BANK NIFTY INDEX – KEY SECTORAL LOSER FOR THE WEEK
The table below captures the movement of BANKNIFTY in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 47,555.50 | 47,868.70 | 47,313.35 | 47,421.10 |
09-May-24 | 47,976.35 | 48,258.65 | 47,440.65 | 47,487.90 |
08-May-24 | 48,124.20 | 48,223.05 | 47,851.15 | 48,021.10 |
07-May-24 | 48,965.05 | 49,023.50 | 48,213.75 | 48,285.35 |
06-May-24 | 49,174.55 | 49,252.65 | 48,784.00 | 48,895.30 |
03-May-24 | 49,375.05 | 49,607.75 | 48,659.70 | 48,923.55 |
Weekly Returns | -3.07% |
Data Source: NSE
Bank Nifty lost a total of 1,502 points or -3.07% for the week. During the week, the Bank Nifty touched a high of 49,608 and a low of 47,313, closing near to the lows. With its 34% weight in the Nifty, the Bank Nifty had an oversized impact on the Nifty index.
NIFTY IT INDEX – REMAINS STABLE IN A TOUGH WEEK
The table captures the movement of Nifty IT index in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 33,166.10 | 33,178.40 | 32,786.55 | 32,935.15 |
09-May-24 | 33,275.75 | 33,454.75 | 33,006.95 | 33,205.85 |
08-May-24 | 33,425.15 | 33,489.65 | 33,237.10 | 33,335.15 |
07-May-24 | 33,268.15 | 33,525.50 | 32,998.20 | 33,473.00 |
06-May-24 | 33,041.20 | 33,435.35 | 32,990.80 | 33,217.10 |
03-May-24 | 33,248.50 | 33,305.00 | 32,690.50 | 32,908.40 |
Weekly Returns | +0.08% |
Data Source: NSE
In the last 3 weeks, the Nifty IT index had fallen by -7.1% and this week it was surprisingly flat with just 8 bps of gains. Despite the broad risks to the IT index, the strength in the dollar worked in their favour. IT heavyweights managed to hold on to modest gains in the week, which led to the IT index gaining marginally. For the week, the Nifty IT index touched a high of 33,526 and a low of 32,691; relatively less volatile in the week.
NIFTY OIL & GAS INDEX – BRENT PRICES HITS OILCOS
The table captures the Nifty Oil & Gas index for the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 11,309.70 | 11,379.45 | 11,181.25 | 11,348.70 |
09-May-24 | 11,585.20 | 11,606.65 | 11,180.35 | 11,212.35 |
08-May-24 | 11,396.75 | 11,669.50 | 11,373.85 | 11,577.05 |
07-May-24 | 11,661.40 | 11,677.20 | 11,352.80 | 11,383.10 |
06-May-24 | 11,866.40 | 11,874.40 | 11,544.60 | 11,601.20 |
03-May-24 | 11,993.85 | 12,035.00 | 11,698.30 | 11,807.65 |
Weekly Returns | -3.89% |
Data Source: NSE
Reliance Industries led the Oil & Gas index lower by -459 points or -3.89% during the week. For the week, the Oil & Gas index touched a high of 12,035 and a low of 11.180 levels. The sharp fall in Brent Crude prices also worked against the fortunes of oil companies.
NIFTY AUTO INDEX – STANDS OUT AS THE CONSISTENT STAR
The table captures the movement of Nifty Auto index in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 22,725.35 | 22,898.30 | 22,672.30 | 22,846.90 |
09-May-24 | 22,501.90 | 22,994.55 | 22,492.60 | 22,633.30 |
08-May-24 | 22,102.95 | 22,512.55 | 21,959.30 | 22,458.65 |
07-May-24 | 22,582.35 | 22,595.90 | 21,996.65 | 22,114.00 |
06-May-24 | 22,622.60 | 22,654.90 | 22,394.35 | 22,526.60 |
03-May-24 | 22,870.55 | 22,870.55 | 22,342.60 | 22,541.35 |
Weekly Returns | +1.36% |
Data Source: NSE
Few sectoral indices have been as consistent as the Nifty Auto Index. After gaining 12% in the last 7 weeks, the Nifty Auto index added another 1.36% or 306 points during the week. For the week, the Auto Index made a high of 22,995 and a low of 21,997; closing near to the high point of the week. Apart from good numbers, and solid auto demand, the fall in input costs also helped the auto stocks.
NIFTY FMCG INDEX – A SURPRISING WINNER OF THE WEEK
The table captures the movement of Nifty FMCG index in the week to May 10, 2024.
Date | Low | High | Low | Close |
10-May-24 | 54,739.25 | 55,407.10 | 54,601.75 | 55,276.50 |
09-May-24 | 55,924.60 | 56,020.35 | 54,533.45 | 54,625.10 |
08-May-24 | 55,704.30 | 56,124.30 | 55,569.70 | 56,008.80 |
07-May-24 | 54,942.60 | 56,222.75 | 54,855.80 | 55,765.55 |
06-May-24 | 54,544.15 | 54,697.70 | 54,149.50 | 54,660.15 |
03-May-24 | 54,688.85 | 54,702.55 | 53,913.30 | 54,273.90 |
Weekly Returns | +1.85% |
Data Source: NSE
It is not often that you get to see FMCG as the star of the week gaining 1.85% or 1,003 points. For the week, the index touched a high of 56,223 and a low of 53,913. The surge in the FMCG index came from a surprise surge in rural sales and hopes of a normal monsoon this year. One hast to wait and watch for now!
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