On Friday, Nifty ended at a fresh record high on Friday as falling Covid-19 cases boosted market sentiment. The 50-stock index closed 97 points higher at 15,435 against the previous close of 15,337. Sensex ended 307.66 points higher at 51,422.
Let us look at the key developments this week.
Covid-19 cases show a sharp decline
On Sunday, India reported 16.55 lakh new Covid-19 cases, which is the lowest daily figure the country has seen in the last 46 days. The daily death toll has also dropped to 3,460, which is the lowest in three weeks since May 3.
A total of 20.63 lakh samples were tested in the last 24 hours. As per the Health Ministry's latest figures, the total number of Covid-19 cases in India stands at 2.78cr, while the total death toll has increased to 3.25lakh. India had witnessed 1.73 lakh new cases on Saturday, with 3,617 patients breathing their last.
Meanwhile, 2.76 lakh patients bid adieu to Covid-19 on Sunday, taking the total number of recovered cases to 2.54cr. 1.14 lakh persons were added to the list of active Covid-19 patients in India in the last 24 hours. On the other hand, India inoculated a total of 30.35lakh people in the last 24 hours, which took the total tally of vaccine doses administered to 21.20cr
Meanwhile, the Serum Institute of India (SII) has informed the government that it will be able to manufacture and supply nine to 10 crore doses of Covishield in June, media reports suggested amid complaint by States about the shortage of anti-coronavirus vaccine jabs.
In a recent letter to Union Home Minister Amit Shah, SII said its employees have been working round the clock in spite of various challenges because of the pandemic. India is currently using made-in-India vaccines — Covishield manufactured by SII and Covaxin of Bharat Biotech — in its COVID-19 immunisation programme. The Russian Sputnik V is the third vaccine to get approval from the Drug Controller General of India (DCGI) for emergency use and is being used in a few private hospitals.
The fourth-quarter earnings season will come to an end this week. Several big companies including Aurobindo Pharma, ITC, Motherson Sumi Systems, PVR, Bharat Forge, and Bank of India will release their quarterly earnings in the coming week.
Among others, Balrampur Chini Mills, Gujarat Gas, Shilpa Medicare, Radico Khaitan, MTAR Technologies, Muthoot Finance, Quess Corp, and MOIL will also declare quarterly earnings.
RBI policy review
The next bi-monthly monetary policy review is scheduled to be announced on June 4, following the meeting of the Monetary Policy Committee (MPC) beginning Wednesday. The meeting of RBI Governor Shaktikanta Das-headed rate setting panel is scheduled for June 2 to 4. The RBI had kept key interest rates unchanged after the last MPC meeting held in April. The key lending rate, the repo rate, was kept at 4% and the reverse repo rate or the central bank's borrowing rate at 3.35%. Consensus estimates expect the central bank to maintain the status quo on rates given the uncertainty regarding the present Covid19 pandemic.
The RBI’s annual report, released last week, has already made it clear that “the conduct of monetary policy in 2021-22 would be guided by evolving macroeconomic conditions, with a bias to remain supportive of growth till it gains traction on a durable basis while ensuring that inflation remains within the target”. The report added that the central bank would ensure that system-level liquidity remains comfortable during 2021-22 is alignment with the stance of monetary policy, and monetary transmission continues unimpeded while maintaining financial stability.
Auto sales numbers
Car and two-wheeler makers will release their monthly sales data for May on Tuesday. Automakers including Maruti Suzuki, Tata Motors, TVS Motor, Ashok Leyland, Bajaj Auto, Hero MotoCorp, and Eicher Motors will be in focus. Sales for May are expected to be muted given the peak of the second wave of Covid19 saw lockdown like restrictions in several states of the country.
FPIs net sellers
Overseas investors took out around Rs1,730cr from the Indian markets in May, turning out to be net sellers for the second straight month. The Foreign Portfolio Investors (FPIs) pulled out the money as the wake of the second wave of the COVID-19 pandemic spooked investors' sentiment.
The overall net outflow from the Indian capital markets, both equity and debt, was at Rs9,435cr in the month of April. FPIs withdrew Rs3,375.2cr from equities, but invested Rs1,645.8cr in the debt segment between May 1 and May 28, as per the depositories data. This took the overall net outflow to Rs1,729.4cr.
Economic data releases
India’s gross domestic product data for the fourth quarter of FY21 will be released on Monday. Apart from this, Markit Manufacturing PMI for May will be released on Tuesday, while Markit Services and Composite PMI for May will be announced on Thursday.
U.S. stocks edged higher to end optimistically after data showed an economic recovery from the coronavirus pandemic Friday despite inflation running at its highest annual rate in about 13-years. The Dow Jones Industrial Average closed 64.81 points higher to end at 34,529.45, a gain of 0.2%. The S&P 500 index advanced 3.23 points, or 0.1%, at 4,204.11. The Nasdaq Composite Index rose 12.46 points, or 0.1%, to reach 13,748.74.
The U.S.’s PCE inflation rate approached its highest level in nearly 13 years at 3.6%, higher than the 2.9% that economists’ surveyed by Dow Jones had forecast. That marks the highest level since 2008. On a month-over-month basis, PCE inflation rose 0.6% in April, while the core rate up rose 0.7%. The core price index, which strips out volatile food and fuel prices, rose 3.1% in the year through April - marking the fastest pace since 1992. That reading on inflation comes as U.S. consumer incomes dropped 13.1% in April after government stimulus checks for Americans ended, but consumer spending climbed 0.5% last month, matching consensus estimates.
In other data, the Chicago Business Barometer, also known as the Chicago PMI, jumped to 75.2 in May from 72.1, which was the highest since December 1983.