Weekly Musings – Index performance for week ended 19th May 2023

22 May 2023 , 09:25 AM

The week gone by saw the Nifty facing resistance at around the 18,000 levels and the Sensex facing resistance at the 62,000 levels. In this segment of weekly musings, we look at the index performance of 3 generic indices and 4 sectoral indices, which should capture the gist of the markets for the week ended 19^th May 2023.

NIFTY 50 INDEX – PRESSURE AT 18,400

The table below captures the movement of the Nifty 50 index in the week to 19th May 2023.

Date	High	Low	Close
19-May-23	18,218.10	18,060.40	18,203.40
18-May-23	18,297.20	18,104.85	18,129.95
17-May-23	18,309.00	18,115.35	18,181.75
16-May-23	18,432.35	18,264.35	18,286.50
15-May-23	18,458.90	18,287.90	18,398.85
12-May-23	18,342.75	18,194.55	18,314.80
	Weekly Returns	-0.61%

Data Source: NSE

The week saw the Nifty facing stiff resistance at the 18,400 levels and after testing these levels for a couple of days in succession, the Nifty closed lower. However, the weekly loss comes on the back of a very sharp rally in the last couple of months. There were a couple of factors that made the markets jittery and it had to do more with the global scenario. Firstly, the US debt ceiling is yet to be sorted out and that is keeping the markets on tenterhooks. June 01st 2023, is when the US government will officially run out of funds and unless the debt ceiling is raised, or it is scrapped, the US government may default on its bills.

The other concern in the market has been the over the global slowdown, which now looks increasingly likely. With the US Fed unwilling to budge on its hawkish stance, it looks all set for another possible rate hike in June. That is making a lot of portfolio managers cagey with the US benchmark bond yields already well above 2% in real terms.

NIFTY NEXT 50 INDEX – MIRRORING THE NIFTY THIS WEEK

The table below captures the movement of the Nifty Next 50 index in the week to 19th May 2023.

Date	High	Low	Close
19-May-23	40,630.50	40,090.25	40,546.15
18-May-23	41,044.20	40,353.40	40,415.35
17-May-23	41,137.00	40,668.65	40,821.40
16-May-23	41,256.80	41,018.45	41,052.05
15-May-23	41,145.95	40,778.70	40,995.05
12-May-23	40,976.15	40,651.00	40,801.10
	Weekly Returns	-0.62%

Data Source: NSE

The week saw the Nifty Next 50 also facing some resistance at the 41,000 levels after testing these closing levels for a couple of days. The Nifty Next 50 index has a 55% exposure to just 3 sectors viz., consumer goods, financials, and healthcare. The sector did witness pressure at higher levels but the Nifty Next 50 largely mirrored the performance of the Nifty during the week. This index represents the 50 companies with the potential to graduate to become Nifty companies in the future.

NIFTY MID-CAP 100 INDEX – ALPHA HUNTING VISIBLE

The table below captures the movement of the Nifty Mid-Cap 100 index in the week to 19th May 2023.

Date	High	Low	Close
19-May-23	32,616.25	32,232.40	32,550.35
18-May-23	32,934.20	32,520.25	32,570.55
17-May-23	32,868.05	32,529.45	32,762.75
16-May-23	33,044.80	32,766.85	32,792.85
15-May-23	32,779.50	32,421.70	32,709.40
12-May-23	32,646.60	32,417.30	32,468.45
	Weekly Returns	0.25%

Data Source: NSE

The week saw the Mid-cap index closing marginally in the green with returns of 0.25%. In a volatile market, there was a lot of alpha hunting seen in the mid cap space. This buying interest not only came from the retail investors but also from HNIs and the domestic mutual funds looking for proper bargains. This segment has seen a turnaround in performance in the last couple of weeks.

NIFTY SMALL-CAP 100 INDEX – ROBUST, BUT STRUGGLES AT 10,000

The table below captures the movement of the Nifty Small Cap 100 index in the week to 19th May 2023.

Date	High	Low	Close
19-May-23	9,925.55	9,790.70	9,891.70
18-May-23	10,009.15	9,869.20	9,890.00
17-May-23	9,957.40	9,880.40	9,937.50
16-May-23	9,953.95	9,873.05	9,885.45
15-May-23	9,897.15	9,765.30	9,887.05
12-May-23	9,904.90	9,792.65	9,807.35
	Weekly Returns	0.86%

Data Source: NSE

The week saw the small-cap closing smartly in the green with returns of 0.86%. In a volatile market, there was a lot of alpha hunting seen in the small cap space. This buying interest not only came from the retail investors but also from HNIs and the domestic mutual funds looking for bargains. However, the Small Cap index did face some resistance during the week at the 10,000 levels as investors preferred to play risk-off at higher levels.

BANK NIFTY INDEX – SBI PLAYS THE PIED PIPER

The table below captures the movement of the Nifty Bank index (BANKNIFTY) in the week to 19th May 2023.

Date	High	Low	Close
19-May-23	44,020.90	43,531.90	43,969.40
18-May-23	44,079.20	43,673.70	43,752.30
17-May-23	43,992.75	43,446.40	43,698.70
16-May-23	44,144.15	43,815.70	43,903.70
15-May-23	44,151.70	43,666.60	44,072.10
12-May-23	43,905.95	43,347.75	43,793.55
	Weekly Returns	0.40%

Data Source: NSE

Bank Nifty has been one of the star performers in the last few months and the reasons are not far to seek. The week saw the stellar results announced by SBI, which became the second most profitable company in India after Reliance Industries for FY23. Banks have been big beneficiaries gaining from sharper growth in net interest income (NII) and broadening of the net interest margins (NIMs). That is because, the cost of deposits has not caught up with the yield on loans, leaving the banks with a clean profit spread. That trend was visible in the previous week also.

NIFTY IT INDEX – SURPRISE GAINER FOR THE WEEK

The table below captures the movement of the Nifty IT index in the week ending on 19th May 2023.

Date	High	Low	Close
19-May-23	28,369.40	28,007.05	28,303.65
18-May-23	28,137.70	27,858.75	27,892.55
17-May-23	28,300.10	27,776.80	27,942.95
16-May-23	28,421.05	28,178.70	28,216.00
15-May-23	28,323.55	27,957.50	28,165.40
12-May-23	28,164.45	27,874.10	28,028.40
	Weekly Returns	0.98%

Data Source: NSE

For the latest week, the IT index was the surprise gainer. The index had been under a lot of pressure but closed the week with gains of 0.98%. Stocks like Tech Mahindra and Infosys were part of the rally and both these stocks had corrected sharply previously. Even as FPIs continue to remain neutral on the IT sector, domestic funds have been accumulating IT stocks at lower levels to balance their portfolio exposures. Also, there appears to be a lot of buying interest building up in the mid-cap IT space.

NIFTY OIL & GAS INDEX – WEAK CRUDE PRICES HOLD DOWN

The table below captures the movement of the Nifty IT index in the week ending on 19th May 2023.

Date	High	Low	Close
19-May-23	7,441.90	7,347.70	7,430.75
18-May-23	7,538.75	7,426.50	7,435.85
17-May-23	7,572.50	7,491.05	7,518.45
16-May-23	7,622.95	7,546.75	7,554.40
15-May-23	7,590.95	7,530.10	7,568.05
12-May-23	7,612.35	7,547.45	7,568.40
	Weekly Returns	-1.82%

Data Source: NSE

This was perhaps the weak link in the entire market story. Oil companies came under pressure on account of Brent Crude tapering to below the $75/bbl levels. While OPEC has cut supplies, markets are unperturbed as this is likely to be offset by lower demand in the event of a global economic slowdown. That is keeping Indian oil stocks, especially the upstream players, under pressure. That trend was evident in the previous week too.

What is the overall picture that emerges for the week ended 19th May 2023? Here are some key takeaways.

• The generic indices like the Nifty and the Nifty Next 50 are looking at opportunities and reasons for a break out. For the week, they were range bound with a downward bias, as the index tries to find its level. 
   
• Smaller sized indices were in the positive as alpha hunting continued in a difficult market. With the recent success of many SME IPOs, the interest in mid-cap and small stocks has revived across investor classes.

In terms of sectoral plays, IT was the surprise pack gaining close to 100 bps in the week. Banks continued to trade with gains on stellar quarterly results from SBI, but it was the oil sector that came under pressure on crude price concerns.