Weekly Musings – Index performance for week ended August 02, 2024

3 Aug 2024 , 10:39 AM

CALL IT THE FRIDAY WEEKEND EFFECT

The week to August 02, 2024 saw some very strange moves. In the first four days of the week, the markets gradually built up heft. On Friday, the markets knocked off all the gains of the week and more. This resulted in most of the generic indices ending in the negative. Here is how some of the key sectors performed during the week.

• The heavyweight banking sector was actually neutral and closed with marginal gains for the week. Interestingly, private banks have not been the cynosure of investors, but they were the ones that saved the day. But for the banks, the fall would have been sharper.
• IT index was the big driver of the fall in the week falling more than 3%. The IT index had the sharpest fall on Friday, after it became clear that the Fed would go ahead with its first rate cut in September. A weak dollar hardly suits the interests of Indian IT industry. To add to that, the GST notice to Infosys also dampened sentiments.
• Auto sector also corrected more than 2% in the week, after the month auto numbers for July 2024 came in weaker than expected. Most of the leading auto companies faced saturation in passenger car sales with high interest rates continuing to be a concern.
• The other sector to give up gains of the last few weeks was FMCG sector. The FMCG stocks had gained substantially from reports of a recovery in rural demand. However, the recent rally had been too frenetic and some correction was always on the cards.

It must be remembered that in the latest week to August 02, 2024, the FPIs turned net sellers for the first time after 7 weeks of persistent buying. The selling was not intense, but most of the unwinding came on Friday and it was the technology stocks that led the sell-off, followed by the auto stocks and the FMCG stocks. Nifty 25,000 had been achieved in quick time and some profit taking was inevitable. A lot will now depend on the Fed action in September and the India GDP data that comes out later this month for Q1FY25.

BSE SENSEX 30 INDEX – FRIDAY CAUTION TAKES ITS TOLL ON SENSEX

The table captures the movement of the BSE SENSEX 30 for the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	81,158.99	81,345.60	80,868.91	80,981.95
01-Aug-24	81,949.68	82,129.49	81,700.21	81,867.55
31-Jul-24	81,655.90	81,828.04	81,434.32	81,741.34
30-Jul-24	81,349.28	81,815.27	81,230.44	81,455.40
29-Jul-24	81,679.65	81,908.43	81,135.91	81,355.84
26-Jul-24	80,158.50	81,427.18	80,013.60	81,332.72
		Weekly Returns		-0.43%

Data Source: BSE

The Sensex closed just below the 81,000 mark, losing nearly 1,000 points on Friday. The selling was led by stocks in the IT, auto, and FMCG sectors. At a macro level, the budget concerns and the geopolitical risks continued to weight on the indices. For the week, the Sensex closed with losses of -0.43%. During the week, the Sensex touched a high of 81,908 and a low of 80,869. The Sensex closed the week 351 points higher. For now, 81,000 levels is the resistance to breach, after which, it opens the floodgates till 85,000.

NIFTY 50 INDEX – LEVEL 25,000 PROVES PSYCHOLOGICAL BARRIER

The table captures the movement of Nifty 50 index in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	24,789.00	24,851.90	24,686.85	24,717.70
01-Aug-24	25,030.95	25,078.30	24,956.40	25,010.90
31-Jul-24	24,886.70	24,984.60	24,856.50	24,951.15
30-Jul-24	24,839.40	24,971.75	24,798.65	24,857.30
29-Jul-24	24,943.30	24,999.75	24,774.60	24,836.10
26-Jul-24	24,423.35	24,861.15	24,410.90	24,834.85
		Weekly Returns		-0.47%

Data Source: NSE

FPIs turned net sellers in the week after 7 weeks of buying. However, for the Nifty, it was the level of 25,000 that became a psychological resistance. On Thursday, the Nifty closed above the 25,000 mark for the first time ever, and that triggered some heavy selling on Friday. The fall was largely led by IT stocks on dollar weakness concerns. For the latest week, Nifty closed with losses of -0.47% as autos, IT sector, and FMCG came under pressure. The VIX fell further to 11.40 levels but it was the 25,000 levels that spooked the markets, especially in the light of the rising geopolitical risks. For the week, the Nifty lost 117 points. During the week, the Nifty touched a high of 25,078 and a low of 24,687, eventually closing the week very close to the low point of the week.

NIFTY NEXT 50 INDEX – ENDS A FLAT, INSIPID WEEK

The table captures the movement of Nifty Next 50 for the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	73,621.40	74,241.25	73,173.45	73,328.15
01-Aug-24	74,936.70	75,057.30	73,921.30	74,294.65
31-Jul-24	74,514.80	74,879.05	74,381.25	74,788.10
30-Jul-24	74,495.85	74,656.65	74,118.95	74,215.85
29-Jul-24	73,836.20	74,365.50	73,571.60	74,288.30
26-Jul-24	72,611.20	73,457.85	72,559.60	73,400.65
		Weekly Returns		-0.10%

Data Source: NSE

In a week when the Nifty and the Sensex closed with losses, the losses on the Nifty Next 50 were relatively subdued at just about -0.10%. The index closed the week losing just 73 points. This week, the Nifty Next 50 touched a high of 75,057 level and a low of 73,173 on the last day, before closing the week at  73,328. For the week as a whole, the Nifty Next 50 index was relatively subdued, but avoided any major losses.

NIFTY MID-CAP 100 INDEX – SURPRISES WITH GAINS IN THE WEEK

The table captures the movement of Nifty Mid-Cap 100 in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	57,900.60	58,247.30	57,563.40	57,913.65
01-Aug-24	59,259.55	59,290.05	58,199.30	58,490.40
31-Jul-24	58,932.60	59,116.00	58,727.70	58,990.90
30-Jul-24	58,445.35	58,782.25	58,355.60	58,623.40
29-Jul-24	58,192.15	58,455.10	58,054.80	58,362.05
26-Jul-24	56,991.55	57,813.55	56,980.45	57,768.10
		Weekly Returns		+0.25%

Data Source: NSE

In the latest week, the mid-cap index was the only index to close with gains, albeit small. Of course, the gains were just 0.25% or 146 points for the week, much lower than the 3.33% gains in the previous week. During the week, the advance / decline ratio turned decisively positive and that favoured these mid-cap stocks. For the week, the Mid-Cap 100 index touched a high of 59,290 and a low of 57,563. Thanks to PSU and energy related stocks in the mid-cap space, the mid-cap index managed to close with gains for the week.

NIFTY SMALL-CAP 100 INDEX –ALPHA HUNTING TAKES A PAUSE?

The table captures movement of Nifty Small Cap 100 in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	18,742.90	18,942.20	18,630.50	18,800.60
01-Aug-24	19,219.35	19,247.60	18,880.55	18,949.95
31-Jul-24	19,234.65	19,251.65	19,110.70	19,137.65
30-Jul-24	19,097.90	19,251.20	19,068.20	19,207.55
29-Jul-24	18,988.10	19,114.10	18,977.15	19,043.40
26-Jul-24	18,726.35	18,879.00	18,692.20	18,854.00
		Weekly Returns		-0.28%

Data Source: NSE

The week showed alpha hunting taking a pause; albeit it did look like a brief pause only. The small cap index lost -0.28% in the current week, but it comes after a sharp bounce in the previous week. This week, the index of small caps closed  with losses of 53 points. For the week, the Nifty Small Cap index touched a high of 19,252 levels and a low of 18,631, with the losses being relatively subdued. Defence stocks are under pressure and that is taking a toll on the small cap index. A lot will depend on retail investors traction.

BANK NIFTY INDEX – CLOSES THE WEEK WITH MARGINAL GAINS

The table below captures the movement of BANKNIFTY in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	51,172.25	51,608.70	51,087.85	51,350.15
01-Aug-24	51,672.60	51,877.15	51,456.20	51,564.00
31-Jul-24	51,583.45	51,663.10	51,335.70	51,553.40
30-Jul-24	51,383.90	51,957.75	51,260.05	51,499.30
29-Jul-24	51,546.65	52,340.25	51,186.95	51,406.25
26-Jul-24	50,456.10	51,398.60	50,438.30	51,295.95
		Weekly Returns		+0.11%

Data Source: NSE

Bank Nifty closed -186 basis points lower in the previous week, but amidst the sell off, the Bank Nifty closed 54 points higher for the week to August 02, 2024. In recent weeks, the banking party was spoilt by the negative news flows in heavyweights like HDFC Bank and Kotak Bank. Banks also faced pressure amidst tapering NII growth and thinning NIM spreads. The rate cut hopes raised by the Fed actually kept the banking stocks in the hunt this week. During the week, the Bank Nifty touched a high of 52,340 and a low of 51,088.

NIFTY IT INDEX – FED RATE CUT EXPECTATIONS SPOOKS IT STOCKS

The table captures the movement of Nifty IT index in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	40,346.55	40,632.25	39,662.65	39,730.30
01-Aug-24	40,862.40	41,036.05	40,537.20	40,709.40
31-Jul-24	40,728.75	41,074.05	40,657.05	40,851.10
30-Jul-24	40,827.10	40,889.90	40,561.60	40,776.30
29-Jul-24	41,220.75	41,381.10	40,691.35	40,820.10
26-Jul-24	40,164.45	41,073.65	40,081.90	40,977.35
		Weekly Returns		-3.04%

Data Source: NSE

The gist of the Nifty quarterly results this season has been that margins are steady, constant currency growth is happening and the global BFSI sector is seeing a sharp revival. All is hunky dory for IT stocks and that was evident in the recent rally. However, in the week to August 02, 2024, IT index fell -3.04% after the Fed hinted at rate cuts in September. That was likely to weaken the dollar, something that does not favour IT stocks. The Nifty IT index closed with weekly losses of 1,247 points. For the week, Nifty IT index touched a high of 41,381 and a low of 39,663. After 6 weeks of sterling performance, the IT index closed near the lowest point of the week.

NIFTY OIL & GAS INDEX – OIL STOCKS HOLD UP IN THE WEEK

The table captures the Nifty Oil & Gas index for the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	13,188.75	13,256.75	13,050.00	13,137.45
01-Aug-24	13,320.40	13,376.45	13,212.95	13,301.90
31-Jul-24	13,301.50	13,377.50	13,220.10	13,254.85
30-Jul-24	13,177.10	13,431.90	13,150.20	13,260.25
29-Jul-24	13,131.00	13,260.50	13,123.75	13,184.90
26-Jul-24	13,050.45	13,078.80	12,985.95	13,049.25
		Weekly Returns		+0.68%

Data Source: NSE

Oil stocks were the only large cap sector to deliver meaningful gains of 0.68% in the week. After gaining 9.8% in the previous 5 weeks, the oil & gas index added another 0.68% spike in the current week to August 02, 2024. The reasons are not hard to fathom. Lower crude prices (now at $76/bbl in the Brent market) have resulted in an improvement in the gross refining margins (GRMs) of the leading oil refiners; in contrast to the June quarter. The Oil & Gas index was up 88 points as some value buying was visible in oil & gas stocks. The Oil & Gas index touched a high of 13,432 and a low of 13,050 levels in the week.

NIFTY AUTO INDEX – WEAK MONTHLY NUMBERS AN OVERHANG

The table captures the movement of Nifty Auto index in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	26,192.80	26,192.80	25,678.35	25,714.45
01-Aug-24	26,900.95	26,934.05	26,357.45	26,487.45
31-Jul-24	26,675.60	26,800.70	26,516.35	26,685.25
30-Jul-24	26,468.85	26,757.90	26,386.10	26,580.95
29-Jul-24	26,382.30	26,460.65	26,261.80	26,426.55
26-Jul-24	25,759.25	26,289.35	25,601.70	26,250.70
		Weekly Returns		-2.04%

Data Source: NSE

After a handsome recovery last week, gaining 5.16%, the current week saw auto stocks back to losses of -2.04%. The auto numbers for July put out by the SIAM showed wholesale dispatches under pressure. Higher inflation expectations and higher input costs remain an overhang on the auto stocks. However, a sharp recovery in rural demand could still be an impetus for the auto stocks. For the week, the Auto Index made a high of 26,934 and a low of 25,678; closing -536 points lower for the week, as it closed near the weekly lows.

NIFTY FMCG INDEX – AFTER THE STORM, COMES THE LULL

The table captures the movement of Nifty FMCG index in the week to August 02, 2024.

Date	Open	High	Low	Close
02-Aug-24	61,659.05	62,639.55	61,632.85	61,745.15
01-Aug-24	62,173.50	62,264.10	61,948.90	62,173.20
31-Jul-24	62,143.30	62,264.60	61,841.50	62,082.20
30-Jul-24	62,627.15	62,915.95	61,777.80	61,819.00
29-Jul-24	63,016.45	63,084.30	62,311.85	62,513.85
26-Jul-24	62,483.50	62,928.60	61,829.75	62,728.80
		Weekly Returns		-1.57%

Data Source: NSE

In the last 4 weeks, the Nifty FMCG Index had rallied an incredible 10.2%. That is not something you get to see often, but the recovery in rural demand appears to be re-rating FMCG stocks on the upside. However, some correction was overdue and this week saw the FMCG index losing -1.57%. For the week, the FMCG index lost 984 points with most of the pressure on the last day. During the week, the FMCG index touched a high of 63,084 and a low of 61,633. The index closed very near to its weekly lows.

In the week to August 02, 2024, most of the pressure came on Friday and the fall was led by the IT stocks, followed by the auto and FMCG stocks. Above all, it was the 25,000 levels on Nifty and 82,000 levels on the Sensex that proved to be the psychological resistance points.