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Weekly Musings – Index performance for week ended August 30, 2024

2 Sep 2024 , 12:59 PM

FIVE KEY TRENDS WE NOTED DOWN IN THE WEEK

The week to August 30, 2024 marked a sharp turnaround with FPIs emerging as net buyers, albeit to the tune of just $2.82 Billion. Effectively, the FPIs have now infused $10 Billion plus since the Modi 3.0 government assumed charge. The week saw buying across all the key indices, except FMCG, which saw some pressure among the frontline indices. Let us look at some sectoral trends that we gathered in the recent week to August 30, 2024.

Non-banking companies and IT companies were the star performers of the week gaining more than 4%. For IT companies there were less concerns about the likely weakness in the dollar and more celebration around the robust GDP numbers for Q2 in the US. It is clear sign that tech spending would most likely remain robust in the coming quarters.
The other heavyweight sector that gained sharply in the week was the oil & gas sector. Of course, the sentiments were driven by the positive outlook for new energy given in the forth seventh AGM of Reliance Industries. In addition, the 1:1 bonus also acted as a value booster. Core sector also saw a sharp revival in refinery output amid rising GRMs.
The week saw largely favourable macros, although most of the macros came on the last day of the week. Core sector was robust at 6.12%, and despite real GDP being lower at 6.7%, the markets liked the fact that nominal growth was higher. The fiscal deficit updated for July showed 17% of full year target, raising hopes of bettering 4.9% of GDP.
The broad trade (or rather the low hanging fruit) appears to be short on PSU banks and short on defence stocks. That has been the trend for the last few weeks. Surprisingly, auto stocks did not see too much pressure despite the weak auto numbers expected for August. However, the consumer theme continues to be the preferred port of call.
Realty stocks showed a sharp recovery after it became apparent that the impact of the removal of indexation benefits would be more than offset by the lower rate of 12.5% on long term capital gains. But, the real news item that flattered the realty stocks was the decision by Prestige Estates to go ahead with its ₹5,000 Crore QIP placement.

It was a week in which the message from the domestic data was that the India growth story combined with fiscal prudence is intact. That is the narrative that FPIs want to hear. More importantly, the US data also underlined that rate cuts were happening in September 2024. The VIX needs to fall further to actually signal a buy-on-dips market at this juncture.

BSE SENSEX 30 INDEX – CLOSES ABOVE ITS 82,000 RESISTANCE

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

Date	Open	High	Low	Close
30-Aug-24	82,637.03	82,637.03	82,256.02	82,365.77
29-Aug-24	81,822.56	82,285.83	81,682.78	82,134.61
28-Aug-24	81,779.84	82,039.26	81,578.32	81,785.56
27-Aug-24	81,815.23	81,919.11	81,600.51	81,711.76
26-Aug-24	81,388.26	81,824.27	81,278.44	81,698.11
23-Aug-24	81,165.65	81,231.49	80,883.26	81,086.21
		Weekly Returns		+1.58%

Data Source: BSE

The band of 81,000 to 82,000 has been a key resistance for the Sensex and the last week saw that band being breached on a closing basis. That is a good signal and a lot will depend on whether this sustains in the coming week. The positive vibes coming from the India GDP and fiscal deficit data, as well as the positive triggers from US GDP and US PCE inflation; were positive triggers for the market. FPIs decisively turned net buyers in equities this week to the tune of $2.82 Billion. For the week, the Sensex closed with gains of 1.58%. During the week, the Sensex touched a high of 82,637 and a low of 81,278. The Sensex closed the week 1,280 points higher. Indices were up for 12 trading sessions in a row.

NIFTY 50 INDEX – GETS DECISIVELY PAST THE 25K MARK

The table captures the movement of Nifty 50 index in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	25,249.70	25,268.35	25,199.40	25,235.90
29-Aug-24	25,035.30	25,192.90	24,998.50	25,151.95
28-Aug-24	25,030.80	25,129.60	24,964.65	25,052.35
27-Aug-24	25,024.80	25,073.10	24,973.65	25,017.75
26-Aug-24	24,906.10	25,043.80	24,874.70	25,010.60
23-Aug-24	24,845.40	24,858.40	24,771.65	24,823.15
		Weekly Returns		+1.66%

Data Source: NSE

The VIX continued to be elevated at above 13 levels during the week, although FPIs turned aggressive net buyers in equities in the week. The sharp rally in the Nifty can be attributed to macro feel-good factor driven by robust nominal GDP numbers in India, contained fiscal deficit and strong core sector growth. Global factors like low PCE inflation and robust GDP growth in the US also helped. For the week, Nifty closed with gains of 1.66%, as the level of 25,000 was taken out towards the close and the Nifty inched closer to the 25,300 levels. For the week, the Nifty gained 413 points. During the week, the Nifty touched a high of 25,268 and a low of 24,875, eventually closing very near to the high point of the week.

NIFTY NEXT 50 INDEX – ANOTHER WEEK OF SMART GAINS

The table captures the movement of Nifty Next 50 for the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	75,166.15	75,450.55	75,056.40	75,279.80
29-Aug-24	75,119.60	75,259.90	74,290.85	74,896.40
28-Aug-24	75,173.75	75,308.05	74,786.20	75,082.55
27-Aug-24	74,884.55	74,933.35	74,622.60	74,848.95
26-Aug-24	74,752.50	74,817.25	74,433.50	74,768.80
23-Aug-24	74,904.35	74,958.60	74,325.25	74,403.60
		Weekly Returns		+1.18%

Data Source: NSE

In a week when the Nifty and the Sensex closed with smart gains, the Nifty Next 50 also showed a smart rally of 1.18%. The index closed the week gaining 876 points. This week, the Nifty Next 50 touched a high of 75,451 level and a low of 74,291 during the week, before closing the week nearer to the high point at 75,280. The Nifty Next 50 represents the large cap stocks of the NSE 100 (outside Nifty-50 index). While IT and healthcare players are helping this index, it is defence that is putting some pressure on this index.

NIFTY MID-CAP 100 INDEX – POSITIVE, BUT ALPHA HUNTING SUBDUED

The table captures the movement of Nifty Mid-Cap 100 in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	59,153.85	59,472.55	58,982.80	59,286.65
29-Aug-24	59,231.00	59,269.85	58,522.95	58,883.95
28-Aug-24	59,388.80	59,412.70	58,942.65	59,146.40
27-Aug-24	59,086.45	59,260.15	58,985.75	59,220.25
26-Aug-24	58,847.50	58,996.50	58,664.30	58,931.15
23-Aug-24	58,961.55	59,008.45	58,518.20	58,555.30
		Weekly Returns		+1.25%

Data Source: NSE

The Nifty Mid Cap index made gains in the previous week to the tune of 1.25%. In the current week to August 30, 2024, the mid-cap index built on the gains adding another 731 points in the week. The index also gained from the improvement in the A/D ratio during the week. For the week, the Mid-Cap 100 index touched a high of 59,472 and a low of 58,523; with most defence and PSU banking stocks under pressure. Alpha hunting appears subdued for now.

NIFTY SMALL-CAP 100 INDEX – AFTER THE STORM, IT WAS THE LULL

The table captures movement of Nifty Small Cap 100 in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	19,335.35	19,386.50	19,222.50	19,307.10
29-Aug-24	19,354.25	19,384.30	19,116.45	19,214.55
28-Aug-24	19,401.90	19,440.05	19,294.80	19,319.75
27-Aug-24	19,183.65	19,349.25	19,151.10	19,333.30
26-Aug-24	19,219.75	19,249.85	19,110.70	19,132.25
23-Aug-24	19,165.60	19,180.20	19,033.95	19,079.25
		Weekly Returns		+1.19%

Data Source: NSE

In the previous week, this index had raised hopes of alpha hunting with 3.48% returns. However, in the current week, the gains were more subdued at 1.19%.This week, the index of small caps closed with gains of 228 points. For the week, the Nifty Small Cap index touched a high of 19,440 levels and a low of 19,111, despite the defence and PSU stocks putting pressure. The small caps have also gained from the improving A/D ratio, but most investors still find the large cap stocks as the low-hanging fruit in the markets.

BANK NIFTY INDEX – POSITIVE BUT PSU BANKS PUT PRESSURE

The table below captures the movement of BANKNIFTY in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	51,437.45	51,466.55	51,256.00	51,351.00
29-Aug-24	51,103.75	51,368.95	50,984.40	51,152.75
28-Aug-24	51,208.95	51,260.75	51,033.70	51,143.85
27-Aug-24	51,214.05	51,404.70	50,938.10	51,278.75
26-Aug-24	51,100.65	51,317.85	51,061.55	51,148.10
23-Aug-24	51,040.05	51,117.85	50,856.70	50,933.45
		Weekly Returns		+0.82%

Data Source: NSE

Bank Nifty closed 418 points higher in the week to August 30, 2024, exactly the same gins as the previous week. There are hopes built that the US will cut rates in September based on the positive signals from the Fed minutes, Jackson Hole speech and the latest GDP and fiscal deficit data in India. However, while private banks are still robust, the PSU banks are facing pressure after a frenetic rally. The big wager is that if the Fed cuts rates, then the RBI would also follow suit to give relief to the Indian corporates. During the week, the Bank Nifty touched a high of 51,467 and a low of 50,938.

NIFTY IT INDEX – BACK TO ITS ENDEARING WINNING WAYS

The table captures the movement of Nifty IT index in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	42,644.10	42,913.95	42,455.10	42,787.80
29-Aug-24	42,191.10	42,790.30	42,151.50	42,591.65
28-Aug-24	41,792.90	42,717.15	41,594.90	42,394.40
27-Aug-24	41,696.85	41,936.70	41,589.85	41,709.25
26-Aug-24	41,343.45	41,820.90	41,319.05	41,662.10
23-Aug-24	41,492.75	41,548.75	41,029.50	41,089.85
		Weekly Returns		+4.13%

Data Source: NSE

In the latest week to August 30, 2024, the Nifty IT index bounced 4.13% to close above the 42,700 mark for the week. In the current week, the IT index gains were robust after the US GDP data for Q2 came in better than expected. That is likely to give a boost to tech spending and more than compensate for any dollar related losses to these IT companies. Clearly, investors have started to see the larger picture on IT stocks. The wager now is that; the growth boost from rate cuts would improve tech spending. For the week, the IT index bounced by 1,698 points. The Nifty IT index touched a high of 42,937 and a low of 41,319. The IT sector is likely to continue to be a dollar defensive for now.

NIFTY OIL & GAS INDEX – RELIANCE CHANGES THE OIL NARRATIVE

The table captures the Nifty Oil & Gas index for the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	13,500.25	13,562.40	13,415.70	13,456.90
29-Aug-24	13,294.90	13,435.10	13,235.60	13,416.45
28-Aug-24	13,324.75	13,344.90	13,266.75	13,292.15
27-Aug-24	13,286.65	13,348.40	13,250.30	13,298.00
26-Aug-24	13,238.55	13,320.10	13,195.65	13,293.05
23-Aug-24	13,243.05	13,272.00	13,124.10	13,140.45
		Weekly Returns		+2.41%

Data Source: NSE

The oil & gas index has been the star performer of the last 4-6 months. In the current week to August 30, 2024, the index continued its rally, gaining 2.41% for the week. The tone was set in the Reliance AGM after it announced that the new energy sector would be at par with the size of the O2C business in four years. The 1:1 bonus announced by Reliance at the AGM also added to the sectoral narrative in the week. The improved gross refining margins (GRMs) has been icing on the cake. During the week, the Oil & Gas index touched a high of 13,562 and a low of 13,196 levels.

NIFTY AUTO INDEX – MARKETS STILL BET ON CONSUMER PLAY

The table captures the movement of Nifty Auto index in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	26,083.30	26,245.60	25,976.45	26,172.80
29-Aug-24	25,858.40	26,117.95	25,671.25	26,020.40
28-Aug-24	25,963.25	26,055.60	25,817.25	25,879.40
27-Aug-24	25,960.70	26,026.80	25,857.05	25,911.90
26-Aug-24	25,913.50	25,995.75	25,802.15	25,941.45
23-Aug-24	25,630.80	25,929.05	25,621.25	25,850.70
		Weekly Returns		+1.25%

Data Source: NSE

In the last few weeks, we have seen growing concerns on the auto sales numbers. As per data put out by the Federation of Automotive Dealers Association (FADA), there is a backlog of dealer inventory to the tune of 7.3 Lakh vehicles. Not surprisingly, the big names in the auto industry like Maruti are tweaking production schedule to ease the backlog. The trade constraints have already imposed a rather steep cost on auto exports, while the higher inflation expectations and higher input costs remain an overhang for auto stocks. The demand concerns have come at a wrong time, but there is still confidence in autos as a high quality consumer play. The saving grace, of course, is the narrative on rural demand recovery. That rural narrative helped the auto index to gain 125 bps. For the week, the Auto Index made a high of 26,246 and a low of 25,671; closing 322 points higher for the week.

NIFTY FMCG INDEX – ONLY MAJOR SECTOR TO CLOSE LOWER

The table captures the movement of Nifty FMCG index in the week to August 30, 2024.

Date	Open	High	Low	Close
30-Aug-24	63,144.70	63,585.95	62,891.50	63,059.75
29-Aug-24	62,825.80	63,355.60	62,661.30	63,162.95
28-Aug-24	62,994.30	63,069.90	62,563.55	62,713.60
27-Aug-24	63,744.90	63,805.95	62,952.60	62,981.15
26-Aug-24	63,480.00	63,782.50	63,173.30	63,657.95
23-Aug-24	63,586.65	63,700.75	63,134.75	63,409.25
		Weekly Returns		-0.55%

Data Source: NSE

The last 7 weeks were action-packed for the FMCG index. The index gained 13.5% in the last 7 weeks on the back of two factors. Trades gravitated to FMCG stocks as a defensive alternative. At the same time, value buyers also saw FMCG as a play on rural demand revival. After the 13.5% rally in 7 week, the FMCG index ended 55 bps lower in the week to August 30, 2024. For the week, the FMCG index fell 350 points. During the week, the FMCG index touched a high of 63,806 and a low of 62,564.

The levels of 25,500 for Nifty and 82,500 for Sensex remain the key levels to take out after the rally in the week. The action now shifts to the realm of the Fed as it likely implements the first rate cut in the US in its September FOMC policy.

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