Weekly Musings – Index performance for week ended February 09, 2024

11 Feb 2024 , 09:13 AM

TATA GROUP CROSSES ₹30 TRILLION MARKET CAP

During the week, the big news was the Tata group crossing the ₹30 Trillion market cap mark. That makes it the most valuable group by a margin. That is way ahead of Reliance at ₹21 Trillion and the Adani group at ₹15 Trillion. However, the mix of the Tata group is quite interesting. There are a total of 24 listed companies after the consolidation of recent years. Out of the group companies, TCS alone accounts for 50% of the group market while Titan and Tata Motors contribute 10% each. Effectively, 70% of the group market is focused in 3 companies. Another 5 companies viz; Tata Power, Indian Hotels, Tata Consumer Products, Tata Steel and Trent account for another ₹6 Trillion in market cap. So, effectively, these 8 companies account for 90% of the group market, but the 2024 story is more interesting.

The real  story is that the Tata group market cap stood at ₹27.91 Trillion as of the close of 2023. In the first 40 days of 2024, the market accretion has been nearly 8% for the Tata group, taking it beyond the ₹30 Trillion mark. What were the major growth triggers in the year 2024 so far? Among the Big-8, Tata Motors valuation grew 20.3%, Tata Power by 18.3%, Indian Hotels by 15.5% and TCS by 10.15%. There also have been some 2024 laggards with companies like Titan, Tata Communications, Tejas Networks, Tata Chemicals and Tejas networks delivering negative returns in 2024. However, the overall leap of 8% in market value for a massive group like the Tatas, is good enough for markets to be enthused.

MONETARY POLICY REITERATES BUDGET MESSAGE

There were 3 clear messages emanating from the interim budget presented on February 01, 2024. Firstly, the message was that India will not give up on fiscal prudence. That was evident when the fiscal deficit target for FY25 was pegged at 5.1%. Secondly, the capex target for FY25 was set at ₹11.1 Trillion, a full 11% higher than last year. That is nearly 3.4% of GDP. Thirdly, the monetary policy and the budget have reiterated that the borrowing target for FY25 will be lower than the current year. That will keep bond yields in check.

The week saw markets relatively cautious as the Nifty and the Sensex were flat to lower. The cautious was ahead of a slew of macro data flows pertaining to India inflation, US inflation, IIP and trade data. The markets were also tentative ahead of the Red Sea situation, especially with the ceasefire talks falling through and Israel likely to intensify its strikes in the Gaza strip. Here is a quick rundown on the key indices.

BSE SENSEX 30 INDEX – TAPERS CLOSE TO 71,500

The table captures the movement of the BSE SENSEX 30 for the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	71,676.49	71,200.31	71,595.49
08-Feb-24	72,473.42	71,230.62	71,428.43
07-Feb-24	72,559.21	71,938.22	72,152.00
06-Feb-24	72,261.40	71,625.18	72,186.09
05-Feb-24	72,385.93	71,602.14	71,731.42
02-Feb-24	73,089.40	71,948.77	72,085.63
	Weekly Returns	-0.68%

Data Source: NSE

Sensex closed the week -0.68% lower, following strength in the previous week. After touching 73,000 mark in the previous week, this week saw the Sensex close at the 71,595 mark. Overall, the Sensex fell by 491 points in the current week, which is actually quite marginal. While the undertone of the monetary policy was positive, the markets would have ideally expected some signals of a rate cut, which now looks unlikely before August 2024. For now, the focus would be on the upcoming macro data like inflation, wholesale prices, IIP data and the trade data expected to be announced next week.

NIFTY 50 INDEX – CLOSES MARGINALLY LOWER

The table captures the movement of Nifty 50 index in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	21,804.45	21,629.90	21,782.50
08-Feb-24	22,011.05	21,665.30	21,717.95
07-Feb-24	22,053.30	21,860.15	21,930.50
06-Feb-24	21,951.40	21,737.55	21,929.40
05-Feb-24	21,964.30	21,726.95	21,771.70
02-Feb-24	22,126.80	21,805.55	21,853.80
	Weekly Returns	-0.33%

Data Source: NSE

Nifty closed the week with marginal losses of just about 33 bps. FPIs turned net sellers in the week to the tune of $618 Million, after being net buyers in the previous week. However, it is the debt flows that continued to be positive. In terms of sectoral display, oil continued to flatter as auto and IT also joined the party. However, the pressure came largely from banks and FMCG stocks. With the rising uncertainty in the market and the impending national elections, the VIX crossed the 16.0 levels, before closing the week at 15.45. But risk is definitely higher and is likely to remain elevated till the elections. This was something seen in 2019 also. 

NIFTY NEXT 50 INDEX – CONTINUES TO OUTPERFORM NIFTY

The table captures the movement of Nifty Next 50 for the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	57,834.60	56,263.40	57,432.90
08-Feb-24	57,927.70	57,388.45	57,660.70
07-Feb-24	57,489.55	56,600.40	57,386.60
06-Feb-24	56,530.40	55,504.05	56,465.45
05-Feb-24	56,535.35	55,463.50	55,669.85
02-Feb-24	56,218.25	55,818.60	55,940.30
	Weekly Returns	+2.67%

Data Source: NSE

The Nifty Next 50 generally mirrors the Nifty and this week, it smartly outperformed the Nifty with 2.67% gains in a rather dull market. The Nifty Next 50 is the list of 50 companies with potential to become Nifty companies in the near future. During the week, the index bounced to the 57,433 levels and is at its lifetime high. The Next 50 index gained 1,493 points after gaining a full 1,649 points in the previous week. Railway, IT, and defence stocks continued to rally as the value story was underlined by the interim budget.

NIFTY MID-CAP 100 INDEX – GIVES A POSITIVE TREAT

The table captures the movement of Nifty Mid-Cap 100 in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	49,395.70	48,040.75	48,889.05
08-Feb-24	49,780.65	49,238.70	49,327.80
07-Feb-24	49,430.85	48,950.05	49,352.05
06-Feb-24	49,018.50	48,301.55	48,984.65
05-Feb-24	48,876.40	48,296.10	48,410.20
02-Feb-24	48,796.35	48,416.10	48,477.00
	Weekly Returns	+0.85%

Data Source: NSE

The Nifty Mid-Cap index gained 412 points during the week as alpha hunting continued to be the focus after the Union Budget. Macro announcements like fiscal prudence and higher capex outlay are positive for rupee stability and interest rates. Both these factors have helped mid-cap companies. Valuation metrics may still be favouring the large caps and that is likely to keep mid-caps under pressure in the near future. However, mid-cap index valuations sobered after the latest quarterly results, where the mid-cap companies did a lot better than the large cap names. 

NIFTY SMALL-CAP 100 INDEX – HAS A FLAT CLOSE

The table captures movement of Nifty Small Cap 100 in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	16,565.20	16,007.55	16,269.30
08-Feb-24	16,691.60	16,471.80	16,500.95
07-Feb-24	16,653.45	16,458.05	16,566.20
06-Feb-24	16,478.05	16,283.05	16,449.35
05-Feb-24	16,531.75	16,220.45	16,319.75
02-Feb-24	16,388.65	16,225.25	16,277.85
	Weekly Returns	-0.05%

Data Source: NSE

In the previous week, the Nifty Small Cap index had shown a stellar 5.64% rally. Hence some sobering was expected. While the small cap index did not correct, it surely closed flat for the week, almost exactly at the point where it started. With fresh allocations of retail investors and domestic mutual funds favouring small caps, the index has shown a lot of traction in recent weeks and is close to its all-time highs. The expectation is that mutual fund NFOs and SIPs would also favour the small caps a lot more and MF flows this month are an indication.

BANK NIFTY INDEX – DISAPPOINTED BY MONETARY POLICY

The table below captures the movement of BANKNIFTY in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	45,718.15	44,859.15	45,634.55
08-Feb-24	46,181.20	44,893.75	45,012.00
07-Feb-24	46,062.85	45,620.50	45,818.50
06-Feb-24	45,932.15	45,527.00	45,690.80
05-Feb-24	46,048.60	45,615.10	45,825.55
02-Feb-24	46,892.35	45,901.25	45,970.95
	Weekly Returns	-0.73%

Data Source: NSE

It may not be a sharp correction, but the banks did appear disappointed after the monetary policy did not offer any trajectory on rate cuts. The Bank Nifty closed 73 bps lower for the week, but the dichotomy was quite evident. PSU banks continue to rally strongly while it was the private banks that took most of the hit. The last few weeks have been about long on PSU banks and short on private banks; and that is unlikely to change in the near future. HDFC Bank exerted a lot of pressure on banks and that is also spreading to other private banks in recent weeks. A slew of macros in the coming week will keep the banks cautious.

NIFTY IT INDEX – TCS LEADS TECH PACK

The table captures the movement of Nifty IT index in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	38,082.05	37,443.75	37,699.25
08-Feb-24	38,101.50	37,625.75	37,851.60
07-Feb-24	38,373.45	37,734.55	37,767.75
06-Feb-24	38,286.00	37,161.60	38,246.30
05-Feb-24	37,574.45	37,097.95	37,162.15
02-Feb-24	37,663.95	36,729.95	37,323.25
	Weekly Returns	+1.01%

Data Source: NSE

In the last 4 weeks, the Nifty IT index has gained 7.5% and this week it added another 1.01%. The rally was about better than expected numbers in the Q3FY24 quarter, but was also about the better than expected GDP numbers in the US. This points to a revival in tech spending and that is positive for Indian IT companies. Indian IT has been quick to adapt to the shift from traditional BFSIT to digital and that is allowing them to reap rich dividends. Even otherwise, the strong dividend yield will keep the IT stocks buoyant. 

NIFTY OIL & GAS INDEX – UPSTREAM AND DOWNSTREAM RALLY

The table captures the Nifty Oil & Gas index for the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	11,754.35	11,301.80	11,541.40
08-Feb-24	11,779.20	11,558.00	11,704.30
07-Feb-24	11,721.75	11,526.10	11,596.80
06-Feb-24	11,623.65	11,194.60	11,572.05
05-Feb-24	11,448.15	11,108.60	11,271.40
02-Feb-24	11,159.80	10,816.65	11,111.50
	Weekly Returns	+3.87%

Data Source: NSE

The previous week saw Reliance Industries rally 9% and the oil & gas index rally by 9.11%. In the last 13 weeks, the oil index has gained 43%, making it the start of the last quarter, but the oil & gas index was not done yet. In the current week, the oil & gas index gained another 3.87% as oil companies across extraction, refining and marketing have done very well. Now, even the gas companies have joined the rally and it is becoming a lot more broad-based. Markets are impressed by the fact that the oil & gas industry is well poised to handle the current fossil fuel opportunity as well as the transition to green energy.

NIFTY AUTO INDEX – LOW INTEREST RATE HOPES

The table captures the movement of Nifty Auto index in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	19,713.35	19,365.20	19,576.00
08-Feb-24	19,974.55	19,607.50	19,649.50
07-Feb-24	20,033.60	19,762.20	19,903.80
06-Feb-24	19,912.45	19,683.90	19,903.85
05-Feb-24	19,823.35	19,529.20	19,615.30
02-Feb-24	19,563.05	19,304.75	19,380.50
	Weekly Returns	+1.01%

Data Source: NSE

With gains of 1.01% in the latest week, the Auto index has gained 5.3% in the previous two weeks. The auto sector was the top performing sector of 2023; so, some pressure is inevitable, but that is not visible at all. The impact of weak rural demand is already evident on tractor stocks and two wheelers stocks, but that now appears to have been factored in. The bet is now on low rates making automobiles affordable.

NIFTY FMCG INDEX – CONTINUES TO LAG THE MARKETS

The table captures the movement of Nifty FMCG index in the week to February 09, 2024.

Date	High	Low	Close
09-Feb-24	54,007.80	53,452.75	53,867.10
08-Feb-24	54,775.60	53,317.25	53,646.20
07-Feb-24	55,041.35	54,523.10	54,772.60
06-Feb-24	54,956.70	54,372.60	54,608.80
05-Feb-24	55,387.90	54,590.60	54,698.40
02-Feb-24	55,557.50	54,992.90	55,118.40
	Weekly Returns	-2.27%

Data Source: NSE

After losing -5% in the previous 4 weeks, the FMCG index lost another 2.27% this week. It was the only major index, other than banking, to close lower and exerted pressure on the Nifty and Sensex. The pressure of weak rural demand was also evident in the Q3FY24 results. While urban demand has been buoyant, it is struggling to fill the gap left by weak rural demand. Most of the FMCG players like Hindustan Unilever, ITC, Tata Consumer and Britannia have reported less than flattering results. That is weighing on the FMCG index.