Weekly Musings – Index performance for week ended June 2, 2023

5 Jun 2023 , 08:36 AM

The week gone by saw the Nifty closing above the 18,500 levels and the Sensex above the 62,500 levels with strong volumes. In this segment of weekly musings, we look at the weekly index performance of 4 generic indices and 5 sectoral indices, which capture more than 80% of the sectoral weight of the Nifty.

NIFTY 50 INDEX – HOLDS 18,500, BUT GENERALLY FLAT

The table below captures the movement of the Nifty 50 index in the week to 02nd June 2023. 

Date	High	Low	Close
02-Jun-23	18,573.70	18,478.40	18,534.10
01-Jun-23	18,580.30	18,464.55	18,487.75
31-May-23	18,603.90	18,483.85	18,534.40
30-May-23	18,662.45	18,575.50	18,633.85
29-May-23	18,641.20	18,581.25	18,598.65
26-May-23	18,508.55	18,333.15	18,499.35
	Weekly Returns	+0.19%

Data Source: NSE

The week saw the Nifty closing convincingly above the level of 18,500 and with 18,800 as the next resistance for the markets. The sharp rally in the week has come amidst strong FPI flows of more than $5 billion in May and another $1 billion in the first two days of June. With the results season almost over, the big news this week was the GDP data. Q4FY23 GDP came in higher than expected at 6.1% and FY23 full year GDP was also higher than the RBI expectations at 7.2%. Combined with the government closing FY23 well within its 6.4% fiscal deficit target, the impact on the market sentiments were strong. However, sectoral heavyweights like banking, IT and oil & gas remained under pressure after the rally.

NIFTY NEXT 50 INDEX – AGAIN OUTSHINES THE NIFTY

The table below captures the movement of the Nifty Next 50 index in the week to 02nd June 2023.

Date	High	Low	Close
02-Jun-23	42,372.90	42,216.05	42,331.40
01-Jun-23	42,320.90	42,067.80	42,154.70
31-May-23	42,129.35	41,804.85	42,049.30
30-May-23	42,031.25	41,834.85	41,946.00
29-May-23	41,996.95	41,840.25	41,925.30
26-May-23	41,710.85	41,186.35	41,684.70
	Weekly Returns	+1.55%

Data Source: NSE

The week saw the Nifty Next 50 actually doing much better than the Nifty with strong 1.55% returns for the week. The Nifty Next 50 index has a 55% exposure to 3 sectors viz., consumer goods, financials, and healthcare. While financials were neutral, consumer goods and healthcare held up in the week. The Nifty Next 50 comprises of stocks with the potential to become Nifty stocks in future. Investors appear to be betting more on future long term growth rather than instant gratification in the markets, which is a good thing.

NIFTY MID-CAP 100 INDEX – ANOTHER ROBUST WEEK

The table below captures the movement of the Nifty Mid-Cap 100 index in the week to 02nd June 2023.

Date	High	Low	Close
02-Jun-23	34,006.55	33,891.50	33,966.80
01-Jun-23	33,961.95	33,774.85	33,812.40
31-May-23	33,814.70	33,540.95	33,761.30
30-May-23	33,695.45	33,541.45	33,635.30
29-May-23	33,613.65	33,427.10	33,551.00
26-May-23	33,454.75	33,180.00	33,425.10
	Weekly Returns	+1.62%

Data Source: NSE

If Nifty Mid-cap index rallied by 2.69% in the prior week, the latest week to 02nd June 2023 saw the mid cap index rally by another 1.62%. It looks like a clear case of investors showing preference for alpha hunting in mid-sized stocks. Domestic mutual funds and foreign investors have been aggressively lapping up smaller sized stocks in the last few weeks, and that trend has only got more pronounced in recent days. The mid-caps are likely to benefit the most from the RBI hinting at a peak on interest rates, combined with steady rupee.

NIFTY SMALL-CAP 100 INDEX – SMALL WAS BEAUTIFUL

The table below captures the movement of the Nifty Small Cap 100 index in the week to 02nd June 2023.

Date	High	Low	Close
02-Jun-23	10,365.45	10,308.65	10,321.60
01-Jun-23	10,290.45	10,193.75	10,269.85
31-May-23	10,181.05	10,045.70	10,166.10
30-May-23	10,076.20	10,032.35	10,062.30
29-May-23	10,068.00	10,014.35	10,040.60
26-May-23	10,024.20	9,967.65	10,010.80
	Weekly Returns	+3.10%

Data Source: NSE

After struggling at the 10,000 mark for the last 2 weeks, the latest week to 02nd June 2023 saw a decisive move above that resistance in the Nifty Small Cap index. The 3.10% rally in the small cap index in the latest week, clearly points towards investors willing to take higher risk down the capitalization curve. Small caps are normally very stock specific plays and they also tend to be high risk alpha plays. The strong interest in small caps shows the willingness of investors take on stock specific risk in Indian markets.

BANK NIFTY INDEX – ANOTHER LACKLUSTER WEEK

The table below captures the movement of the Nifty Bank index (BANKNIFTY) in the week to 02nd June 2023.

Date	High	Low	Close
02-Jun-23	44,088.90	43,812.55	43,937.85
01-Jun-23	44,179.95	43,706.15	43,790.20
31-May-23	44,339.05	43,822.70	44,128.15
30-May-23	44,498.60	44,207.50	44,436.35
29-May-23	44,483.35	44,193.95	44,311.90
26-May-23	44,067.60	43,588.80	44,018.00
	Weekly Returns	-0.18%

Data Source: NSE

It was the second week in succession that banks behaved in a lacklustre manner. After gaining just 0.11% in the prior week, the Bank Nifty gave up -0.18% in the latest week to 02nd June 2023. The HDFC Bank stock continued to put pressure on the banking index while Kotak Bank was another heavyweight to come under pressure during the week. Broadly, investors are also turning cautious that the best of the spread game in private sector and PSU banks maybe over with the fourth quarter of FY23.

NIFTY IT INDEX – REALITY STARTS TO BITE AGAIN

The table below captures the movement of the Nifty IT index in the week ending on 02nd June 2023.

Date	High	Low	Close
02-Jun-23	29,550.15	29,272.55	29,328.15
01-Jun-23	29,599.10	29,382.05	29,446.25
31-May-23	29,495.05	29,212.50	29,319.75
30-May-23	29,405.20	29,172.70	29,297.65
29-May-23	29,659.60	29,200.25	29,240.20
26-May-23	29,384.85	28,975.95	29,355.90
	Weekly Returns	-0.09%

Data Source: NSE

After two weeks of stellar performance by the IT index, the week to 02nd June 2023 saw the IT index marginally contract by -0.09%. Most of the frontline IT stocks saw pressure at higher levels after a very sharp bounce in the last couple of week. In the previous week, we had expressed concerns about the ability of the market to sustain such a rally in IT stocks and that has been largely proven in the latest week. It was a case of the sector tiring out.

NIFTY OIL & GAS INDEX – UPSTREAM OIL UNDER STRESS

The table below captures the movement of the Nifty Oil & Gas index in the week ending on 02nd June 2023.

Date	High	Low	Close
02-Jun-23	7,455.10	7,360.65	7,372.60
01-Jun-23	7,478.00	7,407.20	7,422.45
31-May-23	7,509.95	7,394.30	7,432.15
30-May-23	7,582.50	7,521.30	7,526.90
29-May-23	7,576.75	7,520.80	7,540.35
26-May-23	7,593.05	7,546.20	7,581.45
	Weekly Returns	-2.75%

Data Source: NSE

If there was one sector that actually pulled down the market, it was the oil & gas space falling by -2.75% in the week. The fall was led by heavyweights like Reliance and ONGC, which jointly account for nearly 50% of the oil & gas index. With Brent crude still stuck around the $75/bbl levels, there are concerns over realizations of upstream oil companies and that has played on the oil index in a big way. Downstream oil companies also remained under stress on concerns that high GRM levels of Q4FY23 may not sustain.

NIFTY AUTO INDEX – STEADY AUTO SALES NUMBERS IN MAY-23

The table below captures the movement of the Nifty Auto index in the week ending on 02nd June 2023.

Date	High	Low	Close
02-Jun-23	14,402.25	14,263.45	14,388.60
01-Jun-23	14,303.30	14,168.75	14,257.00
31-May-23	14,236.80	14,107.70	14,199.00
30-May-23	14,273.30	14,164.75	14,177.85
29-May-23	14,315.35	14,158.00	14,219.60
26-May-23	14,150.00	14,017.65	14,130.45
	Weekly Returns	+1.83%

Data Source: NSE

The Nifty Auto index rallied another 1.83% this week, on top of 1.93% in the prior week. Auto numbers continue to be broadly positive across passenger vehicles (PV), commercial vehicles (CV), tractors and two-wheelers. Auto stocks have been an easy bet on rising consumption and falling input costs. Two wheelers also joined the party on solid offtake numbers for the month of May 2023.

NIFTY FMCG INDEX – DOUBLE BOOST CONTINUES

The table below captures the movement of the Nifty FMCG index in the week ending on 02nd June 2023.

Date	High	Low	Close
02-Jun-23	51,399.55	51,026.95	51,288.65
01-Jun-23	51,367.30	50,923.80	50,998.95
31-May-23	51,133.60	50,650.95	51,042.75
30-May-23	51,029.45	50,669.50	50,927.20
29-May-23	50,850.25	50,501.90	50,626.40
26-May-23	50,425.15	49,654.60	50,388.00
	Weekly Returns	+1.79%

Data Source: NSE

FMCG repeated its stellar performance of the prior week with another 1.79% returns in the latest week to 02nd June 2023. FMCG stocks have become a play on a bounce in rural demand, strategic product downsizing and a sharp fall in input costs. In a tough and competitive market, FMCG companies appear to have finally got their mantra right.

Here are the major takeaways for the week ended 02nd June 2023. 

• Among the generic indices, there is a clear bias against the well-tracked large caps and a gradual preference building for smaller alpha plays.

   

• On a sectoral basis, it was again auto and FMCG that stood out as a solid consumer play. Banking, oil & gas, and IT came under pressure during the latest week.

The RBI policy statement is likely to be the big story to watch out for in the coming week, combined with cues from the US markets.