Weekly Musings – Index performance for week ended June 30, 2023

1 Jul 2023 , 08:17 PM

The Nifty gained 2.80% during the week with the rally being led by the heavyweight sectors like autos, IT, and banks; in the order of returns. This week, there was no resistance for the Nifty as it decisively broke above the 18,800 levels as well as the 19,000 levels to close the week at 19,189. Clearly, the positive news flows, the HDFC twins merger and robust FPI flows helped the markets. (For live impact, check market map)

NIFTY 50 INDEX – CLOSES THE WEEK AT ALL-TIME HIGH

The table below captures the movement of the Nifty 50 index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	19,201.70	19,024.60	19,189.05
29-Jun-23	19,011.25	18,861.35	18,972.10
28-Jun-23	19,011.25	18,861.35	18,972.10
27-Jun-23	18,829.25	18,714.25	18,817.40
26-Jun-23	18,722.05	18,646.70	18,691.20
23-Jun-23	18,756.40	18,647.10	18,665.50
	Weekly Returns	+2.80%

Data Source: NSE

The last few weeks saw the Nifty struggling between the 18,400 levels and the 18,800 levels. Even in the previous week, Nifty had faced resistance at 18,800 levels. However, the latest week to June 30, 2023 saw no such hurdles. The Nifty first breached the 18,800 level and then the 19,000 level in a span of just 2 days. Monsoons remain a major overhang on the markets and it could impact food inflation and rural demand. However, this week, the markets were in no mood to play devil’s advocate. It was all about bullishness and it was a celebration of the relentless FPI flows and the merger of the HDFC twins. Nifty has entered a historically new zone altogether now.

NIFTY NEXT 50 INDEX – NOT AS FANCIFUL AS NIFTY 50

The table captures the movement of Nifty Next 50 index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	43,782.90	43,575.50	43,750.30
29-Jun-23	43,524.05	43,263.30	43,465.45
28-Jun-23	43,524.05	43,263.30	43,465.45
27-Jun-23	43,254.50	43,074.10	43,192.60
26-Jun-23	43,070.75	42,589.85	43,006.60
23-Jun-23	43,414.80	42,781.55	42,833.15
	Weekly Returns	+2.14%

Data Source: NSE

It was another positive week for the Nifty Next 50, although the returns were not as impressive as the Nifty 50, because the action was all in the large caps. Nifty Next 50 index has a 55% exposure to 3 sectors viz., consumer goods, financials, and healthcare. Consumer goods have been facing some pressure on account of delayed rains and its repercussions on rural demand. However, financials did very well and that more than offset the slight concerns on the consumption story. Overall, the companies poised to become future Nifty companies have also delivered well in the week.

NIFTY MID-CAP 100 INDEX – ENOUGH ROOM STILL IN MID-CAPS

The table captures the movement of Nifty Mid-Cap 100 in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	35,782.25	35,612.20	35,754.35
29-Jun-23	35,578.55	35,369.35	35,520.95
28-Jun-23	35,578.55	35,369.35	35,520.95
27-Jun-23	35,377.95	35,191.95	35,296.95
26-Jun-23	35,157.25	34,659.75	35,120.45
23-Jun-23	35,223.60	34,767.30	34,799.90
	Weekly Returns	+2.74%

Data Source: NSE

After several weeks of giving average weekly returns of over 2%, the mid-cap index had given negative returns in the previous week. However, in the week to June 30,2023, the Nifty Mid-cap 100 index has once again redeemed itself with 2.74% returns. Mid-cap stocks tend to mirror the benefits of lower rates, lower crude prices, lower inflation, and stable currency better than the large caps. The lower than expected current account deficit for the quarter to March 2023, was a trigger for all these factors; and all of them are conducive to mid-cap stocks. Retail, HNI, and institutional investors have displayed a distinct bias for alpha hunting in mid-sized stocks. Even in the weeks ahead, mid-caps are likely to benefit from the RBI going easy on rates, combined with stable rupee and weak oil prices. 

NIFTY SMALL-CAP 100 INDEX – STAYS ROBUST IN THE WEEK

The table captures the movement of Nifty Small Cap 100 index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	10,851.25	10,817.55	10,837.10
29-Jun-23	10,832.50	10,777.45	10,791.35
28-Jun-23	10,832.50	10,777.45	10,791.35
27-Jun-23	10,780.00	10,727.85	10,753.75
26-Jun-23	10,699.00	10,592.20	10,689.85
23-Jun-23	10,759.55	10,582.65	10,624.10
	Weekly Returns	+2.00%

Data Source: NSE

The Small-Cap 100 index has been largely impervious to the overall market movements and that trend continued even in this week. Even as the Nifty was volatile, the small cap index continued to grow steadily. In the previous week, the small cap index had seen negative returns after a long time. That was an indication of boredom at higher levels spreading to smaller stocks as well. However, the latest week has shown that most of the retail, HNI, and even institutional investors are still very positive about the small cap space.

BANK NIFTY INDEX – LEADS THE RATE SENSITIVES HIGHER

The table below captures the movement of BANKNIFTY in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	44,787.10	44,447.20	44,747.35
29-Jun-23	44,508.40	44,163.20	44,327.80
28-Jun-23	44,508.40	44,163.20	44,327.80
27-Jun-23	44,194.65	43,693.15	44,121.50
26-Jun-23	43,773.10	43,541.75	43,641.05
23-Jun-23	43,824.10	43,519.55	43,622.90
	Weekly Returns	+2.58%

Data Source: NSE

For four full weeks, the Bank Nifty drifted aimlessly with returns of -0.18%, 0.11%, 0.12%, and -0.12% respectively. In the previous week, the Bank Nifty had fallen by -0.72%. However, the latest week saw the Bank Nifty rallying by 2.58%. In a sense, the fabulous quarterly results of the banks for the March quarter had taken the Bank Nifty to new highs. However, once the NII / NIM game had played out, there were no immediate triggers. Now Banks are leading the rate sensitive story as markets are increasingly betting on topping out of rates in India and globally. Of course, the big boost to the banking index also came from the merger of the HDFC twins, which have substantial weightage in the index. That could be a game changer for banking in India and create new paradigms.

NIFTY IT INDEX – DELIVERS STELLAR PERFORMANCE THIS WEEK

The table captures the movement of Nifty IT index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	29,594.20	28,957.15	29,563.00
29-Jun-23	28,997.35	28,778.15	28,842.95
28-Jun-23	28,997.35	28,778.15	28,842.95
27-Jun-23	28,821.85	28,630.45	28,800.15
26-Jun-23	28,631.75	28,451.15	28,590.10
23-Jun-23	28,752.50	28,482.15	28,554.25
	Weekly Returns	+3.53%

Data Source: NSE

The indications of a turnaround in sentiments in IT companies were visible in the previous week with the Nifty IT index giving 0.82% returns. However, the latest week saw a fabulous 3.53% returns on the IT index as there was all-round buying in IT stocks, taking advantage of lower levels. FPIs have been slightly cautious about IT companies due to factors like lower tech spending and pricing pressures. However, domestic buying in IT has been robust. For instance, several Indian mutual funds are floating IT funds and IT ETFs to strike while the iron is hot. This has created domestic institutional demand for IT stocks. However, global spending is still likely to slow and pricing will be under pressure. Above all, there is paradigm shift to generative AI and Low Code, which surely makes the future of the existing IT model slightly ambivalent. But for now, investors are buying in.

NIFTY OIL & GAS INDEX – HOLDS IN THE POSITIVE

The table captures the movement of Nifty Oil & Gas index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	7,545.05	7,500.65	7,535.70
29-Jun-23	7,499.90	7,438.90	7,486.60
28-Jun-23	7,499.90	7,438.90	7,486.60
27-Jun-23	7,471.85	7,413.75	7,428.95
26-Jun-23	7,459.35	7,404.60	7,429.35
23-Jun-23	7,541.15	7,427.65	7,434.25
	Weekly Returns	+1.36%

Data Source: NSE

Oil stocks had seen deep cuts in the previous week and even in the latest week the bounce was subdued. Brent has stayed around the $73-74/bbl range despite Saudi Arabia cutting supply. Upstream oil companies continue to be under pressure due to weak crude prices, but now even refiners are facing pressure as the gross refining margins (GRMs) look to be topping out. Looks like a cautious game overall.

NIFTY AUTO INDEX – LORDS OVER THE MARKET TREND

The table captures the movement of Nifty Auto index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	15,182.45	14,884.35	15,147.65
29-Jun-23	14,859.55	14,767.40	14,840.55
28-Jun-23	14,859.55	14,767.40	14,840.55
27-Jun-23	14,802.55	14,694.90	14,729.90
26-Jun-23	14,745.65	14,527.60	14,717.85
23-Jun-23	14,715.85	14,536.35	14,550.20
	Weekly Returns	+4.11%

Data Source: NSE

Autos have been one of the big stories in the market. The auto index rallied in 4 out of the previous 5 weeks and in the latest week it has given bumper returns of 4.11%. Auto numbers show a huge backlog of orders and demand far in excess of supply. That is holding the cheer for auto stocks. At a broader level, the concerns over delayed monsoons and weak rural demand still remain intact. The bet on autos is more macro in nature.

NIFTY FMCG INDEX – RURAL CONSUMPTION REMAINS A QUESTION MARK

The table captures the movement of Nifty FMCG index in the week to June 30, 2023.

Date	High	Low	Close
30-Jun-23	52,239.05	51,759.45	52,194.75
29-Jun-23	51,985.10	51,590.90	51,893.40
28-Jun-23	51,985.10	51,590.90	51,893.40
27-Jun-23	51,821.75	51,477.55	51,598.60
26-Jun-23	51,883.40	51,346.90	51,635.00
23-Jun-23	51,556.95	51,124.50	51,283.75
	Weekly Returns	+1.72%

Data Source: NSE

After cracking by -2.21% in the previous week, the FMCG index bounced back by 1.72% in the latest week. Institutional investors still like FMCG due to lower input costs, better product positioning and smart product size management. Delayed monsoons this year has turned out to be an overhang, but what has enthused investors is that the FMCG companies are working hard to find realistic solutions.

Here are the major takeaways from the week ended June 30, 2023. 

• Even as the overall Nifty breaks higher, alpha picking continues to be the name of the game. Autos, IT, and banks ruled the roost.

   

• The week saw a macro boost from sharply lower current account deficit and the mega HDFC twins merger.

Nifty 19,000 is now behind us and there could be some tiring of the market at around the 19,200 levels. The outcome of the Prime Minister’s US visit has been icing on the cake. It is now over to inflation and growth.