Weekly Musings – Index performance for week ended March 29, 2024

31 Mar 2024 , 10:23 AM

ANOTHER WEEK OF MIXED MARKET PERFORMANCE

The week ended March 29, 2024 closed with gains of around 104 bps on the Nifty and 139 bps for Sensex. This was despite FPIs being net sellers this week to the tune of $360 Million. In the last two weeks, the FPIs sold Indian equities worth $674 Million. However, in these two weeks, the markets actually gained around 180 bps. What stood out in the week was the diverse performance.

• The rally in the week was largely driven by the oil & gas sector and the auto sector, both rallying by 194 bps and 177 bps for the week. The rally in oil was driven by steady oil prices, but the real story was the massive upgrade of Reliance Industries by Goldman Sachs. That triggered most of the oil sector gains. Autos continues to be robust on the back of demand hopes and the hope that RBI will cut rates in H2-2024.
• Needless to say, IT continued to be the pressure point this week. However, the fall was nowhere as drastic as the 6.2% fall in the previous week, in the immediate aftermath of the earnings outlook downgrade by Accenture. However, it is evident that there is too much selling pressure as even institutions are lightening up on the counter.
• The other sectors like banking and FMCG continued in the positive territory but were relatively more subdued compared to oil & gas or auto. The good news for retail investors was that small caps and mid-caps also gave a bounce after a long time.

With the fiscal over and most of the tax farming done, the markets should adopt a more fundamental driven approach next week.

WHAT SHOULD MARKETS TRACK NEXT WEEK?

The coming week will see several key data points to watch out for. Here are 4 data points that will be closely watched by the markets.

• The rupee level will be the key variable in the coming week also, as it stayed about the ₹83/$ mark for the second week in succession. The strong dollar index is the big short term risk for the rupee and could have an outsized impact on mid and small caps.
• The other variable to track will be the crude oil prices. With the ceasefire now looking elusive, it is likely that oil may gradually inch towards $90/bbl in the Brent Crude market. That can put pressure on the Indian stocks, as elevated oil normally does.
• Watch out for the market reaction to key data inputs late in the week like the current account deficit number for Q3, US GDP growth for Q4 final estimate and the PCE inflation for February 2024. Markes could react to all these factors.
• There will be a series of domestic data flows in the coming week like PMI manufacturing and the PMI services; apart from the auto numbers. Markets will also closely track the GST collections for the month of February 2024 as a high frequency indicator.

Apart from the above, the next week could also see reaction to higher than expected core sector growth as well as fiscal deficit, bang on target for FY24.

BSE SENSEX 30 INDEX – BOUNCES SHARPLY IN THE WEEK

The table captures the movement of the BSE SENSEX 30 for the week to March 29, 2024.

Date	High	Low	Close
29-03-2024	74,190.31	73,120.33	73,651.35
28-03-2024	74,190.31	73,120.33	73,651.35
27-03-2024	73,138.73	72,600.73	72,996.31
26-03-2024	72,705.29	72,363.03	72,470.30
25-03-2024	72,882.46	72,416.03	72,641.19
22-03-2024	72,882.46	72,416.03	72,641.19
	Weekly Returns		+1.39%

Data Source: BSE

Sensex closed the week +1.39% higher, despite the year-end caution and the negative FPI flows in the week. For the week, the Sensex touched a high of 74,190, but closed lower at 73,651 levels. The Sensex did show a bounce on 2 out of the 3 trading sessions, since this was a largely truncated week for trading. Overall, Sensex gained 1,010 points this week, which is a sharp improvement from the tepid gains last week. There was some euphoria coming back into the markets this week as the tax farming season came to an end.

NIFTY 50 INDEX – IT SECTOR RESTRAINS NIFTY GAINS

The table captures the movement of Nifty 50 index in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	22,516.00	22,163.60	22,326.90
28-Mar-24	22,516.00	22,163.60	22,326.90
27-Mar-24	22,193.60	22,052.85	22,123.65
26-Mar-24	22,073.20	21,947.55	22,004.70
25-Mar-24	22,180.70	21,883.30	22,096.75
22-Mar-24	22,180.70	21,883.30	22,096.75
	Weekly Returns		+1.04%

Data Source: NSE

Nifty closed the week with gains of 230 points, with FPIs net selling $360 Million in the week. Now FPIs have taken out $674 Million in the last two weeks, but that pales in comparison to the infusion of $5.56 Billion in the 4 weeks prior to that. In terms of sectoral show; oil & gas and autos showed a sharp rally; FMCG and Banking showed a subdued rally; while IT was the only major sector to give negative returns. The weak revenue guidance provided by Accenture for 2024 continues to be an overhang for the IT sector. The week also saw the Nifty VIX subdued at 12.83 levels, was one of the reasons for the buy-on-dips approach holding the Nifty. This was a truncated week with just 3 trading session.

NIFTY NEXT 50 INDEX – BUILDS ON ITS GAINS

The table captures the movement of Nifty Next 50 for the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	60,842.35	60,026.00	60,624.30
28-Mar-24	60,842.35	60,026.00	60,624.30
27-Mar-24	60,352.25	59,833.25	59,911.70
26-Mar-24	59,858.55	58,991.80	59,801.50
25-Mar-24	59,326.25	58,644.30	59,188.90
22-Mar-24	59,326.25	58,644.30	59,188.90
	Weekly Returns		+2.43%

Data Source: NSE

The Nifty Next 50 is positioned somewhere between Nifty and the smaller stocks. In a market where Nifty is more of Beta and smaller stocks are too risky, the Nifty Next-50 appears to check the right boxes. This week, the index gained +2.43% gains. 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 touched a high of 60,842 levels but closed at 60,624; fairly close to its weekly high. The Next 50 gained 1,435 points; thanks to the bounce in financials.

NIFTY MID-CAP 100 INDEX – BACK TO WINNING WAYS

The table captures the movement of Nifty Mid-Cap 100 in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	48,250.25	47,785.20	48,075.75
28-Mar-24	48,250.25	47,785.20	48,075.75
27-Mar-24	48,135.35	47,786.10	47,837.35
26-Mar-24	47,842.20	47,193.65	47,807.65
25-Mar-24	47,371.00	46,843.50	47,312.85
22-Mar-24	47,371.00	46,843.50	47,312.85
	Weekly Returns		+1.61%

Data Source: NSE

Last week, the mid-cap index showed smart gains and this week it has built on that gaining another 763 points, on top of 627 points gained last week. It looks like the mid-caps are finally back to their winning ways. Much of the tax-farming pressure in mid-cap stocks is now out of the day. This is a common practice among the traders and the mid-cap stocks are most vulnerable to tax farming. While mid-cap funds have gone slow in recent months, the retail interest in these stocks continues to be robust.

NIFTY SMALL-CAP 100 INDEX – DOES A POSITIVE ENCORE

The table captures movement of Nifty Small Cap 100 in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	15,397.15	15,251.20	15,270.45
28-Mar-24	15,397.15	15,251.20	15,270.45
27-Mar-24	15,349.50	15,158.25	15,263.90
26-Mar-24	15,170.25	14,940.75	15,118.35
25-Mar-24	15,092.95	14,918.35	15,056.75
22-Mar-24	15,092.95	14,918.35	15,056.75
	Weekly Returns		+1.42%

Data Source: NSE

The small cap index rallied for the second week in a row after 6 consecutive weeks of negative returns. The 1.42% gain this week was exactly the same as last week. With the small cap index down nearly 10% from the peak, buying interest appears to be returning. A few more quarters of robust numbers should convince the markets about valuations. In addition, other factors like the reduced flows into small cap funds, the additional special margins (ASM) and 100% upfront margins on several small stocks are a major overhang.

BANK NIFTY INDEX – WEEKLY GAINS WERE SUBDUED

The table below captures the movement of BANKNIFTY in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	47,440.45	46,827.85	47,124.60
28-Mar-24	47,440.45	46,827.85	47,124.60
27-Mar-24	46,956.10	46,643.45	46,785.95
26-Mar-24	46,788.35	46,529.05	46,600.20
25-Mar-24	46,974.15	46,566.80	46,863.75
22-Mar-24	46,974.15	46,566.80	46,863.75
	Weekly Returns		+0.56%

Data Source: NSE

Like the previous week, this week was also a week of subdued growth. There are concerns over the pace of NII growth and the ability to sustain NIMs in the coming quarters. However, the RBI clampdown on large NBFCs, has been viewed as positive for the banks. The signals from the Fed policy statement on March 20, 2024 hinted at 3 rate cuts in 2024, and that led to a sharp bounce in banking stocks on the last 2 days of the week. If rate cuts are cut, banks may again benefit as their cost of deposits on the downside falls faster than lending rates.

NIFTY IT INDEX – PRESSURE WAS ABOUT ACCENTURE GUIDANCE

The table captures the movement of Nifty IT index in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	35,203.25	34,786.65	34,898.15
28-Mar-24	35,203.25	34,786.65	34,898.15
27-Mar-24	35,121.55	34,693.60	34,744.35
26-Mar-24	35,400.15	34,938.00	34,969.10
25-Mar-24	35,419.25	34,701.75	35,188.40
22-Mar-24	35,419.25	34,701.75	35,188.40
	Weekly Returns		-0.82%

Data Source: NSE

In the latest week to March 29, 2024, the Nifty IT fell another -0.82%, after the index had cracked -6.17% last week. It all started with Accenture lowering its own guidance for revenue growth from a range of 2-5% to 1-3%. That spooked most of the frontline IT stocks like TCS, Infosys and HCL Technologies; which were mirrors of the Accenture business model. The selling in IT stocks not as bad as the previous week, but pressure stays. There are concerns that IT spending and consulting revenues could take a hit in 2024.

NIFTY OIL & GAS INDEX – IT WAS ALL ABOUT RELIANCE RALLY

The table captures the Nifty Oil & Gas index for the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	11,541.40	11,384.80	11,440.90
28-Mar-24	11,541.40	11,384.80	11,440.90
27-Mar-24	11,519.90	11,341.25	11,365.75
26-Mar-24	11,345.20	11,135.85	11,304.55
25-Mar-24	11,293.00	11,141.15	11,223.00
22-Mar-24	11,293.00	11,141.15	11,223.00
	Weekly Returns		+1.94%

Data Source: NSE

Oil & gas index gained 194 bps this week, making it over 3.50% spike in 2 weeks. There are concerns over oil price volatility in the Brent markets. While OMCs are under pressure after the price cut, the week belonged to Reliance after Goldman Sachs raised the price forecast for RIL stock by a best case scenario of 40%. That surely flattered the oil & gas sector, considering the weightage and importance of Reliance in the oil market calculations.

NIFTY AUTO INDEX – RATE CUTS IS THE STORY FOR AUTOS

The table captures the movement of Nifty Auto index in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	21,607.80	21,085.85	21,419.10
28-Mar-24	21,607.80	21,085.85	21,419.10
27-Mar-24	21,324.75	21,088.70	21,146.20
26-Mar-24	21,177.95	20,974.75	21,038.30
25-Mar-24	21,177.40	20,622.80	21,046.40
22-Mar-24	21,177.40	20,622.80	21,046.40
	Weekly Returns		+1.77%

Data Source: NSE

The Nifty Auto Index has gained over 6% in just w weeks. After sharply gaining by 4.23% in the previous week, the latest week saw another 1.77% spike in the auto index. The auto sector had been making big bets on lower inflation and lower rates of interest on automobiles for some time. However, while Fed statement hinted at 3 rate cuts in 2024, the latest data on PCE inflation and US Q4 GDP don’t seem to support that.

NIFTY FMCG INDEX – REMAINS A DEFENSIVE BET

The table captures the movement of Nifty FMCG index in the week to March 29, 2024.

Date	High	Low	Close
29-Mar-24	54,251.00	53,534.45	53,949.20
28-Mar-24	54,251.00	53,534.45	53,949.20
27-Mar-24	53,819.95	53,491.10	53,543.55
26-Mar-24	53,784.00	53,325.10	53,687.70
25-Mar-24	53,849.60	53,305.05	53,775.70
22-Mar-24	53,849.60	53,305.05	53,775.70
	Weekly Returns		+0.32%

Data Source: NSE

The FMCG sector has been oscillating between positive and negative zone in the last few weeks, but gains in this week were subdued. Last week, FMCG index gained 70 bps, and this week it has followed up with 32 bps gains. Rural demand may be an overhang, but FMCG still remains the best play on the India consumption growth. Higher crude prices may be an overhang, but FMCG is still a great defensive bet.