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Weekly Musings – Index performance for week ended September 06, 2024

9 Sep 2024 , 01:09 PM

FIVE KEY TRENDS WE JOTTED DOWN IN THE WEEK
The week to September 06, 2024 marked the third successive week of FPIs remaining net buyers in Indian equities. In the 3 months since Modi 3.0 government took charge, the FPIs have infused $12.5 Billion into Indian equities. Here are some key trends we noted down in the week ending September 06, 2024.

The week was actually a flat week for the first four days with most of the selling coming only on the last day. The Friday selling could be attributed to the fact that the US jobs data was to be out late in the evening and most of the traders wanted to remain light ahead of a crucial weekend. That explains the hurry to offload positions. However, the data was largely in line with the expectations.
For the second week in a row, the Non-banking finance companies (NBFCs) and the insurers were the star performers. Surprisingly, they have been the stars in recent weeks. While select NBFCs like Chola Financial and Shriram Finance saw concerted institutional buying, Bajaj Finance and Bajaj Finserv gained on likely gains from the Bajaj Housing Finance IPO listing. Insurance companies are emerging as a preferring option among financials even as banks are likely to be under pressure.
The shift towards defensives continued in the week. The selling was quite prominent in PSUs and in the sectors where government participation is quite high. In addition, oil stocks fell sharply as the crude prices went into a free fall in the week. The sectors like insurance, FMCG, consumer durables and healthcare managed to hold value much more effectively than the cyclicals.
While the markets are bracing for the first rate cut by the Fed in this cycle on September 18, 2024; the markets are still ambivalent on whether the rate cut will be 25 bps or 50 bps. The direction of the market will largely depend on this choice by the Fed. More importantly, Indian markets will also depend on how the RBI reacts to the Fed action.
Interestingly, the standout generic index this week was the small cap index. While the Nifty, Sensex and even the Mid-Cap index fell sharply, it was the small cap index that closed almost flat. That could be seen as the first sign that retail interest in these smaller stocks is coming back.

It was a week in which the big data point was the US jobs data. That still shows pressure on growth making a rate cut inevitable in the September 18, 2024 meeting.

BSE SENSEX 30 INDEX – FALLS SHARPLY ON FRIDAY EFFECT

The table captures the movement of the BSE SENSEX 30 for the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	82,171.08	82,254.79	80,981.93	81,183.93
05-Sep-24	82,469.79	82,617.49	82,130.44	82,201.16
04-Sep-24	81,845.50	82,408.54	81,833.69	82,352.64
03-Sep-24	82,652.69	82,675.06	82,400.76	82,555.44
02-Sep-24	82,725.28	82,725.28	82,440.93	82,559.84
30-Aug-24	82,637.03	82,637.03	82,256.02	82,365.77
		Weekly Returns		-1.43%

Data Source: BSE

The band of 81,000 to 82,000 has been a key resistance for the Sensex and this week it again proved to be true. The Sensex closed -143 bps lower this week, but the selling was entirely concentrated on Friday as investors and traders preferred to stay light on positions ahead of the US jobs data. FPIs have infused $12.5 Billion in the last 3 months and that remains a positive tailwind for the Sensex. For the week, the Sensex closed 1,182 points lower for the week, driven largely by the massive sell-off on Friday. During the week, the Sensex touched a high of 82,725 and a low of 80,982. During the week, the slew of positive sessions finally got broken.

NIFTY 50 INDEX – CLOSES BELOW PSYCHOLOGICAL 25K MARK

The table captures the movement of Nifty 50 index in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	25,093.70	25,168.75	24,801.30	24,852.15
05-Sep-24	25,250.50	25,275.45	25,127.75	25,145.10
04-Sep-24	25,089.95	25,216.00	25,083.80	25,198.70
03-Sep-24	25,313.40	25,321.70	25,235.80	25,279.85
02-Sep-24	25,333.60	25,333.65	25,235.50	25,278.70
30-Aug-24	25,249.70	25,268.35	25,199.40	25,235.90
		Weekly Returns		-1.52%

Data Source: NSE

The volatility index (VIX) spiked to 15.22 levels this week and was largely an outcome of the weekend volatility in the index. The week saw a negative close in the Nifty despite FPIs being net buyers to the tune of $1.31 Billion. The Nifty is likely to react to the US jobs data announcement and the likely outcomes for rates, only in the coming week as the data was announced late on Friday. For the week, Nifty closed -1.52% lower, as the level of 25,000 once again proved to be the resistance for the Nifty. For the week, the Nifty lost 384 points. During the week, the Nifty touched a high of 25,334 and a low of 24,801, eventually closing very near to the low point of the week.

NIFTY NEXT 50 INDEX – FRIDAY PRESSURES CHANGES NARRATIVE
The table captures the movement of Nifty Next 50 for the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	75,473.40	75,509.70	74,315.90	74,462.00
05-Sep-24	75,736.85	75,807.70	75,382.80	75,485.95
04-Sep-24	74,894.55	75,530.60	74,744.25	75,450.55
03-Sep-24	75,741.75	75,746.30	75,242.15	75,413.65
02-Sep-24	75,674.85	75,712.35	74,989.15	75,335.80
30-Aug-24	75,166.15	75,450.55	75,056.40	75,279.80
		Weekly Returns		-1.09%

Data Source: NSE

Interestingly, as of the end of Thursday, the Nifty Next 50 had closed with gains for the week. The entire picture changed on Friday as the sell-off led to a correction of over 1,000 points on Friday. In a week when the Nifty and the Sensex closed with losses, the Nifty Next 50 also lost -1.09%. The index closed the week losing -818 points. This week, the Nifty Next 50 touched a high of 75,808 level and a low of 74,316 during the week, closing the week nearer to the low point. The Nifty Next 50 index is heavy on IT and PSU stocks and these were under the maximum pressure in the week.

NIFTY MID-CAP 100 INDEX – CORRECTS IN TANDEM WITH LARGE CAPS
The table captures the movement of Nifty Mid-Cap 100 in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	59,489.55	59,527.15	58,396.80	58,501.95
05-Sep-24	59,550.15	59,597.35	59,335.75	59,448.50
04-Sep-24	58,861.80	59,271.30	58,756.90	59,223.70
03-Sep-24	59,271.05	59,478.90	59,231.55	59,297.85
02-Sep-24	59,529.90	59,529.90	58,967.60	59,152.65
30-Aug-24	59,153.85	59,472.55	58,982.80	59,286.65
		Weekly Returns		-1.32%

Data Source: NSE
With alpha hunting still elusive, the Nifty Mid Cap index closed with losses of -1.32% for the week. In the current week to September 06, 2024, the mid-cap index almost wiped out the gains of the previous week, losing -785 points in the process. The A/D ratio also turned unfavourable towards the end of the week, impacting the mid-cap index stocks. For the week, the Mid-Cap 100 index touched a high of 59,597 and a low of 58,397; with most IT and PSU banking stocks under pressure. Alpha hunting has taken a back seat for now.

NIFTY SMALL-CAP 100 INDEX – CLOSES FLAT IN A TOUGH WEEK

The table captures movement of Nifty Small Cap 100 in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	19,570.00	19,640.60	19,255.70	19,276.05
05-Sep-24	19,395.85	19,595.35	19,392.35	19,520.95
04-Sep-24	19,162.45	19,457.55	19,114.15	19,322.25
03-Sep-24	19,297.20	19,378.95	19,291.20	19,326.70
02-Sep-24	19,395.50	19,405.05	19,209.25	19,244.30
30-Aug-24	19,335.35	19,386.50	19,222.50	19,307.10
		Weekly Returns		-0.16%

Data Source: NSE

Ironically, the small cap index was the one index that stood out during the week with a flat to marginally lower close. In the previous 2 weeks, this index had raised hopes of alpha hunting with 4.7% returns. However, in the current week, the index closed marginally lower at -0.16%. This week, the index of small caps closed with marginal losses of just -31 points. For the week, the Nifty Small Cap index touched a high of 19,641 levels and a low of 19,114, despite the defence and PSU stocks putting pressure. Despite the A/D ratio being under pressure, the concerted buying was quite evident in small caps.

BANK NIFTY INDEX – SBI DOWNGRADE TANKS BANKING INDEX

The table below captures the movement of BANKNIFTY in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	51,200.40	51,380.05	50,447.30	50,576.85
05-Sep-24	51,544.25	51,636.75	51,389.15	51,473.05
04-Sep-24	51,364.65	51,503.55	51,259.90	51,400.25
03-Sep-24	51,479.75	51,750.10	51,240.05	51,689.10
02-Sep-24	51,579.50	51,579.50	51,295.80	51,439.55
30-Aug-24	51,437.45	51,466.55	51,256.00	51,351.00
		Weekly Returns		-1.51%

Data Source: NSE

As usual, the Bank Nifty fall was in tandem with the fall in the Nifty, which is not surprising considering its weight in the index. Bank Nifty closed -774 points lower in the week to September 06, 2024, almost wiping out the gains of the previous week. Ideally, the banks should gain from a US rate cut, but it would also depend on how the RBI responds. The big trigger for the fall in the index was the downgrade of SBI by Jefferies from Neutral to Sell. For now, the pressure on the PSU banks is a lot more than the private banks. During the week, the Bank Nifty touched a high of 51,750 and a low of 50,447.

NIFTY IT INDEX – GIVES UP SOME GAINS OF RECENT WEEKS
The table captures the movement of Nifty IT index in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	42,607.85	42,983.60	42,167.15	42,228.90
05-Sep-24	42,578.15	42,766.05	42,294.55	42,644.65
04-Sep-24	42,315.70	42,498.45	42,023.50	42,450.50
03-Sep-24	42,953.10	43,194.55	42,746.75	42,851.30
02-Sep-24	42,864.85	43,299.50	42,847.80	42,975.60
30-Aug-24	42,644.10	42,913.95	42,455.10	42,787.80
		Weekly Returns		-1.31%

Data Source: NSE
In the latest week to September 06, 2024, the Nifty IT index fell -1.31%, after showing a sharp bounce of 4.13% in the previous week. In the current week, the IT index was cautious ahead of the jobs numbers. Eventually, the jobs numbers came in along expected lines and the IT sector is still looking for signals of a slowdown in the US. Otherwise, the rate cuts are likely to be positive for IT. Investors have started to see the bigger picture on IT stocks. The wager now is that; the growth boost from rate cuts would improve tech spending; although it is still not clear how much the Fed will cut rates. For the week, the IT index fell by -559 points. The Nifty IT index touched a high of 42,984 and a low of 41,024. However, for the time being, IT sector will continue to be a dollar defensive play.

NIFTY OIL & GAS INDEX – RELIANCE PULLS THE INDEX LOWER

The table captures the Nifty Oil & Gas index for the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	13,314.25	13,353.35	12,996.45	13,024.55
05-Sep-24	13,434.10	13,463.85	13,296.05	13,312.30
04-Sep-24	13,320.15	13,441.35	13,274.45	13,363.40
03-Sep-24	13,510.05	13,518.40	13,399.80	13,416.85
02-Sep-24	13,486.00	13,607.20	13,455.90	13,486.55
30-Aug-24	13,500.25	13,562.40	13,415.70	13,456.90
		Weekly Returns		-3.21%

Data Source: NSE

The oil & gas index has been the star performer of the last 4-6 months. In the current week to September 06, 2024, the index fell sharply by -3.21% for the week. After the optimism of the Reliance AGM in the previous week, this week was all about the sharp fall in crude prices, which is likely to impact realizations and GRMs. Brent Crude closed lower at $71/bbl in the week. For the week, the Oil & Gas index touched a high of 13,607 and a low of 12,996 levels; with weak crude prices likely to pressure the oil sector.

NIFTY AUTO INDEX – WEAK OFFTAKE NUMBERS START TO WEIGH

The table captures the movement of Nifty Auto index in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	25,817.65	25,893.15	25,435.90	25,527.15
05-Sep-24	25,987.70	26,016.95	25,800.25	25,835.30
04-Sep-24	25,869.40	25,988.55	25,764.20	25,934.25
03-Sep-24	26,140.85	26,141.75	26,004.15	26,034.65
02-Sep-24	26,289.35	26,289.35	25,951.90	26,071.40
30-Aug-24	26,083.30	26,245.60	25,976.45	26,172.80
		Weekly Returns		-2.47%

Data Source: NSE

In the last few weeks, we have seen growing concerns on the auto sales numbers and that is now starting to show on a more visible basis. Also, the auto numbers for the month of August were not too exciting. 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. This is impelling big names like Maruti to tweak production schedules to ease the backlog. Apart from the geopolitical impact on auto exports, the higher input costs is a major overhang for auto stocks. However, auto may still be a good consumer play. For the week, the auto index closed lower by -646 points. For the week, the Auto Index made a high of 26,289 and a low of 25,436; closing near the lows of the week.

NIFTY FMCG INDEX – ONLY MAJOR SECTOR TO SHOW GAINS

The table captures the movement of Nifty FMCG index in the week to September 06, 2024.

Date	Open	High	Low	Close
06-Sep-24	63,694.90	63,908.50	62,905.80	63,175.70
05-Sep-24	63,867.50	64,015.50	63,554.60	63,700.40
04-Sep-24	62,906.45	63,821.30	62,906.45	63,742.90
03-Sep-24	63,605.50	64,058.00	63,391.30	63,485.75
02-Sep-24	63,306.20	63,768.90	63,289.45	63,578.60
30-Aug-24	63,144.70	63,585.95	62,891.50	63,059.75
		Weekly Returns		+0.18%

Data Source: NSE

FMCG has traditionally been counter-cyclical. This week, when all other indices had lost value, FMCG index ended in the positive. In fact, FMCG index has been one of the star performers in the last 8 weeks. Trades have gravitated to FMCG stocks as a defensive alternative; as well as a bet on rural demand revival. The index has rallied almost 14% in the last 8 weeks. For the week, the FMCG index inched up by 116 points. During the week, the FMCG index touched a high of 64,058 and a low of 62,906.

The levels of 25,000 for Nifty and 82,000 for Sensex remain the key levels to take out. The action now shifts to the realm of the Fed as it implements the first rate cut on September 18, 2024. Whether it is 25 bps or 50 bps will be the key issue!

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