Weekly Musings – Index performance for week ended September 13, 2024

17 Sep 2024 , 01:44 PM

FIVE KEY TRENDS WE JOTTED DOWN IN THE WEEK

The week to September 13, 2024 marked the fourth successive week of FPIs remaining net buyers in Indian equities. In the last 4 weeks, the FPIs infused close to $6.70 Billion into Indian equities while in the periods since the formation of the Modi 3.0 government, the FPIs have infused close to $15 Billion into Indian equities. Here are some key trends we noted down in the week ending September 13, 2024.

1. The Nifty and the Sensex closed the week with solid gains of over 2%, However, there was selling pressure seen on the last day of the week. That is more about traders staying light ahead of the FOMC meeting next week as well as the banking holiday on Monday and the Idol Immersion on Tuesday, when normal activity in the financial capital is likely to be disrupted. Hopefully, there should be greater clarity post September 18, 2024.
2. For the second week in a row, the defensive sectors did much better than the cyclical sectors. If you look at the sectors making top gains in the week, it included relatively defensive plays like consumer durables, digital, FMCG, IT, and MNCs. This is not just a defensive bet amidst rising uncertainty in the global markets, but also an affirmative bet on a revival in rural demand.
3. The surprise package in the week was the private sector banks gaining nearly 2.95% in the week. Most private banking bets are that the Fed would be aggressive on rate cuts; possibly attempting a 50 bps rate cut instead of a 25 bps rate cut. This is also likely to induce the RBI to embark on rate cuts in October, something that is likely to be positive for the bond portfolios of private banks. That triggered the rally this week.
4. At the bottom of the heap during the week was the oil and gas sector which lost -2.61% in the week amidst strong market sentiments overall. The sharp fall in oil & gas stocks can be traded to the sharp fall in crude oil prices, which touched a low of $68/bbl in the Brent Market. It puts pressure on the per barrel realization of the upstream oil companies as well as the gross refining margins (GRMs) of Indian refiners.
5. The overall sentiments in Indian markets are already buoyed by the sharp fall in crude prices, especially considering the deep linkages between oil and the trade deficit. Also, if the RBI cuts rates, then it visibly reduces the pressure on the Indian corporates by reducing their cost of funds. The result would be a gradual strengthening of the Indian rupee, a triple advantage for FPI flows into India.

Inflation in the US and in India was well under control and the focus now shifts to the US Fed policy statement on September 18, 2024 meeting.

BSE SENSEX 30 INDEX – SCALES NEW HIGHS IN THE WEEK

The table captures the movement of the BSE SENSEX 30 for the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	83,091.55	83,092.93	82,653.22	82,890.94
12-Sep-24	81,930.18	83,116.19	81,534.29	82,962.71
11-Sep-24	81,928.12	82,134.95	81,423.14	81,523.16
10-Sep-24	81,768.72	82,196.55	81,445.30	81,921.29
09-Sep-24	80,973.75	81,653.36	80,895.05	81,559.54
06-Sep-24	82,171.08	82,254.79	80,981.93	81,183.93
		Weekly Returns		+2.10%

Data Source: BSE

The band of 81,000 to 82,000 was decisively broken by the Sensex during the week and the Sensex even briefly went above 83,000 before closing tad below that. The Sensex closed the week with gains of 210 bps, and the selling was only seen on the last day as investors and traders preferred to stay light on positions ahead of the US FOMC policy statement. FPIs have infused $15 Billion in the last 3 months and that remains a positive tailwind for the Sensex. The Sensex closed 1,707 points higher for the week, driven largely by the aggressive buying in banks and IT stocks. During the week, the Sensex touched a high of 83,093 and a low of 80,895.

NIFTY 50 INDEX – BANKS, IT, AND FMCG BOOST NIFTY

The table captures the movement of Nifty 50 index in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	25,430.45	25,430.50	25,292.45	25,356.50
12-Sep-24	25,059.65	25,433.35	24,941.45	25,388.90
11-Sep-24	25,034.00	25,113.70	24,885.15	24,918.45
10-Sep-24	24,999.40	25,130.50	24,896.80	25,041.10
09-Sep-24	24,823.40	24,957.50	24,753.15	24,936.40
06-Sep-24	25,093.70	25,168.75	24,801.30	24,852.15
		Weekly Returns		+2.03%

Data Source: NSE

The volatility index (VIX) sobered during the week from a high of 15.22 levels to 12.55 levels as the markets experienced greater stability and confidence in the week. The week saw a sharply positive close for the Nifty as FPIs infused over $2 billion in the week. The Nifty was helped along the way by the Banking index, IT index and the FMCG index. For the week, Nifty closed 2.03% higher, as the level of 25,000 got taken out decisively. For the week, the Nifty gained 504 points. During the week, the Nifty touched a high of 25,433 and a low of 24,753, eventually closing very near to the high point of the week.

NIFTY NEXT 50 INDEX – DEFENCE AND PSUS PUT PRESSURE

The table captures the movement of Nifty Next 50 for the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	75,698.60	75,754.70	75,372.85	75,427.55
12-Sep-24	74,904.50	75,469.95	74,741.70	75,446.35
11-Sep-24	74,882.65	75,132.20	74,176.70	74,355.25
10-Sep-24	74,877.40	75,092.20	74,535.55	74,737.60
09-Sep-24	74,350.40	74,701.05	73,570.80	74,572.90
06-Sep-24	75,473.40	75,509.70	74,315.90	74,462.00
		Weekly Returns		+1.30%

Data Source: NSE

While the Nifty Next 50 closed with gains for the week, it was relatively subdued with gains of just around 1.3%.These subdued gains can be largely attributed to weak traction seen in defence, PSU, and energy stocks; all of which have a strong presence in this index. The Nifty Next 50 gained 966 points during the week. In a week when the Nifty and the Sensex closed with strong gains, the Nifty Next 50, reported relatively subdued gains. The index closed the week losing 130 bps higher. This week, the Nifty Next 50 touched a high of 75,755 level and a low of 73,571, closing the week closer to the high point.

NIFTY MID-CAP 100 INDEX – BEST SHOW AMONG GENERIC INDICES

The table captures the movement of Nifty Mid-Cap 100 in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	59,860.40	60,189.35	59,779.30	60,034.05
12-Sep-24	59,436.85	59,697.75	59,197.15	59,640.30
11-Sep-24	59,238.40	59,479.50	58,812.95	58,938.05
10-Sep-24	58,784.50	59,200.10	58,754.15	59,039.05
09-Sep-24	58,463.10	58,481.55	57,791.20	58,347.40
06-Sep-24	59,489.55	59,527.15	58,396.80	58,501.95
		Weekly Returns		+2.62%

Data Source: NSE

With alpha hunting making a gradual comeback, the Nifty Mid Cap index closed with smart gains of +2.62% for the week. In the current week to September 13, 2024, the mid-cap index was the top performing generic index with gains of 1,532 points in the process. The A/D ratio also turned favourable during the week, impacting the mid-cap index stocks. For the week, the Mid-Cap 100 index touched a high of 60,189 and a low of 58,754; with IT and banking stocks contributing to the rally. Alpha hunting is starting to happen, but the markets are betting big on falling crude prices, lower rates, and steady rupee.

NIFTY SMALL-CAP 100 INDEX – TEPID GAINS AMIDST VALUATION CONCERNS

The table captures movement of Nifty Small Cap 100 in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	19,445.25	19,526.35	19,405.00	19,505.95
12-Sep-24	19,278.90	19,377.45	19,218.10	19,354.75
11-Sep-24	19,363.00	19,417.35	19,140.05	19,161.85
10-Sep-24	19,193.30	19,332.15	19,192.00	19,317.40
09-Sep-24	19,237.90	19,243.25	18,897.30	19,097.40
06-Sep-24	19,570.00	19,640.60	19,255.70	19,276.05
		Weekly Returns		+1.19%

Data Source: NSE

Ironically, the small cap index, which was a star among generic indices last week, showed subdued gains during the week. The small cap index has already gained 4.5% in the previous 3 weeks, and now it has added another 1.19% gains. This week, the index of small caps closed with subdued gains of 229 points. For the week, the Nifty Small Cap index touched a high of 19,526 levels and a low of 19,140. Despite the A/D ratio recovering during the month, the concerted buying was still missing in small caps.

BANK NIFTY INDEX – RATE CUT HOPES BUOY BANKING INDEX

The table below captures the movement of BANKNIFTY in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	51,952.55	51,994.10	51,643.95	51,938.05
12-Sep-24	51,271.00	51,878.10	51,025.00	51,772.40
11-Sep-24	51,218.55	51,420.15	50,947.70	51,010.00
10-Sep-24	51,328.30	51,366.00	50,958.25	51,272.30
09-Sep-24	50,549.25	51,192.75	50,369.40	51,117.80
06-Sep-24	51,200.40	51,380.05	50,447.30	50,576.85
		Weekly Returns		+2.69%

Data Source: NSE

As usual, the Bank Nifty fall was in tandem with the bounce in the Nifty, which is not surprising considering its weight in the index. Bank Nifty closed 1,361 points higher for the week to September 13, 2024, more than wiping out the losses 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 bet is that the global economies should now take the dovish path. The banking stocks appear to have put the SBI downgrade behind them. However, the traction this week was in private banks as PSU banks stayed under pressure. During the week, the Bank Nifty touched a high of 51,994 and a low of 50,369.

NIFTY IT INDEX – BACK TO ITS DOMINANT WAYS

The table captures the movement of Nifty IT index in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	43,244.20	43,571.65	42,989.40	43,394.35
12-Sep-24	42,836.50	43,265.25	42,449.05	43,152.10
11-Sep-24	42,710.15	42,984.20	42,406.15	42,473.25
10-Sep-24	42,128.30	42,937.45	42,055.85	42,644.20
09-Sep-24	42,104.05	42,431.65	41,809.65	41,919.05
06-Sep-24	42,607.85	42,983.60	42,167.15	42,228.90
		Weekly Returns		+2.76%

Data Source: NSE

In the latest week to September 13, 2024, the Nifty IT bounced back by 2.76%, after correcting briefly in the previous week. In the current week, the IT index was cautious ahead of the US inflation numbers. However, with the consumer inflation in the US at 2.5%, the rate cut in September is almost certain. That is likely to be a boost to tech spending and to the fortunes of Indian IT companies. Investors have also started to see the bigger picture on IT stocks. The wager is that; the growth boost from rate cuts would boost tech spending; although it is not clear if the Fed will cut 25 bps or 50 bps. For the week, the IT index spiked by 1,165 points. The Nifty IT index touched a high of 43,572 and a low of 41,810; with the index gaining 2.76% in the week.

NIFTY OIL & GAS INDEX – LOSES 6% IN THE LAST 2 WEEKS

The table captures the Nifty Oil & Gas index for the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	12,779.65	12,832.75	12,666.40	12,684.25
12-Sep-24	12,650.00	12,800.95	12,590.05	12,770.30
11-Sep-24	12,842.85	12,849.50	12,524.90	12,568.30
10-Sep-24	12,890.70	12,926.90	12,798.95	12,814.25
09-Sep-24	13,006.25	13,016.80	12,779.90	12,845.70
06-Sep-24	13,314.25	13,353.35	12,996.45	13,024.55
		Weekly Returns		-2.61%

Data Source: NSE

The oil & gas index had been the star performer of the last 4-6 months. In the current week to September 13, 2024, the index fell sharply by -2.61%, on top of -3.21% correction in the previous week. After the optimism of the Reliance AGM two weeks back, this week was once again about the sharp fall in crude prices, which is likely to impact realizations and GRMs. Brent Crude touched as low as $68/bbl during the week before bouncing and closing the week above $70/bbl. It was more about oil reserves being created at lower levels. For the week, the Oil & Gas index touched a high of 13,017 and a low of 12,525 levels; with weak crude prices likely to remain a pressure point for the oil index.

NIFTY AUTO INDEX – A FEEBLE BOUNCE AFTER THE UNCERTAINTY

The table captures the movement of Nifty Auto index in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	25,832.40	25,870.70	25,718.15	25,820.85
12-Sep-24	25,342.55	25,818.45	25,191.10	25,779.80
11-Sep-24	25,406.40	25,456.80	25,191.00	25,240.60
10-Sep-24	25,539.50	25,627.15	25,398.30	25,556.45
09-Sep-24	25,499.60	25,523.60	25,259.25	25,495.25
06-Sep-24	25,817.65	25,893.15	25,435.90	25,527.15
		Weekly Returns		+1.15%

Data Source: NSE

In the last few weeks, there were 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 FADA, the dealer inventory of 7.3 Lakh vehicles is still sticky. Apart from the geopolitical impact on auto exports, the higher input costs is an overhang too. However, autos turned out to be a good consumer play. For the week, the auto index closed higher by 294 points. For the week, Auto Index made a high of 25,871 and a low of 25,191.

NIFTY FMCG INDEX – ONCE AGAIN THE PASSIVE STAR

The table captures the movement of Nifty FMCG index in the week to September 13, 2024.

Date	Open	High	Low	Close
13-Sep-24	65,616.25	65,616.25	64,912.05	65,062.80
12-Sep-24	64,958.65	65,597.85	64,697.70	65,513.20
11-Sep-24	64,654.00	65,344.60	64,481.60	64,768.15
10-Sep-24	64,701.45	64,883.90	64,348.40	64,584.95
09-Sep-24	63,275.65	64,540.30	63,169.45	64,465.85
06-Sep-24	63,694.90	63,908.50	62,905.80	63,175.70
		Weekly Returns		+2.99%

Data Source: NSE

FMCG in recent weeks; has not only been countercyclical, but also aggressive. This week, FMCG index ended 2.99% higher. In fact, FMCG index has been one of the star performers in the last 9 weeks. Trades have gravitated to FMCG stocks as a defensive alternative; as well as a bet on rural demand revival. FMCG index has rallied almost 17% in the last 8 weeks. For the week, the FMCG index inched up by 1,887 points. During the week, the FMCG index touched a high of 64,616 and a low of 63,169.

The levels of 25,000 for Nifty and 82,000 for Sensex were decisively taken out during the week. The action now shifts to the realm of the Fed as it implements the first rate cut on September 18, 2024. The size of the rate cut and the trajectory will be the key triggers.