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Weekly Musings – Index performance for week ended September 20, 2024

25 Sep 2024 , 04:43 PM

FIVE KEY TRENDS WE GATHERED IN THE WEEK The week to September 20, 2024 marked the fifth successive week of FPIs remaining net buyers in Indian equities. The FPI infusion of $696 Million was relatively modest in the week, but that was more because there were only 3 FPI reporting days, so the action was subdued. In the last 5 weeks, the FPIs infused close to $7.50 Billion into Indian equities while in the 100 days since the formation of the Modi 3.0 government, the FPIs have infused close to $16 Billion into Indian equities. Here are some key trends we noted down in the week ending September 20, 2024.

Once again, the Nifty and the Sensex closed the week with solid gains of around 2% for the week. While there was some tentative moves in the first 3 days of the week, the markets were decisively positive in the 2 days after the Fed announced the 50 bps rate cut. The rate cut was bigger than expected and that gave a leg up to the markets. However, a lot will depend on how the RBI reacts to this rate cut by the Fed.
In the week to September 20, 2024, the positive action largely happened on Friday and it was restricted to the large cap indices. Most of the smaller indices were either flat or in the negative indicating that the market is still looking at beta plays rather than looking for alpha hunting at this point of time. In fact, small cap index closed the week with fairly steep losses, which was more about caution building up at higher levels.
With the Fed cutting rates by a bumper 50 bps, the action was obviously in the financials and other rate sensitives. In fact, the sector that was the start of the week in terms of returns was the realty sector, while the auto sector also did well. The markets are now betting that the RBI will also front load rate cuts instead of waiting too long as they would not want to risk monetary divergence. That led to one of the sharpest rallies in banking stocks. However, the positive action was dominated by the private banks while the PSU banks actually closed the week with negative returns.
IT sector and the oil & gas sector were two sectors that witnessed a lot of pressure with the IT sector being the worst performer in the week. The story of oil sector is quite apparent since the sharp fall in the prices of crude is raising questions over the realizations of upstream oil companies as well as the gross refining margins (GRMs) of refiners. ONGC has already been downgraded by UBS. For IT, the concerns are more over the aggressive rate cut, which is seen as a tacit admission of a slowdown in the US economy; something that could impact tech spending this year.
The one big mystery in the market was the defence stocks, which appears to be in a rather long bear grip. Just about 2 months ago, nothing could go wrong for this sector and things appear to have suddenly changed. We need to check if this trend is just a flash in the pan or indicative of something more significant.

With the US Fed having belled the cat, the focus shifts to other central banks, especially the RBI, which had held rates stagnant at 6.5% since February 2023. BSE SENSEX 30 INDEX – IT WAS ALL ABOUT THE FRIDAY EFFECT The table captures the movement of the BSE SENSEX 30 for the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	83,603.04	84,694.46	83,187.64	84,544.31
19-Sep-24	83,359.17	83,773.61	83,071.66	83,184.80
18-Sep-24	83,037.13	83,326.38	82,700.63	82,948.23
17-Sep-24	83,084.63	83,152.41	82,866.68	83,079.66
16-Sep-24	82,985.33	83,184.34	82,832.82	82,988.78
13-Sep-24	83,091.55	83,092.93	82,653.22	82,890.94
		Weekly Returns		+1.99%

Data Source: BSE The Sensex has surely gathered momentum after it broke out of the 81,000 to 82,000 band decisively. At 84,544; the Sensex is already in uncharted territory. The Sensex closed the week with gains of 1,653 bps, and nearly 85% of these gains came on Friday alone. FPIs flows remain a positive tailwind for the Sensex. The Sensex closed with gains of 1.99% for the week, driven largely by aggressive buying in private banks, autos and FMCG stocks. During the week, the Sensex touched a high of 84,694 and a low of 82,701. NIFTY 50 INDEX – BANKS, AUTO, AND FMCG BOOST NIFTY The table captures the movement of Nifty 50 index in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	25,525.95	25,849.25	25,426.60	25,790.95
19-Sep-24	25,487.05	25,611.95	25,376.05	25,415.80
18-Sep-24	25,402.40	25,482.20	25,285.55	25,377.55
17-Sep-24	25,416.90	25,441.65	25,352.25	25,418.55
16-Sep-24	25,406.65	25,445.70	25,336.20	25,383.75
13-Sep-24	25,430.45	25,430.50	25,292.45	25,356.50
Weekly Returns		+1.71%

Data Source: NSE The volatility index (VIX) stayed sober at around 12.49 levels, although it did show signs of bounce sharply from lower levels. Nifty also saw smart gains post the Fed rate cut. The Nifty was helped along the way by the Banking index, Auto index and the FMCG index. For the week, Nifty closed 1.71% higher, as the level of 25,500 got taken out decisively. For the week, the Nifty gained 434 points. During the week, the Nifty touched a high of 25,849 and a low of 25,336, eventually closing very near to the high point of the week. NIFTY NEXT 50 INDEX – CLOSES FLAT AS IT, PSE EXERT PRESSURE The table captures the movement of Nifty Next 50 for the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	74,678.45	75,691.05	74,545.30	75,481.85
19-Sep-24	75,397.10	75,578.00	73,338.55	74,419.55
18-Sep-24	75,359.30	75,502.95	74,508.10	74,936.15
17-Sep-24	75,635.10	75,635.10	75,040.25	75,260.20
16-Sep-24	75,707.40	75,742.70	75,342.15	75,464.30
13-Sep-24	75,698.60	75,754.70	75,372.85	75,427.55
		Weekly Returns		+0.07%

Data Source: NSE The Nifty Next 50 closed flat for the week, gaining just about 7 bps during the week or a mere 54 points. These subdued gains can be largely attributed to weak traction seen in IT, defence, PSU, and energy stocks; which constitute bulk of this index. In a week when the Nifty and the Sensex closed with strong gains, the Nifty Next 50, reported a flat show. The index closed the week with marginal gains with limited traction on Friday. This week, the Nifty Next 50 touched a high of 75,743 level and a low of 73,339. It has made a lower high and a lower low compared to the previous week. NIFTY MID-CAP 100 INDEX – NOT MUCH OF ALPHA HUNTING The table captures the movement of Nifty Mid-Cap 100 in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	59,614.45	60,374.55	59,393.20	60,208.80
19-Sep-24	60,073.25	60,208.60	58,352.10	59,351.90
18-Sep-24	60,223.75	60,294.35	59,443.35	59,752.85
17-Sep-24	60,367.15	60,404.65	60,002.95	60,180.75
16-Sep-24	60,345.40	60,408.25	60,029.85	60,259.75
13-Sep-24	59,860.40	60,189.35	59,779.30	60,034.05
		Weekly Returns		+0.29%

Data Source: NSE With alpha hunting still quite elusive, the Nifty Mid Cap index closed with marginal gains of +0.29% for the week. In the current week to September 20, 2024, the mid-cap index was a relatively tepid performer with gains of just 175 points. The A/D ratio was under pressure during the week. For the week, the Mid-Cap 100 index touched a high of 60,408 and a low of 58,352; making lower highs and lower lows compared to the previous week. Alpha hunting has just about started and the markets will need more clarity on the broader outlook for the economy and the indices. RBI can help the cause with a rate cut. NIFTY SMALL-CAP 100 INDEX – CLOSES THE WEEK WITH LOSSES The table captures movement of Nifty Small Cap 100 in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	19,267.20	19,385.30	19,189.50	19,332.15
19-Sep-24	19,511.55	19,567.30	18,885.75	19,144.85
18-Sep-24	19,484.00	19,555.25	19,293.25	19,389.75
17-Sep-24	19,603.40	19,606.95	19,429.05	19,465.55
16-Sep-24	19,604.85	19,632.85	19,441.75	19,537.75
13-Sep-24	19,445.25	19,526.35	19,405.00	19,505.95
		Weekly Returns		-0.89%

Data Source: NSE Ironically, the small cap index, which was a star among generic indices just two weeks back, ended losing 89 bps in the week. It had gained 5.8% in the last 4 weeks. This week, the index of small caps closed with losses of -174 points. For the week, the Nifty Small Cap index touched a high of 19,632 levels and a low of 18,886. While regulatory concerns have abated, the mutual funds are still to get back into this space. BANK NIFTY INDEX – SECOND SUCCESSIVE WEEK OF GAINS FOR BANKS The table below captures the movement of BANKNIFTY in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	53,235.80	54,066.10	53,037.60	53,793.20
19-Sep-24	52,929.25	53,353.30	52,847.90	53,037.60
18-Sep-24	52,177.10	52,954.20	52,154.55	52,750.40
17-Sep-24	52,249.05	52,284.60	52,085.50	52,188.65
16-Sep-24	52,038.70	52,208.70	51,921.45	52,153.15
13-Sep-24	51,952.55	51,994.10	51,643.95	51,938.05
		Weekly Returns		+3.57%

Data Source: NSE The Bank Nifty gained 3.57% this week gaining more than 6% in the last 2 weeks. There was a dichotomy, in that while the private banks gained over 4% in the week, the PSU banks were under pressure. The trigger came from the Fed cutting rates by a larger than expected 50 bps. Now, there are expectations that the RBI would also follow suit, having maintained rates at 6.5% since February 2023. While SBI is keeping the PSU banks under pressure, post the downgrade, private banks are having a field day. During the week, the Bank Nifty touched a high of 54,066 and a low of 51,921. NIFTY IT INDEX – US GROWTH CONCERNS SPOOK IT STOCKS The table captures the movement of Nifty IT index in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	42,186.85	42,375.20	41,614.25	42,204.40
19-Sep-24	42,551.00	42,850.45	41,670.80	41,945.60
18-Sep-24	43,222.45	43,222.45	41,814.40	42,089.30
17-Sep-24	43,294.45	43,645.90	43,133.55	43,415.00
16-Sep-24	43,457.40	43,583.15	43,286.80	43,352.65
13-Sep-24	43,244.20	43,571.65	42,989.40	43,394.35
		Weekly Returns		-2.74%

Data Source: NSE In the latest week to September 20, 2024, the Nifty IT bounced fell by -2.74%, almost exactly giving up the gains of the previous week. In the current week, the IT index was cautious ahead of the US Fed meet. However, the IT sector has interpreted the 50 bps rate cut as an indication that an economic slowdown in the US may be for real. That is likely to hit tech spending by US corporates as well as pricing power of IT companies putting pressure on the operating margins. For the week, the IT index fell by 990 points. The Nifty IT index touched a high of 43,646 and a low of 41,614; showing some bounce on the last day of the week. NIFTY OIL & GAS INDEX – LOSES 7.5% IN THE LAST 3 WEEKS The table captures the Nifty Oil & Gas index for the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	12,467.60	12,534.70	12,422.95	12,501.35
19-Sep-24	12,593.50	12,620.00	12,284.95	12,414.80
18-Sep-24	12,737.20	12,752.85	12,534.00	12,584.00
17-Sep-24	12,732.50	12,756.10	12,681.60	12,714.25
16-Sep-24	12,742.10	12,758.40	12,626.80	12,697.60
13-Sep-24	12,779.65	12,832.75	12,666.40	12,684.25
		Weekly Returns		-1.44%

Data Source: NSE The oil & gas index had been the star performer of the last 4-6 months. In the current week to September 20, 2024, the index fell sharply by -1.44%, losing 750 bps in the last 3 weeks. This week was once again about the sharp fall in crude prices, which is likely to impact realizations and GRMs. While Brent Crude has taken support at $70/bbl, the downsides are still open. The buying was restricted to oil reserves accretion at lower price levels. For the week, the Oil & Gas index touched a high of 12,758 and a low of 12,285 levels; with weak crude prices likely to remain a pressure point in the near future. NIFTY AUTO INDEX – SMART BOUNCE ON RATE CUT HOPES The table captures the movement of Nifty Auto index in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	25,960.50	26,452.05	25,926.75	26,394.55
19-Sep-24	25,934.85	26,105.00	25,806.00	25,907.65
18-Sep-24	25,885.50	26,117.25	25,746.35	25,804.45
17-Sep-24	25,903.35	25,942.90	25,602.20	25,896.40
16-Sep-24	25,865.80	25,915.55	25,801.10	25,829.65
13-Sep-24	25,832.40	25,870.70	25,718.15	25,820.85
		Weekly Returns		+2.22%

Data Source: NSE In the last few weeks, there have been growing concerns on the auto sales numbers amidst piling dealer inventory. FADA had pegged dealer inventory at 7.3 Lakh vehicles, which is sticky. While higher input costs are also rankling, this week was about hopes of RBI cutting rates after the Fed executed a bigger than expected 50 bps rate cut. Also, autos remain a good proxy for India consumption and for India manufacturing. For the week, the auto index closed higher by 574 points. Auto Index made a weekly high of 26,452 and a low of 25,602. NIFTY FMCG INDEX – RECORD FMCG STOCKS AT 52-WEEK HIGHS The table captures the movement of Nifty FMCG index in the week to September 20, 2024.

Date	Open	High	Low	Close
20-Sep-24	65,272.30	65,974.60	65,043.25	65,870.80
19-Sep-24	64,826.20	65,458.65	64,768.10	64,975.80
18-Sep-24	64,722.55	64,988.75	64,261.95	64,615.05
17-Sep-24	64,643.80	65,199.75	64,489.65	64,686.45
16-Sep-24	65,026.10	65,026.1	64,322.40	64,597.00
13-Sep-24	65,616.25	65,616.25	64,912.05	65,062.80
		Weekly Returns		+1.24%

Data Source: NSE FMCG in recent weeks; has been countercyclical and also aggressive. This week, FMCG index ended 1.24% 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 19% in the last 9 weeks, with a record number of FMCG stocks touching 52-week highs. For the week, the FMCG index gained 808 points. During the week, FMCG index touched a high of 65,975 and a low of 64,262. The levels of 25,500 for Nifty and 84,000 for Sensex are now decisively taken out; putting the indices in uncharted territory. With the Federal Reserve having cut rates by 50 bps on September 18, 2024; the question is whether the RBI will follow suit. A dovish reaction from the RBI would surely add momentum to the markets.

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