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Weekly Musings – Index performance for week ended September 27, 2024

30 Sep 2024 , 03:47 PM

FIVE KEY TRENDS WE GLEANED FOR THE WEEK

The week to September 27, 2024 marked the sixth successive week of FPIs remaining net buyers in Indian equities. The FPI infusion of $2.83 Billion in the week was one of the best in recent months and was largely driven by index adjustments. Also, the entire week flows were concentrated in just 2 days of flows. In the last 6 weeks, the FPIs infused close to $10.3 Billion into Indian equities while in the 110 days since the formation of the Modi 3.0 government, the FPIs have infused close to $19 Billion into Indian equities. That is not counting debt flows. Here are some key trends we noted down in the week ending September 27, 2024.

Once again, the Nifty and the Sensex closed the week with solid gains of 1.50% and 1.22% respectively for the week. The week saw the aftermath of the Fed 50 bps rate cut as the markets also raised hopes of a rate cut by the RBI. However, while the PSU banks soared in the week, the heavyweight private sector banks were relatively subdued. That limited the upsides to the overall Nifty index.
In the week to September 27, 2024, the big positive action was focused on the metals index, which rallied more than 7% for the week. It is a long time since the metal stocks have seen so much of interest and this can be attributed largely to the big stimulus announced by China. It remains the largest repository of metals demand and any revival in China is likely to be positive. That propped up metal stocks in the week.
Among the two heavyweight sectors that showed big gains in the week were oil & gas and auto stocks. The oil & gas sector rallied by more than 5% while the auto sector rallied more than 4.6% in the recent week. The trigger came from a sharp fall in crude oil prices. After a brief rally, the price of Brent Crude fell back to $71/bbl, which triggered a major rally in downstream oil stocks on hopes of expanded margins. Auto stocks also gained from the dual trigger of lower oil prices and the prospects of a rate cut by the RBI. Barring these two sectors, other heavyweight sectors were largely neutral.
An interesting trend visible in the week was the sharp revival in government owned stocks. A few clear trends were visible. After a long time, the defence index gave positive returns in the week. The CPSE index and the PSU banks index rallied by more than 3.4% in the week, while the energy index also rallied close to 4% for the week. Clearly, the cautious sentiments surrounding the PSU stocks appears to have given way to a lot more of optimism in the markets.
There were some notable sectors giving negative returns like the private banking index with the likes of HDFC Bank and ICICI Bank under pressure. Even the FMCG index closed marginally in the negative, although that is understandable due to the incredible rally that the sector has seen in the last couple of months. The IT sector had a neutral week, but the pressures were visible. Markets were cautious that while IT spending gains would more in the medium term, the short term pressures of a weak dollar would also raise cross-currency risks for the IT companies.

The US Fed had set rate cuts in motion last week, but the real action would only be visible after the unemployment data and the Fed minutes are out in early October 2024.

BSE SENSEX 30 INDEX – FRIDAY FALL TEMPERS WEEKLY GAINS

The table captures the movement of the BSE SENSEX 30 for the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	85,893.84	85,978.25	85,474.58	85,571.85
26-Sep-24	85,167.56	85,930.43	85,106.74	85,836.12
25-Sep-24	84,836.45	85,247.42	84,743.04	85,169.87
24-Sep-24	84,860.73	85,163.23	84,716.07	84,914.04
23-Sep-24	84,651.15	84,980.53	84,607.38	84,928.61
20-Sep-24	83,603.04	84,694.46	83,187.64	84,544.31
		Weekly Returns		+1.22%

Data Source: BSE

The Sensex has surely gathered momentum after it broke above the 82,000 levels decisively. At 85,572; the Sensex is already in uncharted territory with 86,000 levels proving to be the resistance in this week. The Sensex closed the week with gains of 1,028 points, and this could have been much higher, but for the sharp fall on Friday. The fall on Friday was more due to week-end profit booking ahead of a data packed next week. The Sensex closed with gains of 1.22% for the week, driven largely by aggressive buying in oil & gas and auto stocks. During the week, the Sensex touched a high of 85,978 and a low of 84,607.

NIFTY 50 INDEX – HYDROCARBONS AND AUTOS HOLD NIFTY UP

The table captures the movement of Nifty 50 index in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	26,248.25	26,277.35	26,151.40	26,178.95
26-Sep-24	26,005.40	26,250.90	25,998.40	26,216.05
25-Sep-24	25,899.45	26,032.80	25,871.35	26,004.15
24-Sep-24	25,921.45	26,011.55	25,886.85	25,940.40
23-Sep-24	25,872.55	25,956.00	25,847.35	25,939.05
20-Sep-24	25,525.95	25,849.25	25,426.60	25,790.95
		Weekly Returns		+1.50%

Data Source: NSE

The volatility index (VIX) stayed sober at around 11.96 levels, and it was relatively more subdued in the latest week. Nifty also saw smart gains post the Fed rate cut; although the private banks actually ended the week with losses. The Nifty was helped along by the oil & gas index and auto index; both of them gaining nearly 5% for the week. For the week, Nifty closed 1.50% higher, as the level of 26,300 proved the resistance for the week. The Nifty gained 388 points in the week. During the week, the Nifty touched a high of 26,277 and a low of 25,847, eventually closing very near to the high point of the week.

NIFTY NEXT 50 INDEX – PSE, ENERGY, AUTO PARTS PULL UP INDEX

The table captures the movement of Nifty Next 50 for the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	77,201.80	77,918.00	77,053.95	77,813.25
26-Sep-24	76,751.70	77,143.70	76,431.15	77,086.95
25-Sep-24	76,889.70	76,915.20	76,049.45	76,517.40
24-Sep-24	76,747.35	76,959.35	76,636.45	76,803.80
23-Sep-24	75,893.55	76,743.35	75,775.25	76,707.50
20-Sep-24	74,678.45	75,691.05	74,545.30	75,481.85
		Weekly Returns		+3.09%

Data Source: NSE

The Nifty Next 50 closed strong for the week, gaining a full 3.09% during the week or nearly 2,331 points. These fabulous gains can be largely attributed to strong traction in sectors like public sector enterprises, auto components and energy stocks, which are quite prominent in this index. In a week when the Nifty and the Sensex closed with steady gains, the Nifty Next 50 managed to put up a still better show. The index even gained sharply on Friday, when the overall markets were under strain. This week, the Nifty Next 50 touched a high of 77,918 level and a low of 75,775. It has made a higher high and a higher low this week.

NIFTY MID-CAP 100 INDEX – AN EXACT ENCORE OF PREVIOUS WEEK

The table captures the movement of Nifty Mid-Cap 100 in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	60,584.05	60,696.35	60,275.30	60,381.15
26-Sep-24	60,603.85	60,615.40	59,983.45	60,469.15
25-Sep-24	60,872.00	60,888.50	60,284.35	60,465.15
24-Sep-24	60,887.60	60,925.95	60,737.55	60,850.80
23-Sep-24	60,521.45	60,759.45	60,250.70	60,712.40
20-Sep-24	59,614.45	60,374.55	59,393.20	60,208.80
		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; exactly the same percentage gains as in the previous week. In the current week to September 27, 2024, the mid-cap index was a relatively tepid performer with gains of just 172 points. The A/D ratio was under pressure during the week. For the week, the Mid-Cap 100 index touched a high of 60,926 and a low of 59,983; coming under pressure in the second half of the week. Alpha hunting looks elusive till there is more clarity on the broader outlook for the economy and indices. RBI can contribute with a rate cut.

NIFTY SMALL-CAP 100 INDEX – AGAIN CLOSES THE WEEK WITH LOSSES

The table captures movement of Nifty Small Cap 100 in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	19,314.25	19,401.85	19,210.90	19,242.00
26-Sep-24	19,432.95	19,438.50	19,211.15	19,261.30
25-Sep-24	19,493.80	19,508.00	19,312.90	19,357.75
24-Sep-24	19,608.20	19,615.25	19,426.90	19,440.05
23-Sep-24	19,480.00	19,566.75	19,403.80	19,548.90
20-Sep-24	19,267.20	19,385.30	19,189.50	19,332.15
		Weekly Returns		-0.47%

Data Source: NSE

Ironically, the small cap index, which was a star among generic indices just 3 weeks back, ended losing 47 bps, on top of an 89 bps loss in the previous week. It had gained 5.8% in the 4 weeks prior to that. This week, the index of small caps closed with losses of -90 points. For the week, the Nifty Small Cap index touched a high of 19,615 levels and a low of 19,211. Regulatory concerns have abated; but mutual funds now need to take the initiative to buy.

BANK NIFTY INDEX – AFTER THE STORM CAME THE LULL

The table below captures the movement of BANKNIFTY in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	54,338.70	54,338.70	53,763.20	53,834.30
26-Sep-24	54,045.85	54,467.35	54,010.90	54,375.35
25-Sep-24	53,794.00	54,141.30	53,792.85	54,101.65
24-Sep-24	54,110.65	54,247.70	53,904.65	53,968.60
23-Sep-24	53,917.90	54,197.95	53,741.40	54,105.80
20-Sep-24	53,235.80	54,066.10	53,037.60	53,793.20
		Weekly Returns		+0.08%

Data Source: NSE

After gaining more than 6% in the last two weeks, the Bank Nifty had a subdued week with gains of just 3.57% this week. The pressure this week came from private banks, on expectations that loan growth and deposit growth will be slow in Q2 also. Sentiments could change if the RBI also cuts rates, having held rates for nearly 20 months. The subdued bank Nifty moves were due to the fall in the private banking index. During the week, the Bank Nifty touched a high of 54,467 and a low of 53,741.

NIFTY IT INDEX – DOLLAR CONCERNS KEEP IT INDEX SUBDUED

The table captures the movement of Nifty IT index in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	42,738.55	43,377.95	42,270.55	42,312.60
26-Sep-24	42,033.90	42,345.40	41,982.85	42,160.90
25-Sep-24	42,128.15	42,222.85	41,645.85	41,960.95
24-Sep-24	41,863.35	42,403.90	41,691.40	42,243.95
23-Sep-24	42,288.35	42,378.50	41,785.15	41,987.45
20-Sep-24	42,186.85	42,375.20	41,614.25	42,204.40
		Weekly Returns		+0.26%

Data Source: NSE

In the latest week to September 27, 2024, the Nifty IT was subdued with gains of just about 26 bps. In the last previous two weeks, the overall impact on the IT sector was neutral. In the current week, the IT index was cautious. While the rate cuts promise higher IT spending in the medium term, markets are more concerned about the dollar weakness in the short term. For the week, the IT index gained 108 points. The Nifty IT index touched a high of 43,378 and a low of 41,645; showing some bounce on the last day of the week.

NIFTY OIL & GAS INDEX – EMERGES STAR PERFORMER OF THE WEEK

The table captures the Nifty Oil & Gas index for the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	12,842.30	13,152.30	12,806.20	13,128.25
26-Sep-24	12,784.90	12,850.15	12,683.95	12,823.70
25-Sep-24	12,773.90	12,803.40	12,717.15	12,786.65
24-Sep-24	12,736.60	12,843.00	12,711.10	12,785.95
23-Sep-24	12,577.70	12,746.75	12,538.35	12,737.85
20-Sep-24	12,467.60	12,534.70	12,422.95	12,501.35
		Weekly Returns		+5.01%

Data Source: NSE

In the previous week, the oil & gas index had fallen by -1.44%; but this week it turned the tables and bounced by a whopping 5%. In the current week to September 27, 2024, the index gained 627 points. With crude prices again falling to $71/bbl ahead of the OPEC meet, the sector celebrated higher marketing margins and GRMs. For the week, the Oil & Gas index touched a high of 12,850 and a low of 12,538 levels.

NIFTY AUTO INDEX – SMART BOUNCE ON DUAL TRIGGERS

The table captures the movement of Nifty Auto index in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	27,477.70	27,696.10	27,382.65	27,610.75
26-Sep-24	26,885.45	27,526.35	26,839.30	27,496.25
25-Sep-24	26,872.50	27,108.45	26,714.80	26,888.35
24-Sep-24	26,700.80	26,966.95	26,696.60	26,920.45
23-Sep-24	26,491.25	26,825.55	26,485.90	26,805.40
20-Sep-24	25,960.50	26,452.05	25,926.75	26,394.55
		Weekly Returns		+4.61%

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 the auto index gained 4.61%. For the week, the dual triggers were the sharp fall in crude prices, and the expectations that the RBI would also cut rates in its October meet to avoid the risk of monetary divergence. For the week, the auto index closed higher by 1,216 points. Auto Index made a weekly high of 27,696 and a low of 26,486.

NIFTY FMCG INDEX – TAKES A BREATHER AFTER A FRENETIC RALLY

The table captures the movement of Nifty FMCG index in the week to September 27, 2024.

Date	Open	High	Low	Close
27-Sep-24	65,967.00	66,427.70	65,530.65	65,845.45
26-Sep-24	65,604.40	66,218.85	65,496.35	66,156.90
25-Sep-24	65,817.20	65,854.30	64,970.15	65,521.70
24-Sep-24	66,276.35	66,324.85	65,697.30	65,796.65
23-Sep-24	66,008.80	66,438.70	65,787.35	66,305.20
20-Sep-24	65,272.30	65,974.60	65,043.25	65,870.80
		Weekly Returns		-0.04%

Data Source: NSE

FMCG in recent weeks; has been countercyclical and also aggressive. In fact, FMCG index has been one of the star performers in the last 10 weeks gaining more than 21% in this period. Trades have gravitated to FMCG stocks as a defensive alternative; as well as a bet on rural demand revival. More importantly, a record number of FMCG stocks have recently touched their 52-week highs. For the week, the FMCG index was flat, losing just about 45 points. During the week, FMCG index touched a high of 66,439 and a low of 64,970.

The levels of 26,300 for Nifty and 86,000 for Sensex are now the key resistance points, even though the index is in uncharted territory overall. With the Federal Reserve having cut rates by 50 bps on September 18, 2024; the question is whether the RBI will follow suit. A relatively dovish signal from the RBI, combined with positive growth numbers in Q2FY24 could change the narrative for Indian equities.

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