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This week, NSE Nifty is expected to remain sideways on account of mixed global cues and subdued quarterly results so far. There could be stock or sector specific action on account of the last leg of Q2 earnings. Key results this week include ONGC, Hindalco, Britannia, Eicher Motors, Grasim and Hero Motocorp amongst others. On the global front, Investors will watch out for October inflation data of the United States and India, and July-September GDP data of Britain. Industrial production data for India will also be released.
Last week was quite eventful as Donald Trump won the US Presidential polls, which boosted overall market sentiments on hopes that his policies would lead to a stronger economy. It was followed by the Federal Reserve cutting its benchmark lending rate by 25 bps, in-line with expectations. Moreover the dovish commentary by Fed Chairman Jerome Powell indicating more rate cuts in offering. The Bank of England also reduced interest rates by 25bps.
China, in an attempt to support economic growth, approved $839 billion refinancing of local government debt which would help reduce interest payments by 600 billion yuan over five years. However, this was below expectations and failed to enthuse global markets.
Despite the events last week which led to a bounce in global markets, Indian markets ended on a subdued note and fell 156 points or 0.6% to 24,148. Even the broader markets fell with mid and small caps down -0.3% and -1.9% respectively. IT and PSU Banks were the only gainers. Mixed earnings and heavy FII selling kept the sentiments sombre.
Foreign Institutional Investors (FIIs) have been net sellers for 29 consecutive days and have sold Rs1.41 lakh crore. Meanwhile, IPOs of Swiggy, Acme Solar, Niva Bupa Health Insurance and Sagility India opened for subscription last week.
On the domestic front, auto companies announced better than expected sales in October as the consumer demand was spurred by festive season and discounts offered. However going ahead, automotive demand is expected to remain moderate. Banking stocks saw buying interest, particularly after PSU banks reported strong quarterly results.
On the positive side, the domestic manufacturing and services PMI for October indicated an improvement in commercial activities during the month. The MSCI rejig in November is expected to raise India’s weightage in the MSCI Emerging Market Index from 19.3% to nearly 19.8%. BSE, Voltas, Alkem Laboratories, Kalyan Jewellers and Oberoi Realty will now be a part of MSCI Global Standard Index.
(The writer is head of Research, Wealth Management, Motilal
Oswal Financial)