Indian Markets this week: Domastic data, U.S. Market data and IPO watch.
Indian market’s bulls roared as benchmark indices touched historic highs in the week ended June 30, with purchasing across sectors. The strong southwest monsoon, positive global statistics (including US Q1CY23 GDP and surprising reduction in jobless claims), reducing current account deficit in Q4FY23, substantial FII inflows, and HDFC-HDFC Bank merger update bolstered investor mood during the week.
Benchmarks closed at record highs. During the week, the BSE rose 1,739 points or 2.8 percent to 64,719 and the Nifty50 rose 524 points or 2.8 percent to 19,189, bringing monthly gains to approximately 3.5 percent.
The Nifty Midcap 100 and Smallcap 100 indices rallied 2.7 percent and 2 percent, respectively, in a week.
Main factors for indian market the week Ahead
FOMC Minutes
International markets will keenly examine the June FOMC minutes, unemployment rate, and June non-farm jobs data the following week.
The Federal Reserve held the fed funds rate at 5.00–5.25 percent in June, despite policymakers’ claims that inflation is still a problem. Fed Chair Jerome Powell has suggested two more rate hikes next year to reach the 2 percent inflation target.
Despite a robust labour market, the unemployment rate climbed to 3.7 percent in May 2023, the most since October 2018.
In May, unemployment rose but remained low. Powell said FOMC members expect labour market supply and demand to improve over time, decreasing inflationary pressure.
Domestic Economy Data
S&P Global Manufacturing PMI results for June will be released on July 3, followed by Services and Composite PMI results on July 5.
May’s S&P Global Purchasing Managers’ Index (PMI) rose to 58.7, a 31-month high. The S&P Global Purchasing Managers’ Index dipped to 61.2 from 62.0 in April despite strong services activity. Activity increases above 50 and decreases below 50.
Read more about four-year doubling: After merging, HDFC Bank MD Sashidhar Jagdishan
The week-ending June 30 foreign exchange reserves will be released on July 7.
Gift Nifty
Following its move from Singapore Exchange, Nifty 50 offshore derivatives will begin trading on Monday on the NSE International Exchange under the new moniker GIFT Nifty.
The whole $7 billion open interest in SGX Nifty would be transferred to Gift Nifty. The average daily volume is between $1.5-2 billion.
FII flows
Foreign portfolio investors, driven by improved domestic macro indicators, have driven markets to historic highs.
V K Vijayakumar attributes the ongoing FPI flows into India to their strategic reversal.
After Covid, their 2023 plan was “Sell India, Buy China.”
FPIs invested Rs 47,148 crore in June following Rs 43,838 crore in May.
Bank HDFC-HDFC
The massive merger of Housing Development Finance Corporation and HDFC Bank is now in effect. This will strengthen the already strong sense of optimism surrounding the stock.
In anticipation of the conclusion of the board meeting, shares of HDFC Bank and HDFC reached one-month highs on Friday.
The record deadline for determining whether shareholders are eligible for share allocation in the merger is July 13, according to the boards.
Auto sales
The focus will be on auto stocks as a number of businesses revealed their June wholesale sales figures.
Due to sluggish exports and muted demand in the small car market, Maruti Suzuki recorded a meagre 2.3% year-over-year increase in overall sales to 1,59418 units. Tata Motors reported a meagre 1% increase in domestic sales, with an 8% YoY decline in commercial vehicle sales.
Last month, Escorts Kubota tractor sales fell 2% due to weak domestic demand.
Oil Costs
Since May, stable oil prices have boosted Indian share markets, earnings, and GDP indicators. We import oil. Technically, the price has been below the 200-day EMA since November 2022 (an exponential moving average of $82.55) and hit substantial resistance at the 50-day EMA ($76.28) in June. Watch these levels.
Brent crude futures rose daily, weekly, and monthly (1.2%, 1.9%, and 3.9%), but fell for the fourth consecutive quarter (5.6%). Due to declining US stocks and positive US Q1CY23 GDP numbers, it settled at $75.41 a barrel on Friday. Due to China’s slow economic recovery, supply shortages and rate rises remain.
Experts expect prices to remain range bound. All eyes will be on the July 5–6 OPEC meeting.
Experts say Saudi Arabia’s 1 million-barrel-per-day production cutbacks starting in July and the rest of OPEC’s extension of earlier cuts until 2024 boost crude prices.
FUTURE & OPTION CUE
According to weekly options data, the Nifty 50’s immediate trading range may be 19,000–19,400 points, while its wider range may be 18,800–19,500.
According to the greatest Call open interest at 19,500 and significant Call writing at 19,400, 19,200, and 19,300 strikes, the Nifty may gain another 300 points soon.
The largest open interest on the put side was at the 19,000 strike, which can provide fast support for the Nifty50, followed by put writing at the 19,100, 19,000, and 19,200 strikes.Heavy put writing near 19,000 Strike supported Nifty immediately. SAMCO Securities derivatives and technical analyst Ashwin Ramani said support strengthened after Friday’s closure. Due to more call writing than put trade, the Nifty could hit 19,200.
India VIX
Volatility dropped to near-record lows to soothe bulls and stabilize the market. India VIX’s trading range shrank and closed below 12 for the sixth week in June. It ended the week down 3.87 percent at 10.8, its lowest level since December 2019.
Corporate Action
Axis Bank, ACC, Ambuja Cement, Adani Enterprises, Ashok Leyland, Biocon, Happiest Minds Technologies, Mphasis, IDBI Bank, Kalpataru Projects International, L&T Technology Services, and Navin Fluorine International will become ex-dividend next week.
UPCOMING IPO
The primary market will remain active next week due to two mainboard and SME IPOs.
Alphalogic Industries, a subsidiary of BSE-listed software development business Alphalogic Techsys, will launch a Rs 12.88 crore IPO on July 3 and accept bids until July 6 at Rs 96 per share. Senco Gold, a Kolkata-based jeweler, will launch its Rs 405 crore IPO on July 4 at Rs 301-317 per share, with a closing date of July 6.
PKH Ventures’ Rs 379 crore IPO ends on July 4, while Global Pet Industries’ Rs 13 crore IPO ends on June 3. Synoptics Technologies and Tridhya Tech will also close their IPOs on July 5.
Veefin Solutions, Essen Speciality Films, Greenchef Appliances, and Magson Retail and Distribution will list on the SME market on July 5, and HMA Agro Industries will list on the BSE and NSE on July 4.