HDFC Securities Weekly Bulletin

Markets in the week gone by

Indian benchmark indices extended their losing streak for the third consecutive week. This drop suggests cautious sentiment among investors, likely driven by concerns over global economic conditions and inflationary pressures. FII continued to remain net sellers and have pulled out Rs 77,000 crore, or $9.2 billion so far in this month, from domestic stocks—the highest-ever in a calendar month. The uncertain outlook of the US rate cut after robust economic data has further added to the concerns of investors. Sensex fell 0.19% for the week while the Nifty settled 0.44% lower. The indices were lower for three out of five trading sessions.

In the broader markets BSE Midcap index fell 1.01% and the BSE Smallcap index declined 0.18%. Market breadth was evenly distributed among gainers and losers.

Average cash turnover on NSE was lower by 4% as compared to the previous week. Sectoral indices were mixed with Bankex gaining 1.8%, Financial Services adding 1.0% and Realty up 0.8%. Among losers Auto fell sharply by 4.3%, followed by Consumer Discretionary down 3.2%, Oil & Gas down 1.6%, Metal and FMCG losing 1.5% each.

Among Nifty 100 stocks, Adani Energy surged 6.8%, Wipro increased 3.9%, ICICI Bank was up 3.4%; DLF gained 3.4% and L&T added 2.7%. On the downside, Bajaj Auto fell 15.3%; Dmart slipped 12.8%; Colgate Palmolive was down 8.0%; Zomato fell 7.2% and LTI Mindtree declined 6.5%.

As per provisional figures, FIIs were net sellers of Rs 21823 crore in the equity markets during the week and DIIs were net buyers of Rs 16384 crore.

Wall Street's weekly win streak hit six with all major indexes gaining, assisted by solid earnings and data. The Nasdaq Composite outpaced other indexes thanks partly to a double-digit rally in Netflix following its robust earnings. This week's solid U.S. retail sales and lower jobless claims also provided a boost, while average earnings per share (EPS) are exceeding Wall Street's expectations, up more than 6.7% for the 15% of S&P 500 companies reporting third quarter results so far. More than 70 S&P 500 companies have reported earnings this season. Of those, 75% have beaten expectations, according to FactSet. The Dow added about 1.0% for the week, Nasdaq rose 0.8% and the S&P 500 climbed 0.9%.

US crude futures dropped 2% to settle at $69.2 per barrel on Friday, marking the biggest weekly losses since early September. The decline was driven by weaker demand forecasts from OPEC and the IEA, slowing economic growth in China and signs of easing geopolitical tensions in the Middle East. For the week, the US oil benchmark was down 8.4% at $69.2/barrel. Gold climbed to new record high, driven by global demand for safe-haven assets and expectations of further interest rate cuts from major central banks. Gold also found support from rising tensions in the Middle East. Prices surged 2.4% for the week to $2721.2/ounce.

The Indian 10yr G-Sec yield rose 3 bps to 6.82%. The Indian rupee depreciated by 1ps against the US dollar at Rs 84.07 per USD.

Other economic data

India

· The annual inflation rate in India rose to 5.49% in September of 2024 from 3.65% in the previous month.

· India’s wholesale prices increased by 1.84% year-on-year in September 2024, accelerating from a four-month low of a 1.31% rise in the previous month.

· The merchandise trade deficit in India was at $20.8 billion in September of 2024, the lowest since April. Imports grew by 1.6% from the corresponding period of the previous year to $55.4 billion. In the meantime, outbound shipments expanded by 0.5% from the previous year to $34.6 billion.

· The passenger vehicles segment saw a moderate decline in September 2024. The total passenger vehicle sales fell slightly by 3.4 per cent, totaling 3,63,078 units. The two-wheeler market recorded an impressive 12.9 per cent growth in September 2024 to 20.3 lakh units.

· In one of the largest falls in India’s forex reserves in recent times, the country’s foreign exchange kitty dropped $10.746 billion to $690.43 billion during the week ended October 11.

· The RBI Governor said on Friday that it would be "very premature" and risky to lower interest rates at this stage.

US

· Retail sales in the US increased 0.4% month-over-month in September 2024, well above a 0.1% gain in August. Retail Sales in the United States increased 1.7% year-on-year in September 2024, the smallest yearly gain since January, following an upwardly revised 2.2% rise in August.

· Industrial production in the US fell 0.3 percent from a month earlier in September 2024, after a downwardly revised 0.3 percent rise in August. For the third quarter as a whole, industrial production declined at an annual rate of 0.6 percent.

· The Biden administration rang up a budget deficit topping $1.8 trillion in fiscal 2024, up more than 8% from the previous year and the third highest on record. Government debt has swelled to $35.7 trillion, an increase of $2.3 trillion from the end of fiscal 2023.

UK/Eurozone/Germany

· The United Kingdom’s unemployment rate fell to 4.0% from June to August 2024, down from 4.1% in the previous three-month period.

· Annual inflation rate in the UK fell to 1.7% in September 2024, the lowest since April 2021, compared to 2.2% in each of the previous two months.

· Factory gate prices for goods produced by UK manufacturers fell 0.7% year-on-year in September 2024, following an upwardly revised 0.3% rise in August.

· Retail Sales in the United Kingdom increased 3.9% year-on-year in September 2024, the most since February 2022, following a downwardly revised 2.3% rise in August.

· Industrial production in the Euro Area rose by 1.8% month-over-month in August 2024, the most since February 2023 and recovering from an upwardly revised 0.5% decrease in July. On an annual basis, industrial output edged up 0.1%, after a 2.1% drop in July.

· Annual inflation rate in the Euro Area was revised lower to 1.7% in September 2024, compared to initial estimates of 1.8% and 2.2% in August.

· The ECB lowered its three key interest rates by 25 bps in October 2024, as expected, following similar moves in September and June.

· Germany’s wholesale prices dropped by 1.6% year-on-year in September 2024, steeper than a 1.1% decline in the previous month.

Japan/China

· Industrial production in Japan declined by 3.3% month-over-month in August 2024, in line with preliminary data. This marked the fifth time of decrease so far this year, following a 3.1% growth in the previous month. Yearly, industrial production contracted 4.9%, reversing a 2.9% increase in July.

· The annual inflation rate in Japan fell to 2.5% in September 2024 from 3.0% in the prior month, marking the lowest reading since April.

· The Chinese economy expanded 4.6% yoy in Q3 of 2024, compared with 4.7% rise in Q2. In the first three quarters of the year, the economy grew by 4.8%, compared with China’s full-year target of around 5%.

· China’s industrial production grew by 5.4% yoy in September 2024, accelerating from August's five-month low of 4.5%.

· China's retail sales climbed by 3.2% year-on-year in September 2024 from 2.1% gain in the previous month.

· Chinese authorities continued announcing fresh stimulus measures during the week.

NSE 500 Results of key corporates in the coming week

· 21-Oct – 360 ONE, CG Power & Ind, City Union Bank, HFCL, Route Mobile, UltraTech Cem., Union Bank (I)

· 22-Oct – A B Real Estate, Adani Green, Amber Enterp., Bajaj Finance, C P C L, Can Fin Homes, Coforge, G M D C, ICICI Pru Life, ICICI Securities, Indus Towers, Jubilant Ingrev., Kajaria Ceramics, M & M Fin. Serv., Max Financial, One 97, Persistent Sys, SRF, Supreme Inds., Varun Beverages, Zensar Tech.

· 23-Oct – Asian Paints, AU Small Finance, Bajaj Finserv, Bajaj Holdings, Birla Corpn., Birlasoft Ltd, Dr Lal Pathlabs, Godrej Propert., Hind. Unilever, KPIT Technologi., Metro Brands, Navin Fluo.Intl., Nuvoco Vistas, Pidilite Inds., Piramal Enterp., Piramal Pharma, SBI Life Insuran, Schaeffler India, Sona BLW Precis., Syngene Intl., TVS Motor Co., United Spirits, V I P Inds

· 24-Oct – ACC, Adani Total Gas, Adani Wilmar, Bikaji Foods, Castrol India, CIE Automotive, Cyient, Finolex Inds., Go Digit General, Godrej Consumer, ITC, Nippon Life Ind., Oracle Fin.Serv., Patanjali Foods, Petronet LNG, PNB Housing, Radico Khaitan, Ujjivan Small, United Breweries, Westlife Food

· 25-Oct – Atul, B P C L, Bank of Baroda, Bharat Electron, Cholaman.Inv.& Fin, Coal India, CreditAcc. Gram., H P C L, IDBI Bank, Intellect Design, Interglobe Aviat, J & K Bank, JM Financial, JSW Steel, Mahindra Life., Poonawalla Fin, Torrent Pharma., UTI AMC

· 26-Oct – C D S L, Godawari Power, ICICI Bank, IDFC First Bank, J K Cements, SBFC Finance, Yes Bank

Key economic events in the coming week

· 24-Oct – India/Japan/Germany/Eurozone/UK/US Prov. Manufacturing/Services PMI;

· 25-Oct – US – Durable Goods Orders, Consumer Sentiment

Outlook:

Nifty formed a bullish piercing pattern formation on October 18. Nifty showed a sharp reversal from morning lows. On a weekly basis, Nifty fell 0.44% showing intra week sell-offs followed by dip buying and recovery for the second consecutive week. Nifty could face resistance from 25128 in the near term while 24568 could provide support