HDFC Securities Weekly Bulletin

The domestic market concluded the week on a high note, surging to fresh record highs, with both indices continuing their upward trajectory for the second consecutive week. PSU companies, engineering and energy stocks also contributed to the rally on hopes of continued capital expenditure spending by the new government. The S&P BSE Sensex soared 0.39% and the NSE Nifty 50 jumped 0.75%. The markets edged higher in 4 out of 5 trading sessions during the week.

In the broader markets BSE Midcap index was up 4.42% and the BSE Smallcap index rose 5.07%. Market breadth was in favour of gainers with 5 shares advancing for every 3 losers.

Average cash turnover on the NSE was 30% lower as compared to previous week. Among the sectoral indices Capital Goods gained 6.4%, Realty 5.5%, Media 4.4% Consumer Durables 4.1% and Telecom 3.9%. On the downside IT lost 1.1% and FMCG declined 0.8%?

Among Nifty 100 stocks, Siemens surged 13.3%, ABB was up 11.7%; Motherson gained 11.4%; Hindustan Aeronautics added 9.6%; and Shriram Finance rose 9.4%. On the downside, Marico fell 5.2%; HUL slipped 3.8%; Adani Total Gas was down 3.2%; Adani Green fell 3.1% and United Spirits declined 2.9%.?

As per provisional figures, FIIs were net buyers of Rs 2031cr in the equity markets during the week and DIIs were net buyers of Rs 6293 crore.

The major indexes in the US ended mostly higher for the week, with the S&P 500 Index and Nasdaq Composite touching new highs as enthusiasm over the potential of artificial intelligence appeared to provide a continuing tailwind to technology-related stocks and growth shares. Reassuring inflation data and falling interest rates aided market sentiment. For the week, the S&P 500 gained 1.6%, Nasdaq rose 3.3%, and the Dow was down 0.5%.

Crude oil prices ended the week with strong gains, marking their highest weekly increase since April. The prospect of increased summer fuel demand in the upcoming weeks outweighed uncertainties in the market regarding the timing and extent of US rate cuts. For the week, the US oil benchmark was up 4.1% at $78.5/barrel. Gold prices rose above $2,330 per ounce mark on Friday, for its first weekly gain in four weeks as investors assessed softer-than-anticipated US inflation figures against the Federal Reserve’s updated interest rate projections. Gold prices were up 1.7% for the week at $2332.2/ounce.?

The Indian 10yr G-Sec yield fell 3 bps to 6.98%. The Indian rupee depreciated by 12 paise against the US dollar to Rs 83.55 per USD.

Other economic data

India

• The annual consumer inflation rate in India eased to 4.67% in May of 2024 from 4.83% in the previous month, to mark the slowest increase in consumer prices in one year.?
• Industrial output in India rose by 5% on an annual basis in April 2024, following a 4.9% growth in the previous month and 5.4% in the year ago period.
• India’s wholesale prices climbed by 2.61% year-on-year in May 2024, accelerating from a 1.26% rise in the previous month.?
• India’s merchandise trade deficit was at $23.8 billion in May of 2024, widening from the shortfall of $19.1 billion in April 2024. Exports rose 9% month-on-month from April. Imports rose 14.5% month-on-month from April.
• Total passenger vehicle sales in India climbed 4.3% from a year earlier to 300,795 in May 2024, after a 1.2% rise in the previous month.
• Equity mutual fund inflows surged 83.42 percent to a record high of Rs 34,697 crore in May. Inflows into open-ended equity funds remained in the positive zone for the 39th month in a row in May. The investment via systematic investment plans (SIPs) rose to Rs 20,904 crore in May against Rs 20,371 crore in April.?
• The Indian government has cut the windfall tax on petroleum crude to Rs. 3,250 per metric ton from Rs.5,200 rupees effective June 15.
• The country’s largest lender State Bank of India (SBI) has raised its marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) or 0.1 per cent across all tenures

US

• The Federal Reserve left the fed funds target range steady at 5.25%-5.50% for a 7th consecutive meeting in June 2024, in line with forecasts. Policymakers do not expect it will be appropriate to reduce rates until they gained greater confidence that inflation is moving sustainably toward 2%. The Fed made no revisions to GDP growth projections and still sees the economy expanding 2.1% in 2024, 2% in 2025 and 2026. The committee, in its closely watched “dot plot” of individual participants’ rate expectations, did indicate a more aggressive cutting path in 2025, with four reductions totaling a full percentage point anticipated, up from three.
• Factory gate prices in the US went down 0.2% month on month in May 2024, compared with market expectations of a 0.1% increase and after a 0.5% rise in April. Prices increased 2.2% year-on-year in May 2024, easing from an upwardly revised 2.3% gain in April.
• The University of Michigan consumer sentiment for the US fell for a third straight month to 65.6 in June 2024, the lowest since November, from 69.1 in May.

UK/Eurozone/Germany

• The UK's trade deficit widened to a near two-year high of ￡6.75 billion in April 2024, up from ￡1.10 billion in March. Imports rose by 7.2% to a near one-year high of ￡76.9 billion, while exports fell by 0.7% to ￡70.1 billion.
• Industrial production in the UK tumbled 0.9% month-over-month in April 2024, following a 0.2% rise in the previous month.?

• Industrial production in the Euro Area shrank by 3% from the previous year in April, after a revised 1.2% decline in the previous month.
• The Euro Area posted a trade surplus of EUR 15 billion in April 2024, compared with a EUR 11.1 billion gap in the same month of the previous year. Imports increased by 1.8% to EUR 232.5 billion, while exports surged by 14% to EUR 247.6 billion.
• French President Macron?dissolved the National Assembly?and called for a snap poll following a setback in Sunday’s parliamentary election to the far-right parties. A renewed wave of anxiety gripped global markets as concern over a political crisis in France deepened, driving stocks down while spurring a flight to haven assets — from bonds to gold and the US dollar.

Japan/China

• Producer prices in Japan jumped 2.4% year-on-year in May 2024, accelerating from an upwardly revised 1.1% gain in April.?
• The Bank of Japan unanimously maintained its key short-term interest rate at around 0% to 0.1% at its June meeting, as widely expected, after delivering the first rate hike since 2007 and ending its eight years of negative rates in March.
• Industrial production in Japan dropped 0.9% month-over-month in April 2024, after a 4.4% growth in the previous month. Yearly, industrial output dropped by 1.8% in April, the sixth straight month of contraction.
• China's producer prices dropped by 1.4% yoy in May 2024, following April's figure of a 2.5% decrease. On a monthly basis, producer prices rose 0.2%, the first increase in eight months, reversing from a 0.2% decline in April.

Events in the coming week

• 17-Jun –China – Industrial Production, Retail Sales, Unemployment Rate
• 18-Jun –US – Retail Sales, Industrial Production
• 20-Jun – China – Prime Lending Rate; UK – BoE Monetary Policy;?
• 21-Jun – India/Japan/Germany/Eurozone/UK/US Prov. Manufacturing/Services PMI;

Nifty formed a long legged doji on daily charts on June 14 suggesting possibility of a reversal. However, on weekly charts, Nifty gained 0.75% and negated the bearish formation of hanging man formed in the previous week by closing above the top of that pattern. A move above 23490 could nullify the bearish indication on daily charts. We think Nifty could stay in the 23290-23695 band for the near term with a mild bullish bias.?