HDFC Securities Weekly Bulletin

Markets in the week gone by?

Domestic equity indices ended the week with marginal gains extending the upward trajectory for the seventh consecutive week. Lower commodity prices and a global tech sell-off spurred profit taking at higher levels after recent strong gains. Global sentiment was fragile as deepening Sino-US trade tensions and lack of Chinese stimulus restrained investors risk appetite. Sensex advanced 0.11% and Nifty added 0.12%. The markets edged higher in 3 out of 4 trading sessions during the week.?

In the broader markets BSE Midcap index was down 2.63% and the BSE Smallcap index fell 2.84%. Market breadth was in favour of losers with 3 shares advancing for every 4 losers.?

Average cash turnover on NSE was 7% lower as compared to previous week. Sectoral indices were mostly negative Media falling 5.4%, Capital Goods and Metals losing 4.5% each, Power was down 4.0%, and Consumer Durables down 2.5%. On the positive side FMCG and IT gained 2.0% each and PSU Bank was up 1.4%.??

Among Nifty 100 stocks, SBI Life surged 5.4%, LIC was up 5.4%; Infosys gained 4.7%; ONGC added 4.1%; and Hindustan Unilever increased 4.0%. On the downside, Hindustan Aeronautics fell 12.6%; Siemens slipped 10.0%; Trent was down 8.6%; Bharat Electronics fell 8.0% and Havells declined 7.3%.??

As per provisional figures, FIIs were net buyers of Rs 10946 crore in the equity markets during the week and DIIs were net sellers of Rs 4226 crore.?

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US stocks saw wide swings last week, with an early-week rally that sent U.S. markets to new highs but which faded toward week's end, led by weakness in the tech sector. The major indexes finished mixed, with the S&P 500 and Nasdaq closing lower on the week, while the Dow posted a solid gain. Leadership rotation was the key theme for financial markets last week. The tech sector faded while cyclical sectors, which have lagged this year, saw upward momentum. This was underscored by the sharp rally in small-cap stocks. The S&P 500 and Nasdaq slipped 1.97% and 3.65%, respectively, marking their biggest weekly losses since April. The tech-heavy Nasdaq also snapped a six-week win streak. On the other hand, the Dow advanced 0.72% over the week.?

Oil prices slipped over 3% on Friday to mark the second consecutive weekly loss. Market sentiment was influenced by renewed hopes of a ceasefire in Gaza, with U.S. Secretary of State Antony Blinken indicating that a long-sought truce between Israel and Hamas was within reach. Also, a stronger dollar and concerns over China's economic outlook exerted downward pressure on prices. For the week, the US oil benchmark was down 2.7% at $80.0/barrel. Gold prices retreated from record highs made earlier in the week as the dollar rebounded on robust US economic data, although bets for Federal Reserve interest rate cuts remained intact. Gold prices were down 0.7% for the week at $2395.0/ounce.??

The Indian 10yr G-Sec yield fell 2 bps to 6.96%. The Indian rupee depreciated 10 paise against the US dollar to Rs 83.64 per USD. The largest cryptocurrency Bitcoin rose 6% on Friday to as high as $67,235, its loftiest level since June 13.?Bitcoin is still more than 8% below its record high of $73,798 reached in March, while up nearly 60% this year to date. Investors raise their expectations that the next U.S. presidential administration under Trump will be more friendly to crypto. Investors are expecting the US Fed to begin cutting its interest rates in September, pricing in a 94% chance that it will lower its policy rate that month by a quarter percentage point to a target range of 5% to 5.25%, according to the CME FedWatch Tool, at last check.?

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Other economic data?

India?

• India's wholesale prices rose at their fastest annual pace in 16 months in June on the back of costlier food. The wholesale price index rose 3.36% in June from a year earlier vs 2.61% in May 2024 and -4.18% in June 2023.?

• India’s merchandise trade deficit widened slightly to $21 billion in June of 2024 from the $20.1 billion shortfall in the corresponding period of the previous year. Imports jumped by 5% from the previous year to $56.18 billion. In the meantime, exports grew by 2.6% from a year earlier to $35.2 billion.?

• Passenger vehicle sales increased by 3 per cent in June compared to the previous month, according to the latest report from SIAM on auto sales. The month saw sales of 337,757 units of passenger vehicles, along with 59,544 units of three-wheelers and 1,614,154 units of two-wheelers, marking growth rates of 12.3 per cent and 21.3 per cent, respectively, over the same period.?

• Retail business sales in June 2024 showed a gain of 5% as compared to the sales levels during the same period in June 2023.?

• The Indian government has raised the windfall tax on petroleum crude to 7,000 rupees per metric ton from 6,000 rupees, with effect from July 16.

US?

• Retail sales in the US stalled in June from May 2024, following an upwardly revised 0.3% rise in the previous period. Retail Sales increased 2.3% year-on-year in June 2024, following an upwardly revised 2.6% rise in May.?

• Industrial production in the US rose 0.6 percent from a month earlier in June 2024. For the second quarter as a whole, industrial production increased at an annual rate of 4.3 percent.?

UK/Eurozone/Germany?

• Factory gate prices of goods produced by UK manufacturers rose 1.4% year-on-year in June 2024, easing from a one-year high 1.7% increase in the previous month.??

• Retail sales in the UK declined 1.2% month-over-month in June 2024, following a 2.9% rise in May. Year-on-year, retail sales edged 0.2% lower, following an upwardly revised 1.7% rise in May.?

• Industrial Production in the Euro Area fell 2.90 percent in May of 2024 over the same month in the previous year.?

• The euro area trade surplus declined to a four-month low in May on weak exports. The trade balance posted a surplus of EUR 13.9 billion in May compared to a surplus of EUR 14.2 billion in April. Exports logged a decrease of 0.5 percent annually. At the same time, imports declined 6.4 percent.?

• Annual inflation rate in the Euro Area was confirmed at 2.5% in June 2024, lower than 2.6% in May and 5.5% a year earlier.??

• The ECB decided to keep interest rates unchanged in July 2024, as expected, as current data supports their previous inflation outlook. The main refinancing operations rate remained at 4.25%, the deposit facility rate at 3.75%, and the marginal lending rate at 4.5%.?

• Producer prices in Germany shrank by 1.6% yoy in June 2024, softer than a 2.2% decline in the prior month.

Japan/China?

• The Reuters Tankan sentiment index for manufacturers in Japan jumped to +11 in July 2024 from +6 in June, improving for the first time in 4 months and posting the highest reading in 7 months.?

• Japan posted a trade surplus of JPY 224.04 billion in June 2024, surging from a gain of JPY 36.52 billion in the same month of the prior year. Shipments rising by 5.4% yoy. Meanwhile, purchases increased by 3.2%.?

• The annual inflation rate in Japan stood at 2.8% in June 2024, holding steady for the second straight month.??

• The Chinese economy grew by a seasonally adjusted 0.7% in Q2 of 2024, after a marginally revised 1.5% increase in Q1. On yearly basis, the Chinese economy expanded 4.7% yoy in Q2 of 2024, slowing from a 5.3% growth in Q1.?

• China’s industrial production increased by 5.3% year-on-year in June 2024, while softening from a 5.6% growth in the prior month.??

• China's retail sales rose by 2% year-on-year in June 2024, notably slowing from a 3.7% gain in the previous month.??

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NSE 500 results?

• 22-Jul – MRPL, Supreme Ind, Zensar Tech, Coforge, IDBI Bank?

• 23-Jul –? United spirits, HUL, SRF, Torrent Pharma, ICRA, ICICI Prudential, Bajaj Fin?

• 24-Jul –? Mah Life, Petronet Lng, IGL, JSPL, CG Power, Oracle, SBI Life, Axis Bank, L&T,??

• 25-Jul –? Ashok Leyland, Tech Mahindra, Chennai Petro, Mphasis, Cyient, Canara Bank, MGL?

• 26-Jul –? Cipla, Sanofi, TTK Prestige, Indusind Bank?

• 27-Jul –? Dr Reddys, ICICI Bank, REC

Events in the coming week?

• 22-Jul – China – Prime Lending Rate?

• 23-Jul – India – Union Budget;??

• 24-Jul – India/Japan/Eurozone/Germany/UK/US Prov. Manufacturing/Services PMI; US – Goods Trade Balance,??

• 25-Jul? -- US – Durable Goods Orders?

• 26-Jul –? US – Personal Spending, Consumer Sentiment

Outlook?

Nifty formed an engulfing bear pattern on daily charts on Friday giving up all the gains of the previous session. It gained 0.12% over the week but formed a bearish shooting star type pattern and closed near the week’s low. The high of Friday i.e. 24854 could now be a strong resistance for the near term while 24087-24344 band could provide support. The coming week, that includes the Union Budget, is the eighth in the series of rises and could end in the negative.?