Market Pulse | 29th November, 2024

ECONOMIC HIGHLIGHTS

INDIA

?India GDP growth hits 7-quarter low of 5.4% in Q2 amid manufacturing slump: India’s GDP (gross domestic product) growth for the July-September quarter dropped to a surprising 5.4%, the lowest level since Q3FY23. This figure represents a sharp fall from 8.1% in the same period last year and 6.7% in the April-June quarter (Q1FY25). Economists had projected a moderation to 6.5%, but the economy underperformed expectations, plunging to a near two-year low. In the Reserve Bank of India’s (RBI)?Monetary Policy Committee (MPC) meeting last month, Governor Shaktikanta Das forecasted 7% growth for Q2.?The unexpected slowdown is likely to increase pressure on the central bank, which has kept the benchmark repo rate steady amidst inflationary concerns.

?Rupee logs worst month since March as Trump win lifts dollar, outflows persist: The Indian rupee ended November with its worst monthly performance in eight, as Donald Trump's victory in the U.S. election boosted the dollar and U.S. bond yields, while foreign portfolio outflows persisted. The rupee closed at 84.4825 against the dollar on Friday, nearly flat on the day but within touching distance of its lifetime low of 84.5075 hit last week. For the month, the rupee fell by nearly 0.5%, the steepest decline since March. The dollar has rallied and U.S. yields have risen since Trump's victory in the Nov. 5 presidential election, hurting emerging market assets. . Foreign investors net sold more than $1.7 billion of local stocks and bonds in November, adding to the $11.5 billion outflow of the previous month.

?India’s April-October fiscal deficit at ?7.51 lakh crore, widens to 46.5% of FY25 target: India’s fiscal deficit at the end of the first seven months of the current financial year 2024-25 (FY25) came in at???7.51 lakh crore and widened to 46.5% of the full-year target, government data showed on Friday, November 29. According to data released by the Controller General of Accounts (CGA), the fiscal deficit—the gap between government expenditures and revenue—was??7.51 lakh crore in absolute terms during April- October of 2024. Net tax receipts for April-October were at 51% of the annual target. In the Union Budget, the government projected to bring down the fiscal deficit to 4.9% of gross domestic product (GDP) in the current 2024-25 financial year. The deficit was 5.6% of the GDP in 2023-24. In absolute terms, the government aims to contain the fiscal deficit at??16,13,312 crore during the current fiscal.

GLOBAL HIGHLIGHTS

?Gold prices set for biggest monthly decline in over one year:?? Gold prices gained on Friday, supported by a weaker greenback and geopolitical woes, but were on course for their worst monthly performance since September 2023 due to a dollar rally this month following Donald Trump's U.S. election victory. Spot gold is set for a weekly fall of about 2% after a sharp sell-off earlier this week. Bullion has declined 3% so far in November, its worst monthly performance since September 2023, as traders expect the prospect of higher tariffs under Trump administration to keep interest rates higher for longer.

?US economy holds firm in early Q4; inflation stuck above Fed's target: U.S. consumer spending increased slightly more than expected in October, suggesting the economy retained much of its solid growth momentum early in the fourth quarter, but progress on lowering inflation appears to have stalled in recent months.The lack of success in bringing inflation back to the Federal Reserve's 2% target, together with the prospect of higher tariffs on imported goods from the incoming Trump administration, could narrow the scope for interest rate cuts from the U.S. central bank next year. The Fed is still widely expected to deliver a third rate cut in December, with other data on Wednesday showing more unemployed people were experiencing long bouts of joblessness in mid-November.

?Eurozone inflation edges up; 'underlying' price growth steady: Euro zone inflation accelerated in November and its most closely watched components remained high, data showed on Friday, adding to the case for a more cautious European Central Bank interest rate cut next month. Consumer price inflation in the 20 countries sharing the euro stood at 2.3% in November, according to the data from Eurostat. That was higher than 2.0% a month earlier and the ECB's 2% target but in line with expectations.

?China Nov factory activity expands for second month as Trump threats loom: China's factory activity expanded modestly for a second straight month in November. The National Bureau of Statistics purchasing managers' index (PMI) on Saturday rose to 50.3 - a seven-month high - from 50.1 in October, above the 50-mark separating growth from contraction. The mood in China's manufacturing sector has been depressed for months due to tumbling producer prices and dwindling orders, but two months of positive PMI readings suggest the stimulus announcements are improving sentiment on factory floors. That said, fresh headwinds from additional U.S. tariffs could threaten China's industrial sector next year and pour cold water over any early optimism in the Asian giant's manufacturing sector.

MARKET HIGHLIGHTS

Bulls fight back after a volatile week: Reliance, pharma stocks lead Indian shares' rebound to log weekly gains

?India’s benchmark indices rebounded sharply on Friday, the last trading day for November, recovering nearly 1% after suffering their steepest two-month decline in the prior session.

?The Nifty 50 closed the week with a 0.9% gain, marking its second consecutive week in positive territory. Broader indices outperformed, with the Nifty Smallcap 100 and Nifty Midcap 100 surging 5% and 2.5%, respectively.

?Earlier this month, markets had entered correction territory, declining 10% from record highs amid muted corporate earnings and sustained foreign outflows. Investor anxiety deepened with concerns over a slower pace of rate cuts amid persistent inflation. Adding to the uncertainty, escalating tensions from missile strikes by Russia further unsettled markets.

?In November, the Nifty fell 0.3%, dragged down by sharp losses in two Adani Group stocks. By contrast, the Sensex, which excludes Adani companies, managed a 0.5% gain for the month.

?The Nifty IT Index emerged as the star performer, rallying nearly 7% this month, as expectations of a stronger dollar and increased tech outsourcing were fueled by Donald Trump’s return to the political spotlight.

?The top gainer for November was Auto major M&M as a host of brokerages remain bullish on the stock following a host of launches that consolidate M&M's position as one of the fastest-growing manufacturers in India.

?On the flip side, Asian Paints and Adani Enterprises were the worst performers, tumbling more than 15% during the month.

? After a three-month rally, gold prices posted a decline of 2.60 per cent for the month in the domestic markets, erasing some of the geopolitical risk premium. This pullback was largely driven by the announcement of a ceasefire agreement between Israel and Hezbollah and the broader strength in the US Dollar Index following Donald Trump's victory in the US Presidential elections.

?Adani group stocks recover sharply amid ongoing U.S. legal challenges: A sustained buying in Adani Group stocks during the last 3 trading sessions has erased most of the losses for its investors. The combined market capitalization of all 11 listed Adani stocks was at Rs 1.37 lakh crore on Friday afternoon and needs a rally of another Rs 60,000 crore to erase all the loss that investors suffered on November 21.

Adani Green Energy, Adani Energy Solutions, and Adani Total Gas jumping as much as 23% in the afternoon on November 29 following Japan’s biggest banks planning to maintain ties with billionaire Gautam Adani-led conglomerate despite US bribery charges. The rise was also on their inclusion in the National Stock Exchange’s futures and options (F&O) segment, starting Friday. Among the three, shares of Adani Green tracked the strongest upside and hit its 23 percent upper circuit for a third straight session.

?Ola Electric stock in full throttle, skyrockets 35% in five days: Shares of Ola Electric Mobility revved up 6 percent on November 28, extending its upsurge to the fifth straight session. This upward run in the stock comes after the company unveiled its most affordable electric scooters yet — the S1 Z and Gig range — with prices starting at Rs 39,000, drawing positive outlook from brokerages. Citi highlighted Ola's dominant 38 percent market share in the EV two-wheeler space, extensive product portfolio, strong R&D, and vertical integration, including Li-ion cell manufacturing, bode well for Ola.

?Cochin Shipyard shares hit upper circuit for 4 straight sessions after 50% fall from peak: Cochin Shipyard shares hit the upper circuit for the fourth consecutive trading session in the morning trade on Thursday, climbing over 20 percent in the past week. The public sector enterprise, India's largest shipyard by capacity, has gained traction in both commercial and defence sectors, boosting investor confidence. This recent rally comes after the stock saw a significant correction, dropping nearly 50 percent from its peak of Rs 2,979.45, recorded on July 8, 2024.

?Edelweiss Financial Services soars 10% on buzz of stake sale in MF unit: Shares of Edelweiss Financial Services were locked in the 10 per cent upper circuit on the BSE in Thursday’s intra-day trade in an otherwise weak market. In the earlier 2 sessions, the stock had rallied 14 per cent on reports that the company was looking to sell a minority stake in its mutual fund (MF) arm. Earlier this week, a report said the financial services group is likely to hire Nomura to help find a buyer for a minority stake.

?Bharti Airtel stock soars 6%, logs sharpest intra-day rally in 18 months: The stock of the country’s second largest telecom operator Bharti Airtel rose 5.7 per cent to Rs 1,648.70 on the BSE in Friday’s intraday trade, recording its sharpest intraday rally in 18 months. S&P Global Ratings had recently revised its rating outlook on the company to positive from stable on earnings strength. Airtel's India earnings will see strong growth over the next 24 months. This will be largely driven by a hike in mobile tariffs in the country earlier this year. Prices of the company’s mobile plans were up 10%-21% effective July 4, 2024. “We project Earnings before interest, tax, depreciation and amortization (EBITDA) from Airtels. Indian operations will rise 18%-20% in fiscal 2025 (year ending March 31, 2025), and by a further 12%-15% in fiscal 2026. Most of this growth will come from the mobile segment,” S&P Global Ratings said in rationale.

?FIIs reverse selling spree, pumped? ?11,100 crore in equities over 2 days: Foreign institutional investors (FIIs) recorded a net purchase of ?1,157.70 crore in equities on Tuesday, November 26, following a massive ?9,947.55-crore inflow the previous day. This signals a continuation of FII buying momentum after ending a record 38-session selling streak. In contrast, domestic institutional investors (DIIs) were net sellers on both of the days. The sharp divergence in trading patterns came amidst a broader recovery in market sentiment, buoyed by MSCI index rebalancing and political stability after the BJP-led NDA's win in Maharashtra. However, FIIs ended the week with heavy selling, registering a net outflow of ?16,139 crore over the last two trading sessions, wiping out gains from earlier in the week.

SECTOR HIGHLIGHTS

?Pharma stocks (Nifty Pharma) jumped 2.35% on Friday , driven mainly by a 3.7% rise in Divi's Lab after Citi said the stock was its top pick in the sector. A combination of factors, including the depreciation of the Rupee, Trump's tariffs on China, and technical market dynamics also led to the rise. The continuous depreciation of the rupee is one positive development for the Indian pharmaceutical sector. Secondly so far President-elect Donald Trump has spared India in his protectionism measures. This has given hope that under his regime the Indian pharma sector may not face any direct or indirect pressures.

?IT stocks (Nifty IT) tumbled 2.39% on Thursday after U.S. inflation and consumer spending data overnight suggested interest rate cuts could be slower than expected. That could impact spending by clients in the U.S., a key market for IT companies.

?Defence shares rallied on Tuesday after NDA alliance victory in Maharashtra. The political stability is expected to bolster the Government of India’s (GOI) capital expenditure momentum, leading to improved order inflows across key sectors such as railways and defense. Garden Reach Shipbuilders & Engineers (GRSE), Cochin Shipyard, Bharat Dynamics (BDL), BEML, Mazagon Dock Shipbuilders (MDL), Mishra Dhatu Nigam (MIDHANI), Bharat Electronics (BEL) and Hindustan Aeronautics (HAL) were up in the range of 3 per cent to 10 per cent on the BSE in Tuesday’s intra-day trade in otherwise a subdued market.

?Telecom stocks rallied up to 19% on Tuesday on bank guarantee waivers by the Union Cabinet with Vodafone Idea’s shares witnessing the highest surge, climbing 18.6% to reach their intraday peak of ?8.28, followed by Tata Teleservices (Maharashtra), which soared 13% to a high of ?78.11. Indus Towers rose by 5.5%, while Bharti Hexacom gained 4.5%. Additionally, Tata Teleservices and Bharti Airtel recorded increases of 1.8% and 1.6%, respectively.

BUSINESS-INDUSTRY UPDATES

?RIL gains 2% as US-based arm picks 21% stake in Wavetech Helium: Reliance Industries (RIL) shares rose 2.1% on BSE in Fridays trade and logged an intraday high of Rs 1,299.3 per share. The buying interest sparked after the company’s US-based arm Reliance Finance and Investments bought a 21% stake in Wavetech Helium, Inc. (WHI). As per the agreement, Reliance Finance and Investments will buy a 21% stake for an aggregate consideration of $12 million.

?Aster DM Healthcare to merge with Blackstone-backed Quality Care India: India’s? Aster DM Healthcare will merge with Blackstone-backed hospitals operator Quality Care India, the companies said on Friday, bringing Aster closer to its larger rivals Apollo Hospitals and Manipal Hospitals. This is Aster’s first major deal since selling its Gulf business. The company will get access to Quality 5,500 beds, taking the merged entity’s total bed count to more than 10,000. The acquisition will bring Asters domestic capacity close to that of market leader Apollo Hospitals and the privately-held Manipal Hospitals, making it one of the top three hospital chains in the country. The merged entity, which will be called Aster DM Quality Care, plans to add another 3,500 beds by fiscal year 2027, funded through internal accruals. Earlier this year, Aster laid out plans to spend up to $108 million to boost its domestic capacity across the 19 hospitals it runs in India.

?Key infra sectors’ growth drops to 3.1% in Oct from 12.7% last year: The output of eight key infrastructure sectors expanded by 3.1% in October 2024, sharply down from a 12.7% growth registered in the same month last year, according to official data released on Friday.?On a monthly basis, the production growth of these sectors was higher than the 2.4% expansion recorded in September 2024.?In October, production of crude oil and natural gas declined. Production growth of coal, fertiliser, steel, cement and electricity moderated to 7.8%, 0.4%, 4.2%, and 0.6% respectively, as against 18.4%, 5.3%, 16.9% and 20.4% in October last year.

?HUL approves demerger of ice-cream business into separate, listed entity: Hindustan Unilever Ltd. (HUL), the country’s leading fast moving consumer goods (FMCG) maker, has decided to demerge its ice cream business. The board of directors of the Mumbai-headquartered company decided on Monday that the ice cream division - represented by its master brand Kwallity Walls will be separate listed entity. HUL's move follows its London-based parent Unilever’s decision in March this year to separate its own ice-cream business in a bid to become a more “focused” company, operating four business groups across beauty and well-being, personal care, home care and nutrition.