Week Gone by 07.06.24: Election volatility subsides, Market eyes forward momentum

Week Gone by 07.06.24: Election volatility subsides, Market eyes forward momentum

Indian benchmark indices closed positively amidst election volatility, with the Nifty 50 edging closer to its lifetime highs of 23,339. During the week, the market experienced its largest weekly gain of 2024 at 3.4% despite witnessing the most significant single day drop of 5.9% in four years. Parallel to last week, the broader market lagged behind front line indices with the Mid Cap and Small Cap index rallying 2.9% and 3.1% respectively. Nifty IT led with an 8.6% gain this week, followed by FMCG gaining 7.1% and Auto up by 6.8%, while Nifty underperformers were PSE declining by 2.0%, with CPSE at 1.7% and PSU Bank at 1.4%.

The Lok Sabha elections concluded, with Prime Minister Narendra Modi set to lead for a third term as NDA secured 293 seats with 240 seats to BJP which has led to a coalition government.

Economy: RBI kept repo rate unchanged at 6.50%. Moreover, they upgraded the projected real GDP growth for FY25 to 7.2% driven by favorable monsoon, strong agricultural and services sectors, robust investment, and improving global trade, with balanced risks. While RBI is working towards managing the inflation, GDP growth is looking well balanced on a good trajectory of being higher than 7%. In May 2024, India's GST collections increased 10% YoY to Rs 1.73 lakh crore, primarily due to a spike in domestic consumption. India's Index of Eight Core Industries (ICI) surged 6.2% in April 2024 compared to the previous year, driven by robust performances in multiple key sectors like electricity, natural gas, coal and steel.?

ECB and Bank of Canada cut rates ahead of Fed due to their lagging economies. Favorable reports from China, as the May Caixin manufacturing Purchasing Managers' Index (PMI) stood at 51.7, signifying sustained sectoral growth and highlighting economic resilience while The U.S. manufacturing sector slowed in May, as indicated by the ISM manufacturing index at 48.7, leading to decreases in Treasury yields and the dollar. US job openings declined to 8.059 million in April, the lowest since 2021, from a revised 8.355 million in March.

#Gainers4week - #Top3??

#AVANTIFEED +20.3% Andhra Pradesh based companies rose on positive sentiment around TDP's win in elections?

#ARE&M +18.6%? Announced plans for ?3,000Cr investment in new energy and lead-acid battery businesses?

#IIFL +17.9%? Conclusion of a special audit directed by the RBI

#losers4week #Top3

#TITAGARH -14.6% Concerns about policy continuity following the narrow victory of the NDA alliance

#DATAPATTNS -11.1% Concerns over budgetary allocation with new coalition government

#BEML -9.7% Profit booking in defense sector as stock has delivered two fold return in past year?

#Unlisted Equity : Action continues with NSE being traded around 5200 levels, other unlisted companies where interest levels are high - HDB financials, Tata Capital, Ixigo, Swiggy, OYO and Vikram Solar

#Weekahead

India VIX has subsided from heightened levels of 31.7 back to around 16.8? vs average levels of 13.5. The markets would now shifting its focus to budget , 100 day plan and global macros following Lok Sabha polls and the RBI meeting. Policy related announcements, India inflation, global interest rate commentary and expectations of FII flows will determine the direction of the market

On the global front eyes would be on FED meeting, Bank of Japan policy decision and China's inflation rate.

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