The stock markets logged strong gains after a week of share correction and closed with healthy gains and volumes for the week that ended on February 3. It was a volatile week with a sell-off in Adani Group stocks, a growth-focused Union Budget, positive global cues, a less hawkish tone by the Federal Reserve, and a correction in oil prices.
Market last week
In the last week, the BSE Sensex rallied over 1,500 points to 60,842 and recovered the losses from the previous week. Nifty climbed to 17,854 up by 250 points but the chains were still limited due to the selling pressure in Adani Enterprises and Adani Ports. Talking about the sectors, banking, auto, FMCG, IT, and financial services stocks pulled the market down whereas metal, energy, pharma, oil, and gas stocks were in the green.
This week may see a similar trend of a volatile market as the focus has now moved from the budget to the upcoming meeting of the Reserve Bank's Monetary Policy Committee, earnings and further development in the Adani Group.
Here are areas that will be in focus in the coming week.
Monetary Policy Committee meeting outcome
The Monetary POlicy Committee meeting outcome is expected on February 8 with commentary by RBI governor Shaktikanta Das. The expectation for the three-day meeting is that the repo rate will be increased to 6.50 by 25 basis points.
Earnings
The quarterly earnings season is nearing its end, and a total of 1,300 companies are expected to announce the release of their numbers in the coming week. Some of the prominent companies reporting earnings this week include Tata Steel, Mahindra & Mahindra, Adani Port and Special Economic Zone, Hindalco Industries, Ambuja Cements, Bharti Airtel, Life Insurance Corporation of India, Hero MotoCorp, Lupin, Oil India, Volats, and IRCTC.
Adani Group shares
Since the US-based short-seller Hindenburg Research released its report on Adani Group, the shares of all seven companies under Adan have seen major sell-offs. But on Friday, Adani Enterprise and Adani Ports recovered close to 56 per cent and 26 per cent respectively, from their day's low. Ultimately, Adani Enterprise closed with a 1 per cent gain, whereas Adani Port closed with an 8 per cent gain. ACC and Ambuja Cements also closed with 4 per cent and 6 per cent gains, respectively. However, Adani Power, Adani Wilmar, Adani Total Gas, Adani Green Energy, NDTV, and Adani Transmission were still in the red with a drop of 5 to 10 per cent.
The jump could be credited to the statements issued by the banks, the RBI, and Finance Minister Nirmala Sitharaman. While the Finance Minister, in an interview with Network18 Group, said that the banks are not overexposed, SBI Chairman Dinesh Kumar Khara said that Adani Groups' exposure is between 0.8 and 0.9 per cent of its loan book. He also added that the repayments are also on track.
Additionally, Adani Ports will continue to be on the F&O ban list, and Ambuja Cements was removed from the ban list. Adani Enterprises, Ambuja Cements, and Adani Port are also under the additional surveillance measures framework.
Data to be released in the upcoming week
In the upcoming week the industrial and manufacturing production data for December, the foreign exchange reserves for the week ended February 3 and the bank loan and deposit growth for the fortnight ended January 27 are expected to be released on February 10.
FII flow
Foreign institutional investors' flow has been under strain as they sold over Rs 2,200 crore worth of shares in the first week of February. In the last month, there was a sale of Rs 41,000 crore.
It is expected that the FII will see a strong comeback only after the federal reserve's show a complete pause in the increasing rate hikes.
Crude oil prices
The crude oil prices saw a drop of almost 7 per cent during the last week with Brent crude settling below $80 per barrel and WTI crude was close to $70 per barrel. This was after the US job report for January was announced on Friday, indicating a strong growth.
