Unabated sell-off and elevated volatility led key benchmark indices to end 2.5 percent down during the week as sentiments got a blow amid concerns over building inflation pressure in the global economy which may force central banks to check easing money supply.
Investors were also concerned about the global growth as rise in fresh COVID cases in some countries like Russia, China can weigh on world economy.
The US GDP slowed down to 2 percent in Q3 CY21 v/s 6.7 percent in Q2 CY21 due to slowdown in consumer spending. Relentless selling by FPIs amid rising global concerns also weighed on major indices. In October, FPIs sold Rs 25,872 crore of Indian equities, through the impact was partly offset by continued strong inflow by retail investors.
Institutional investors were also concerned about the expensive market valuation. Selling was broad based with all sectoral indices ending in red, though mid cap index at (-)1 percent escaped the sell-off as compared to large cap stocks. Banking index was down (-)3.2 percent primarily led by Axis Bank which was down (-)10.5 percent during weak due to weak performance on the margin front during Q2 FY22.
Alternatively, ICICI Bank stock witnessed re-rating driven by strong performance across all major parameters in Q2 FY22.
Rising COVID cases in some countries and inflation concerns along with key economic data for the next week including India’s auto sales, GST collection, manufacturing/services PMI of major economies and BoE interest rate decision will decide the market course.
On the sectoral front, all the sectors ended in the red zone, the energy sector saw the highest loss of 4.5 percent followed by the banking, service and IT sector losing 3 percent.
Stocks like ULTRATECH CEMENT saw more than 6 percent gains UPL, ICICIBANK, ASIANPAINTS and DRREDDY inched up by 4 percent while on the losing side stocks like AXISBANK wiped off more than 9 percent, ADANIPORTS lost 8 percent, NTPC saw the loss of nearly 7 percent while YESBANK, KOTAKBANK, VEDANTA shredded off above 6 percent.
During the week, the benchmark indices wiped out nearly 700 points from the weekly high of 18,342.05 levels, closing at 17,671.65, and losing 185.60 points while Bank Nifty plunged above 2,500 points from a lifetime high of 41829.6, ending at 39,115.60, and losing 393.35 on Friday’s trading session.
Technically, the stochastic indicator has given a downside crossover indicating weakness. The RSI indicator is witnessed pointing towards the south which suggests further correction on a weekly chart. However, on the daily time-frame, the index has taken immediate support of prior swing lows and lower Bollinger Band formation. The Nifty has also tested support at 50-Days SMA and has closed above it. At present, the Nifty index has weekly support of 17400 and resistance of 17900/18100 levels.
• Asian Paints stock surges amid company announcement of 7-10 percent hike in product prices to combat margin pressure.
• Sentiments got a boost as UPL is announced as Regional Supporter for FIFA World Cup Qatar 2022
• Shree Cement remained on buying radar ahead of quarterly results expecting strong numbers
• Ultratech Cement gained 6.8 percent during the week on expectation of strong demand outlook.
• Strong performance of ICICI Bank during the week was driven by better than expected result numbers for Q2 FY22. Bank posted strong growth on business and profitability fronts and healthy NIM.
• Sell-off in Axis Bank stock was due to weak performance by the lender on margin front in Q2 FY22. Investors are disappointed on continued weak reporting of NIM as the bank close peers have been witnessing strong improvement in NIM.
• Adani Ports’ share price tumbled after reporting a fall in consolidated profit in Q2 FY22, mainly due to lower cargo volumes.
• BPCL makes huge dividend payouts as a result of its proposed privatization
• Coal India temporarily halts supplies to non- power plant amid power crisis in the country.
• Over the past 12 months, price of imported coal has increased by more than 150 percent. Due to higher expenses, NTPC’s standalone net profit went down by 8.5 percent YoY in the current quarter
(Satish Kumar is Research Analyst, Choice Broking)
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