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Bulls and bears were caught in a tough battle throughout the week increasing volatility in the markets. Market participants used tops to book profit whereas sell-offs were looked upon as an opportunity for bargain hunting. Despite most rating agencies lowering India’s GDP growth forecast citing the impact of the second wave of Covid, benchmark indices ended the week with over 1% gains amid strong global cues and a ramp-up in the vaccination programme. The barometer index Sensex rose 580.59 points or 1.11% to settle at 52,925.04. Whereas the broader market index Nifty 50 jumped 177 points or 1.13% to settle at 15,860.35.
The broader market continued its outperformance to benchmark indices. BSE Mid-Cap index gained 311.44 points or 1.4% to settle at 22,549.65. The BSE Small-Cap index gained 347.40 points or 1.41% to settle at 24,996.23. Even the BSE500 index was up 1.15% to 21,564.16. A closer look at the BSE500 index shows that as many as 315 stocks delivered positive returns this week.
With a gain of 28.44% or Rs 758.25, Venky’s was the top performer of the week on the BSE500 index as its shares rallied from Rs 2,666.10 on June 18, 2021, to Rs 3,424.35 on June 25, 2021. Indian Overseas Bank (up 26.14%), HFCL (up 22.89%) and Central Bank of India (up 22.47%) were the other stocks that rallied over 22% this week. Both public sector banks rallied on reports that the government has shortlisted these banks for divestment while HFCL surged as the company reported a 1,365% rise in its Q4 net profit to Rs 84.67 crore and a strong business outlook.
“Global cues turned positive after US President embraced a bipartisan Senate infrastructure deal. Domestically, PSU Banks gained the most amid renewed privatisation talks and fund-raising by few banks. Metal stocks rallied after the Russian government proposed new export taxes from August 1 on steel, nickel, aluminium, and copper. Earnings season for FY21 ended on a strong note with Nifty EPS growing at 14.2% YoY to INR539 – the highest since FY11,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.
Top gainers
Bharat Electronics (up 19.66%0, The Jammu & Kashmir Bank (up 19.05%), JK Paper (up 18.95%), Shoppers Stop (up 15.33%), Allcargo Logistics (up 13.70%), DCM Shriram (up 13.66%), The South Indian Bank (up 13.44%), IRB Infrastructure Developers (up 13.07%), GMR Infrastructure (up 12.61%), Thyrocare Technologies (up 12.46%), Godfrey Phillips India (up 12.18%), Max Financial Services (up 11.00%), IFCI (up 10.70%), Jindal Stainless (up 10.69%), Godrej Agrovet (up 10.68%), KRBL (up 10.54%) and Jindal Stainless (Hisar) (up 10.49%) were among other majors gainers of the week.
Outlook
Market participants will be looking forward to infrastructure output data for May which will be released on 30 June 2021. Markit Manufacturing PMI for June will be declared on 1 July 2021. Auto stocks will be in focus as auto companies will start announcing monthly sales numbers. Global data like China’s industrial profits data for May, the Caixin Manufacturing PMI for June, Japan’s preliminary industrial production data for May, the US Markit Manufacturing PMI and the Euro Area Markit Manufacturing PMI will also be tracked closely as they are slated to be announced next week.
Progress of monsoon will be another factor that will be closely watched. The Indian Meteorological Department has predicted a normal monsoon in most parts of the country in June. As per the weather department, the country is likely to experience 101% rainfall during the monsoon season. The IMD will issue the forecast for the July rainfall in the last week of June 2021.
Besides the Covid caseload, the movement of the rupee against the dollar and crude oil prices, the trend in global stock markets will dictate the trend on the bourses in the near term. Investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will be monitored.
Commenting on market outlook, Deepak Jasani, Head of Retail Research, HDFC Securities explained, “after one negative week, benchmark indices closed the current week with a gain of over 1.1%. It seems likely that a new high in Nifty may be made in the coming week. The action seems limited to a few stocks/sectors on a rotational basis and the overall mood in the markets is still not euphoric. This is a good sign that may prevent a fast reversal.”