Weekly Market Analysis 03-09-2021

Benchmark Indian indices had a terrific rally during the week, helping both the indices touch record highs. For the week, the Sensex closed 3.6% higher at 58,130 and Nifty closed 3.7% higher at 17,323.6.

All sectors ended in the green on a weekly basis. Nifty Realty (10.8%), S&P BSE Telecom (8.8%), BSE Consumer Durables (7.7%), S&P BSE Energy (6.8%), S&P BSE Utilities (6.5%), BSE Power (6.3%) were the top gainers among sectoral indices. Technology stocks had a very low traction and the Nifty IT edged up only 1.7%.

In Nifty 50, the top gainers were Shree Cements (13.2%), Titan Company (10.8%), Bharti Airtel (10.6%), Asian Paints (9.9%) and Eicher Motors (8.8%), Bajaj Finance (8%) and Reliance Industries (7.2%). Mahindra & Mahindra (-3.3%), Infosys (-0.5%) and Tech Mahindra (-0.2%) were the only losers on a weekly basis among Nifty 50 stocks.

Reliance Industries’ subsidiary Reliance Industries Retail Ventures (RRVL) completed the takeover deal of local search engine Just Dial and RRVL now holds 40.98% in Just Dial. In July, RRVL acquired 1.31 crore equity shares of Rs 10 each of Just Dial at a price of Rs 1,020 per equity share from VSS Mani. Reliance is also in talks to buy Norwegian solar panel maker REC from ChemChina and the deal is value at about $1.2 billion. In addition, the company is also coming out with a new smartphone JioPhone Next smartphone in less than a week. All these positive factors propelled the company shares this week.

Bharti Airtel said its board approved a proposal to raise up to Rs 21,000 crore through rights issue of shares. The proceeds from the issue will be used to clear dues linked to adjusted gross revenue. The company’s chairman Sunil Bharti Mittal also hinted at raising tariffs as it is the only way forward for the telecom industry. The chairman interacting with the investors boosted their confidence and the firm’s strategy drove the shares up.

Economy News

India’s gross domestic product (GDP) jumped 20.1% in the April-June quarter of FY22. The GDP logged a high growth as the economy opened gradually after the lockdown and due low base effect as the economy witnessed a contraction of 24.4% in the first quarter of 2020-21 fiscal.

IHS Markit’s report said the seasonally adjusted India Manufacturing Purchasing Managers’ Index (PMI) stood at 52.3 in August 2021, indicating an improvement in overall operating conditions. The index fell from 55.3 in July 2021. Additionally, the seasonally adjusted India Services Business Activity Index stood at 56.7 in August, up from 45.4 in July.

The production of eight core industries comprising of Coal, Crude oil, Natural Gas, Petroleum refinery products, Fertilizer, Cement, Steel, and Electricity rose by 9.4 per cent in July against a 7.6 per cent decline in the year-ago month, according to government data.

Global Markets

The Nasdaq ended at a new high, while other main Wall Street indices fell on Friday, reflecting a mixed sentiment as abysmal U.S. jobs report raised concerns about the pace of economic recovery but weakened the case for a near-term tapering. On a weekly basis, the Dow fell 0.24%, S&P 500 gained 0.58%, Nasdaq jumped 1.55%.

In Asian Markets, the Nikkei 225 Index soared 5.38%, while the broader TOPIX Index rose 4.49% during the week. Japan’s Prime Minister Yoshihide Suga announced his resignation which increased hopes of an economic stimulus and Japan’s accelerating COVID-19 vaccination drive helped the indices to rise.

China’s indices edged higher as the Shanghai Composite Index gained 1.7% and the large-cap CSI 300 Index rose 0.3%. However, China’s PMI for August indicated the economic impact following July’s outbreak of the delta variant, which led to renewed lockdowns and restrictions across the country. On the services side, the non-manufacturing PMI fell to 47.5 in August, from 53.3 in July. The Caixin services PMI, a private survey focusing on smaller firms, fell to 46.7 in august from 54.9 in July .

The dollar index fell 0.16% to 92.08, while gold prices advanced as spot gold prices were up 1.04% to $1,828.26.

Oil prices fell on concerns over fuel demand recovery. US crude futures dropped 1% to $69.29 and Brent fell 0.58% to $72.61.