Nifty near an all-time high, Monsoon progress, global cues in the limelight
Benchmark indices inched towards new highs as optimism over the domestic economy and FII inflows boosted investors’ confidence. Volatile was high with Nifty closing the week above the crucial support level of 18600, while the Bank Nifty once again struggled to hold 44000 level. For the week, the Nifty fell 0.8 pct to 18,665 levels while the Midcap and Smallcap indices fell about 1 pct each. On the sector front, Nifty Metal fell 3 pct, Nifty Realty and Nifty FMCG fell 2 pct each. Nifty Bank fell 0.7 pct. On the institutional activity front, FIIs were net buyers to the tune of Rs 10.34 bn, and DIIs were net buyers of 16.92 bn.
Gold posted its worst week in over four months, with prices hovering at their lowest levels in 3 months primarily due to concerns over aggressive monetary tightening and hawkish messaging from major central banks. Prices are trading near USD 1,929 an oz. Oil recorded weekly losses of nearly 4 pct as further monetary tightening and hawkish messaging from major central banks weighed on the energy demand outlook. Brent crude prices fell from USD 76.6 a bbl to USD 76.85 a bbl.
On PM Modi’s visit to the US, US President Joe Biden, and Indian Prime Minister Narendra Modi announced a series of defense and commercial deals designed to improve military and economic ties. Biden and Modi also announced new defense collaborations, including progress on an order for MQ-9B SeaGuardian drones made by General Atomics, and an agreement that will allow American Navy ships to undertake major repairs at Indian shipyards
Stocks/Sector in Spotlight
- Hindustan Aeronautics- The aerospace unit of General Electric signed an MoU with Hindustan Aeronautics Ltd to produce fighter jet engines for the Indian Air Force. The agreement includes the potential joint production of GE Aerospace’s F414 engines in India, and GE Aerospace continues to work with the US government to receive the necessary export authorization for this.
- Lupin has received approval for a generic version of Spiriva HandiHaler (Tiotropium Bromide Inhalation Powder) from USFDA in the US Market. This is the first generic version of Spiriva that provides an edge for Lupin to garner a higher market share. The estimated size of this drug is USD 1,246 mn in US Market. This is the first generic version of Spiriva that provides an edge for Lupin to garner a higher market share.
- Adani Group stocks fell during the week after reports that the US Attorney’s Office in Brooklyn, New York, has sent inquiries in recent months to institutional investors with large holdings in the Group. The requests for information were focused on what Adani Group told those investors. The Securities and Exchange Commission also has a similar probe underway.
- HDFC Ltd. HDFC Bank and HDFC Life gained after the IRDA approved HDFC Ltd’s move to transfer its nearly 49 pct stake in its life insurance unit to HDFC Bank, clearing a key step ahead of HDFC-HDFC Bank. Post-merger, HDFC Bank will have a majority stake in the insurer, allowing the bank to show it as a subsidiary and consolidate its earnings.
- Accenture’s guidance for Q4FY23 (YE August) came in lower than expected, leading to FY23 revenue growth guidance getting lowered a tad from 8-10 pct to 8-9 pct (200 bps inorganic). Weak performance in small deals and Communications, Media, and Hi-Tech verticals led to this cut. For the first time.
International News
- US initial jobless claims came in at 264,000, unchanged from the previous week’s revised level. Economists had expected jobless claims to edge down to 260,000 from the 262,000 originally reported for the previous week.
- US housing starts soared by 21.7 pct to an annual rate of 1.631 million in May after tumbling by 2.9 pct to a revised rate of 1.340 million in April. Economists had expected housing starts to edge down to a rate of 1.400 million from the 1.401 million originally reported for the previous month.
- The Bank of England surprised markets with a 50-basis point hike to interest rates, its 13th consecutive increase as policymakers grapple with persistently high inflation. The Monetary Policy Committee voted 7-2 in favor of the half percentage point increase, which takes the bank’s base rate to 5%. The move defied market expectations, which had priced in around a 60% chance of a 25-basis point hike.
- Overall consumer prices in Japan were up 3.2 pct on year in May. That was well shy of estimates for 4.1 pct and down from 3.5 pct in April. On a monthly basis, consumer prices rose 0.1 pct – slowing from 0.6 pct a month earlier.
Mutual Funds Industry Update
DSP Mutual Fund launches DSP NIFTY IT ETF
DSP Mutual Fund has launched DSP Nifty IT ETF, an open-ended scheme replicating/tracking Nifty IT Index. The new fund offer of the scheme is open for subscription and will close on July 3. The performance of the scheme will be benchmarked against Nifty IT TRI. The scheme will be managed by Anil Ghelani and Diipesh Shah. The investment objective of the scheme is to provide returns that, before expenses, correspond to the total return of the underlying index (Nifty IT TRI), subject to tracking errors.
HDFC Mutual Fund launches HDFC Non-Cyclical, Consumer Fund
HDFC Mutual Fund has announced the launch of the HDFC Non-Cyclical Consumer Fund which intends to invest across India’s consumption categories with a bottom-up stock selection approach for portfolio construction. The New Fund Offer ( NFO) will open on June 23 and will close for subscription on July 7. The fund will invest in a core of the portfolio (at least 80%) of stocks that represent the non-cyclical consumer theme within the basic industries like Consumer Goods, Consumer Services, Telecom, Healthcare, Media, Entertainment, and Publication. The universe for this theme is diverse – with 300+ companies having market caps of more than Rs 500 crores. The fund will invest across market cap segments (largecaps, midcaps, and smallcaps), and diversify within consumer sectors and sub-sectors.
Outlook for the Week
Volatility will remain high this week on account of derivative expiry. It will be a holiday-shortened week as markets will remain shut on 28 June for Bakri Id. Domestic and global macroeconomic data, trends in global stock markets, and the progress of the monsoon will be closely watched. Markets will be closely watching events unfolding in Russia. The larger picture for Nifty points out to an ultimate target of 19700 and we expect the coming week to gain strength on a move past 18800 in Nifty futures.
Disclaimer: The views expressed in the blog are purely based on our research and personal opinion. Although we do not condone misinformation, we do not intend to be regarded as a source of advice or guarantee. Kindly consult an expert before making any decision based on the insights we have provided.
