Nifty flat for the week; RBI policy in focus
Benchmark indices traded flattish positive bias, but midcap and smallcap indices outperformed. Sentiments across the globe were boosted after the US Senate approved the debt-ceiling suspension till January 1, 2025, thereby, averting a default. For the week, the Nifty ended flat at 18,534 levels, up 0.2 pct while the Nifty Midcap 100 and Nifty Smallcap 100 index gained 1.6 pct and 3.1 pct respectively. The Nifty Realty index gained 3.9 pct, the Nifty Pharma index gained 2.4 pct and the Nifty Auto index gained 1.8 pct. The Nifty Bank index lost 0.2 pct while the Nifty Energy index was down 1.9 pct.
On the commodity front, Gold experienced volatile movements but ultimately closed higher as buying returned after a three-week decline. Gold prices ended the week at USD 1,969 levels. Crude oil prices experienced significant volatility throughout the week due to concerns over the U.S. debt ceiling and uncertainty surrounding the OPEC+ meeting. Brent prices initially declined to USD 71 a bbl amid worries about the debt ceiling pact, however, it rebounded from its lows to end at USD 76 a bbl.
India’s Gross domestic product grew 6.1 pct YoY, following a 4.5 pct growth in the previous three-month period. Economists had forecast growth of 5.0 pct. In the corresponding period last year, the economy had grown 4.0 pct. According to a survey from S&P Global, the manufacturing Purchasing Managers’ Index, or PMI, rose to 58.7 in May from 57.2 in April. A reading above 50 indicates expansion in the sector. The expected score was 56.5.
Stocks/Sector in Spotlight
- Maruti’s PV sales grew ~10 pct YoY despite degrowth in smaller car volumes which were offset by strong SUV sales growth largely driven by new models. M&M and Tata Motors continued to perform well driven by strong order book. Waiting periods have started to come down for Tata Motors, while it remains elevated for M&M. Maruti reported a total volume of 178k units and was partly impacted by chip shortage for top-selling models. M&M reported a volume of 35k units (up 23 pct YoY), while Tata Motors reported a volume of 46k units (up 6 pct YoY).
- Bajaj Auto reported strong growth on a YoY basis on a lower base, growth was mainly driven by strong >125cc dispatches in the domestic market. Bajaj Auto saw gradual growth in exports sequentially and expects the momentum to continue. Royal Enfield reported volumes that were in line with expectations, while Hero MotoCorp, Bajaj Auto, and TVS were ahead of estimates mainly due to better-than-expected domestic demand driven by the ongoing wedding season. Bajaj Auto’s volume came in at 307k units, RE reported ~77k units, while TVS and Hero MotoCorp reported 319k and 519k respectively.
- The tractor volume came in marginally weak YoY/ MoM due to a high base and some pre-buying in the month of March due to festivals also led to a marginal decline sequentially. Mahindra volumes stood at 34,126 units which were largely in line with expectations (down 5 pct YoY), while Escorts’ stood at 9,167 units (up 9 pct YoY). CV sales across most OEMs were in line with expectations and were weak sequentially due to a high base and accelerated pre-buying before the price hike pertaining to BS6-II. MHCV—Bus dispatches were strong for Ashok Leyland despite overall weakness.
- Tata Elxsi has partnered with Cultos Global to integrate a Blockchain mechanism from Cultos Global with its TETHER Connected Vehicle Platform, to create an innovative Driver Reward Program. This unique proposition of tracking driver behavior using rich analytics from the cloud-first TETHER connected vehicle platform, augmented with ADAS and driver monitoring features, enables an entirely new way of positively impacting driver behavior, incentivized through a high-trust and high-privacy blockchain model.
- Paras Defence and Space Technologies have entered into a joint venture agreement with Israel-based CONTROP Precision Technologies. Both will undertake the business of manufacturing, implementation/installation, integrated logistics support, after-sale support, training, etc., in the electro-optic (EO)/infra-red (IR) field in accordance with the Government of India’s Make in India initiative.
Mutual Funds Industry Update
- Mirae Asset Mutual Fund launches Mirae Asset Silver ETF
Mirae Asset Mutual Fund has announced the launch of Mirae Asset Silver ETF, an open-ended scheme replicating/tracking Domestic Price of Silver. The New Fund Offer (NFO) of the scheme is open and it will close for subscription on June 6. Scheme re-opens for continuous Sale & Repurchase on June 12. Mirae Asset Silver ETF will be managed by Ritesh Patel.
- Kotak Mutual Fund launches Kotak NIFTY 200 Momentum 30 Index Fund
Kotak Mahindra Mutual Fund has launched Kotak NIFTY 200 Momentum 30 Index Fund, an open-ended scheme replicating/ tracking the Nifty 200 Momentum 30 Index. The new fund offer of the scheme is open for subscription and will close on June 8. The scheme will open for sale and repurchase within five business days from the date of allotment. The performance of the scheme will be benchmarked against the NIFTY 200 Momentum 30 Index (Total Return Index). The scheme will be managed by Devender Singhal, Satish Dondapati, and Abhishek Bisen.
- UTI Mutual Fund launches UTI S&P BSE Housing Index Fund
UTI Mutual Fund has launched UTI S&P BSE Housing Index Fund, an open-ended scheme replicating/tracking S&P BSE Housing Total Return Index (TRI). The new fund offer of the scheme is open for subscription and will close on June 5.
International News
- US construction spending surged by 1.2 pct to an annual rate of $1.908 trillion in April after rising by 0.3 pct to a revised rate of $1.885 trillion in March. Economists had expected construction spending to inch up by 0.2 pct.
- US initial jobless claims crept up to 232,000, an increase of 2,000 from the previous week’s revised level of 230,000. Economists had expected jobless claims to rise to 235,000 from the 229,000 originally reported for the previous week.
- The US consumer confidence index edged down to 102.3 in May from an upwardly revised 103.7 in April. Economists had expected the consumer confidence index to slip to 100.0 from the 101.3 originally reported for the previous month.
- Eurozone inflation eased sharply to a 15-month low in May largely due to a fall in energy prices. Inflation eased to 6.1 pct in May from 7.0 pct in April. The rate was forecast to slow to 6.3 pct. This was the lowest rate since February 2022, when inflation was 5.9 pct.
- The monetary base in Japan was down 1.1 pct on year in May, coming in at 672.732 trillion yen. That beat expectations for a decline of 1.4 pct following the upwardly revised 1.7 pct contractions in April (originally – 1.9 pct).
- According to the survey results from S&P Global, China’s manufacturing activity expanded for the first time in three months in May as strong new orders boosted production. The Caixin manufacturing Purchasing Managers’ Index picked up to 50.9 in May from 49.5 in April. The reading was forecast to remain unchanged at 49.5.
Outlook for the Week
Going forward, the market will continue to take direction from global and domestic factors. The upcoming RBI policy meeting on 8 June is expected to be in focus. The MPC will continue with the ‘pause’ mode and is expected to maintain its stance “withdrawal of accommodation” stance. Technically, with the formation of rising three methods on a daily candlestick, Nifty has been positioned for a rally with an immediate target seen at 19,285. We maintain our positive stance on the markets.
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.
