Nifty ends flat, RBI policy outcome as expected; Fed Meet in focus.
Markets remained range bound, and the Nifty ended almost flat during the week helped by firm global trends and positive news flow on the domestic macro front. The Reserve Bank of India’s Monetary Policy Committee’s decision on June 8 to hold policy rates was pretty much along expected lines and the overall policy itself had no surprises. The RBI continues with its policy stance of “withdrawal of accommodation”. Global stock markets continued their volatile trade as market participants looked ahead to key inflation data next week as well as the Federal Reserve’s latest policy announcement.
For the week, the Nifty ended up by 0.2 pct to 18,563 levels. Nifty Midcap and Nifty Smallcap indexes gained 0.6 pct and 1.2 pct. FII were net buyers to the tune of Rs 9.71 bn while DIIs were net buyers to the tune of Rs 19.35 bn. Gold prices gained marginally by 0.4 pct to USD 1,977 an oz. Recent data suggesting that the labor market was slowing amid mounting risks of a recession has increased the chances of the Federal Reserve pausing its interest rate hiking cycle, which can weigh on the dollar and boost gold prices. Demand concerns outweighed the prospect of tighter supply after Saudi Arabia pledged at a weekend OPEC+ meeting to cut crude output by 1 million barrels per day in July. Brent prices fell from USD 76 a bbl to USD 74.8 bbl.
Stocks/Sector in Spotlight
- Indian Energy Exchange (IEX) fell 20 pct after the Ministry of Power’s (MoP) decision to go ahead with market coupling. Markets term this move as a big negative for IEX. The market coupling mechanism for spot power trading by CERC will see better and lower pricing for consumers in general.
- Tata Motors highlighted that it expects a double-digit EBITDA margin and positive FCF in PV/CV segments over the medium term and also a positive EBITDA in E-PVs. The annual capex plan includes up to Rs 25 bn/annum in CVs and up to Rs 30 bn in PVs and the EV capex expected is at USD 2 bn till FY27. Tata Motors targets near-zero consolidated net-automotive debt for Mar-25.
- Suzlon gained 27 pct for the week after the company announced that it is the first Indian wind energy company that has surpassed 20 GW in wind energy installations. The company said 20 GW wind energy installations were accomplished through the deployment of 12,647 wind turbines across 17 countries, spanning six continents.
- Tata Elxsi has partnered with the Indian Space Research Organization (Isro) to enable the upcoming Gaganyaan Mission. Through the association, Tata Elxsi has designed and developed Crew Module Recovery Models (CMRM) for recovery team training of the space Mission.
- Defense stocks gained and posted new 52-highs post an agreement between India and the US on a roadmap for military-industrial cooperation during the visit of US Secretary of Defence Lloyd Austin. The agreement will fast-track technology cooperation and co-production in areas including air combat and land mobility systems, the “undersea domain”, and intelligence, surveillance, and reconnaissance, according to a statement issued by the US Defense Department.
- Va Tech Wabag has secured a DBO order worth ~Rs 420 Crores for a Water Treatment Plant with a capacity of 270 MLD at Jite, Raigad for City and CIDCO. The scope of the project includes the Design, Engineering, Supply, Construction, Installation, and Commissioning of the 270 MLD WTP including a clear water pumping station within a period of 42 months from commencement and followed by O&M for a period of 15 years.
- The maiden public issue of IKIO Lighting has received an overwhelming response from all types of investors as they bought 66.3 times the offer size on the final day of bidding on June 8. The Noida-based LED lighting solutions provider plans to raise Rs 6065 mn from the public issue at the upper price band of Rs 270-285, comprising a fresh issuance of shares worth Rs 3500 mn, and an offer-for-sale of Rs 2565 mn by promoters. From the fresh issue net proceeds, IKIO Lighting will utilize Rs 2120 mn for setting up a new facility at Noida and another Rs 500 mn for repaying debts.
International News
- US jobless claims jumped to the highest since October 2021, indicating a potentially softening labor market. The uptick also raised hopes that the Fed would pause its rate-hiking campaign at its meeting next week.
- US wholesale inventories edged down by 0.1 pct in April after dipping by a revised 0.2 pct in March. Economists had expected wholesale inventories to slip by 0.2 pct compared to the unchanged reading originally reported for the previous month.
- US trade deficit increased to $74.6 billion in April from a revised $60.6 billion in March. Economists had expected the trade deficit to jump to $75.2 billion from the $64.2 billion originally reported for the previous month.
- The European Central Bank is expected to continue to tighten its monetary policy. Meanwhile, Japan’s economy grew more than initially thought in January-March, revised data showed as a post-pandemic pickup in domestic spending and company restocking helped offset the hit to exports from slowing global demand.
- Chinese inflation came in flat again in May as the country’s economy sputters owing to softening demand and falling exports, leading to calls for a rate cut and a bigger government stimulus.
Mutual Funds Industry Update
Samco Mutual Fund launches SAMCO Active Momentum Fund
SAMCO Asset Management Private Limited has announced the launch of India’s first actively-managed momentum fund – SAMCO Active Momentum Fund. Leveraging the persistent and globally acclaimed momentum anomaly in finance, the fund aims to deliver exceptional risk-adjusted returns to investors, tapping into the immense potential of momentum investing in the Indian market.
Edelweiss Mutual Fund launches Edelweiss Multi Asset Allocation Fund
Edelweiss Mutual Fund has launched the Edelweiss Multi Asset Allocation Fund, an open-ended scheme investing in equity, debt, commodities, and in units of REITs & InvITs. The new fund offer of the scheme is open for subscription and will close on June 19. The scheme will be managed by Bhavesh Jain and Bharat Lahoti (Equity), Dhawal Dalal (Debt), Amit Vora (Overseas), and Ashish Sood (Commodities). The investment objective of the scheme is to provide the investors an opportunity to invest in an actively managed portfolio of multiple asset classes. The scheme will invest predominantly in fixed-income, equities, and gold & silver. It will aim to generate returns through arbitrage in equities and gold & silver and income generation from fixed-income instruments.
Outlook for the Week
Markets will take cues from global events in the absence of any major cues back home. Major central bank meetings namely US Fed, BoJ, and ECB will be in focus this week. BoJ will announce its rate decision on 16 June. The ECB will announce its rate decision on 15 June and the US Fed will announce its rate decision on 14 June. On the macro front, the IIP date will be released on 12 June. WPI inflation will be unveiled on 14 June.
For Nifty, the weekly candlestick has turned out to be a shooting star which indicates caution but with India VIX settling around the 11 mark, it clearly suggests a positive stance for the market in the coming days. Most of the time before a meaningful rally, institutions resort to aggressive put writing which impacts lower reading in India VIX. A move above 18720 in Nifty Futures should be seen as a reinforcement of a breakout for a short-term upside of 19000.
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.
