Nifty crosses 19K convincingly; FII flows, results season in focus
Markets gained sharply at the beginning of the July series as the bulls made a strong comeback resulting in new highs in the benchmark indices. Nifty breached the significant psychological level of 19,000, while Nifty Bank reached an all-time high during Friday’s session. Sustained buying by the FIIs and the advance of the southwest monsoon helped push markets higher. Global markets witnessed volatility trade as upbeat economic data soothed investor worries about an imminent recession triggered by the Federal Reserve’s aggressive interest rate hikes. For the week, the Nifty gained 2.8 pct to 19,189 levels and Nifty Midcap 100 and Nifty Smallcap 100 gained 2.7 pct and 2 pct respectively. There were no sectoral losers. For the week, FIIs were net buyers to the tune of Rs 203.62 bn while DIIs were net sellers to the tune of Rs 15.65 bn. On the commodity front, Gold prices touched lows of USD 1,900 an oz during the week and ended near USD 1,929 an oz. Brent crude prices remained flat near USD 74.9 a bbl during the week.
India’s Current Account Deficit (CAD) decreased to USD 1.3 bn, 0.2 pct of GDP in Q4FY23. Net foreign direct investment recorded a robust sequential rise to USD 6.4 bn in Q4 from USD 2.0 bn in Q3. US consumer confidence increased to a near 1-1/2 year high in June. European Central Bank president Christine Lagarde has said euro zone inflation has entered a new phase that could linger for some time.
Stocks/Sector in Spotlight
- Asset Management Companies shares gained 14 pct after the SEBI deferred its decision to lower the total expense ratio (TER). The regulator now plans to rework the TER plan, with the new amendments likely to be less stringent. This decision will benefit asset managers by enabling them to gain a larger market share over time.
- HDFC- HDFC Bank were in focus- HDFC merged with its subsidiary HDFC Bank on July 1 after their respective boards cleared the proposal. Following the reverse merger, HDFC will cease to exist from July 1 onwards. Under the union, HDFC Bank will allot to eligible shareholders 42 new equity shares of the face value of Re. 1 each, for every 25 equity shares of the face value of Rs 2 each fully paid-up held by such shareholder in HDFC Ltd as on the record date (July 13, 2023). The newly issued HDFC Bank shares are expected to be listed on bourses by July 17, 2023.
- Shree Cement fell 5 pct during the week after a news report claimed that IT evasion amounting to Rs 23,000 crore was found in searches at multiple company locations. The company has issued a statement saying it has collaborated with and provided all support to tax authorities.
- Mahindra & Mahindra gained about 6 pct after becoming the first company to receive the eligibility certificate under the production-linked incentive (PLI) scheme for automobiles.
- Maruti Suzuki India sold 1.5 lakh units in June, 1.6 pct higher on a YoY basis. Domestic sales grew 6.1 pct, while exports witnessed a 17 pct decline. Maruti’s sales of utility vehicles surged 130 pct to 43,404 units, while, on the other hand, the sales in the mini and compact segment fell 14.8 pct. Tata Motors reported a 1.1 pct decline in sales at 81,673 units,
- Escorts Kubota’s sales declined by two pct for the period under review affected by the delayed monsoon. The dispatches fell to 9,850 units in June. The tractor maker’s exports for the month slipped 26 pct to 580 units.
- Tata Motors’ CV Sales fell 8 pct, PV Dispatches Up 5 pct. Tata Motors’ total wholesale sales rose 1 pct YoY to 80,383 units in June even as weak dispatches in smaller commercial vehicles dragged the overall tally.
- Eicher Motors posted a 6.5 pct rise in total VE commercial vehicles in June at 6,725 units against 6,307 units in the previous year.
- Royal Enfield registered the best-ever first-quarter performance in FY24 with a sale of 2,27,706 motorcycles. Hero MotoCorp Ltd.’s dispatches to dealerships fell nearly 10 pct YoY to 4.37 lakh units in June, missing consensus estimates that projected growth in the month. Domestic sales declined 8.7 pct to 4.23 lakh units. Exports fell 34.3 pct to 14,236 units.
- MOIL clocked its best-ever quarterly manganese-ore production of 4.36 lakh MT in Q1FY24, registering a significant YoY growth of 35 pct. The production of 1.5 lakh MT in June is also its best-ever production of any June month since inception. On the sales front, MOIL recorded the best-ever Q1 sales performance, registering sales of 3.96 lakh MT, marking a 39 pct YoY growth, according to a government press release.
- Coal India Ltd mined a total of 175.5 million tonnes (MT) of coal during the first quarter of fiscal 2023-24, registering a growth of nearly 10 pct as compared to the same period last year. This was the highest-ever production for the company recorded during the first quarter of any year. The company’s production in the month of June rose 12.4 pct to 58 MT from 51.6 MT, YoY.
Mutual Funds Industry Update
Quant Mutual Fund launches Quant Healthcare Fund
Quant Mutual Fund has launched Quant Healthcare Fund, an open-ended equity scheme investing in the healthcare sector. The new fund offer of the scheme is open for subscription, and it will close on July 11. The performance of the scheme will be benchmarked against S&P BSE Healthcare TRI. The scheme will be managed by Sandeep Tandon, Ankit Pande, Sanjeev Sharma, and Vasav Sahgal. The investment objective of the scheme is to seek long-term capital appreciation by investing in equity/equity-related instruments of companies from the healthcare sector. The scheme will invest at least 80% in healthcare, life sciences, insurance, and wellness companies that are expected to benefit from increased investments in healthcare infrastructure and service delivery, including advanced medical technology.
Axis Mutual Fund launches Axis Nifty IT, Index Fund
Axis Mutual Fund announced the launch of Axis Nifty IT Index Fund, an open-ended index fund tracking the NIFTY IT TRI. Axis Nifty IT Index Fund will track the NIFTY IT TRI and aim to provide returns before expenses that correspond to the total returns of the NIFTY IT TRI, subject to tracking errors. The minimum investment amount is Rs 5,000 and in multiples of Re 1. Hitesh Das (Fund Manager) would be managing the fund. The main objective of an Index Fund is to replicate a stock market index in terms of the portfolio.
DSP Mutual Fund files draft for Multicap Fund DSP Mutual Fund has filed a draft for a multi-cap fund.
DSP Multicap Fund will be an open-ended equity scheme investing across large-cap, mid-cap, and small-cap stocks. The scheme will be benchmarked against Nifty 500 Multicap 50:25:25 TRI. The scheme will be managed by Chirag Dagli, Jay Kothari (fund manager for overseas investments). The investment objective of the scheme is to seek to generate long-term capital appreciation from a portfolio of equity and equity-related securities across market capitalization.
Outlook for the Week
Markets are expected to continue their uptrend amidst good progress of monsoon, healthy FII inflows, and the absence of any near-term triggers. The results season begins on 12 July with the results of TCS and HCL Tech. Manufacturing PMI will be declared on July 3 and Services PMI will be declared on July 5. Globally, China will announce manufacturing PMI on July 5. US manufacturing PMI will be declared on 3 July and Services PMI will be out on 6 July. The US Non-Farm Payrolls data and the unemployment rate for June will be announced on July 7.
On the Nifty front, a major FII short squeeze was seen on the move past 18,900 and we can expect major profit booking in the range of 19200-19300.
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.
