Weekly Market Newsletter

16th August, 2020

Market snapshot

Key triggers of the week

-Global cues remained firm during the last week, wall street awaits for the economic aid (stimulus) package for Covid-19.

-The lack of progress on the US economy aid package, rising covid infections and the geo-political conflicts between India-China and US-China weighed on the market sentiments.

-Defence stocks remained in investors’ radar over a media report of suspension of 101 defence items imports as a part of Atma-Nirbhar Bharat push.

-Pharma stocks continued the shine and remained in investors’ buying radar after strong Q1 results and improved business outlook.

-Metal stocks continued the rally this week led by the rising international metal prices amid emerging signs of China economic activity.

-Mid cap and Small cap stocks outperformed as compared to the key benchmark.

-India’s latest domestic factory output data contracted 16 percent in June month and remained weak which further dented investors sentiments. While improvement in the consumer non-durables sector continues to show strong demand recovery in rural India.

-CPI inflation data of MOSPI shows a jump of 6.93 percent in the month of July and data of June month is also revised to 6.23 percent from 6.09 percent. The retail inflation grew beyond RBI’s upper margin of 6 percent. The surge in retail inflation was mainly due to higher pulses and products prices while other segments also witness a spike.

-The heavy sell-off in banking stocks in the last session pared the index gains ahead of the SC hearing on AGR case and investors remained cautious over asset quality of banking stocks.

Nifty lost over 0.3% this week ignoring the strong gains of Metal and Auto stocks. Metal and Auto stocks have gained the trend following the optimism of demand recovery. Banking indices remained under pressure amid expectations of asset quality challenges in the near term and SC scheduled hearing on AGR payment case which continued to weigh on the market. Pharma stocks posted strong quarterly numbers and with improved business outlook investors continued the buying in pharma stocks. Going ahead investors will keep an eye on the earning commentary of corporates, geo-political tensions, vaccine development and economic development. Market will be driven by India’s macros such as trade data, credit growth, inflation and global economic data.

Upcoming quarterly results (17th Aug to 22 Aug, 2020)