The BSE Sensex & Nifty 50 surged by 3.22% and 3.01% respectively during last week. However, on Friday domestic markets witnessed selling pressure as the index heavy weight Reliance Industries shares fell after Supreme Court validated an arbitration order stopping USD 3.4 billion deal to buy Future Retail. The IHS Markit India Services PMI increased to 45.4 levels in July from 41.2 levels in the previous month, but far below market expectations of 49 levels.
On the monetary policy front, RBI kept its benchmark repo rate at 4% during its August 2021 policy-meeting, as widely expected, saying it was maintaining an accommodative monetary policy stance as long as necessary to support the economic recovery and to help mitigate the negative impact of COVID-19. The bank also left the reverse repo rate , unchanged at 3.35%. Meanwhile, the RBI raised its projection for inflation for full year Fy22 to 5.7% from 5.1% previous projection. Click here to read our complete RBI policy analysis –“ G-secs offer no attraction to traders”.
Next week, domestic investors will watch out for inflation & industrial production (IIP) data and Q1 earnings release from Shree cements, MRF, Nilkamal, Coal India and Jindal Steel. Global investors in the coming week will watch out for the US consumer confidence data and Eurozone industry output data.
FIIs/FPIs have sold Rs. 113 billion in July 2021 and invested Rs. 9.75 billion in August 2021 (as of 08th August 2021) . Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest across index options, index futures, and stock futures. Implied volatility (IV) fell for put options and call options in the last week. Fall in IV for call option and put option shows steady support for Nifty at present levels.
Wallstreet indices closed on a record high territory on Friday, as Dow jones and S&P 500 indices gained momentum after US non-farm payroll data came in better than expectations. Meanwhile, the tech-heavy Nasdaq Composite underperformed its peers, falling almost 100 points to around 14,835. During the week, Dow Jones gained by 0.80%, Nasdaq rose by 1.11%, and S&P 500 up by 0.75%.
European indices closed on a flat note on Friday, upbeat US employment data pulled the indices from negative to positive zone. Banking stocks were top gainers and mining stocks continued to witness the selling pressure. During the week, FTSE gained by 1.30% and DAX rose by 1.40%.
Brent crude futures traded below USD 71 a barrel on Friday, dragged down by a stronger dollar and as both the US and China are witnessing a spike in coronavirus cases threatening demand at the peak summer driving season and limiting air traffic. On weekly basis, Brent Crude prices fell by 7.4%.
Global Economy
The US unemployment rate declined by 0.5% to 5.4% in July 2021, the lowest level since March 2020 and better than market expectations of 5.7%. The number of unemployed persons fell by 782,000 to 8.7 million.
The trade deficit in the US widened to a new record of USD 75.7 billion in June 2021, from a revised USD 71 billion in the previous month and compared with market expectations of a USD 73.9 billion gap. Imports jumped 2.1% to an all-time high, adding to signs that domestic demand consolidated its recovery from the pandemic hit, while exports rose at a softer 0.6%.
The IHS Markit US Services PMI was revised slightly higher to 59.9 levels in July 2021, from estimate of 59.8 levels.
The IHS Markit Eurozone Services PMI came in at 59.8 levels in July 2021, compared with estimate of 60.4 levels and above June's final 58.3 levels. The latest reading pointed to the steepest pace of expansion in the service sector since June 2006, due to the easing of COVID-19 restrictions.
China General Services PMI climbed to 54.9 levels in July 2021 from a 14-month low of 50.3 levels in June 2021, signalling a sharp and accelerated expansion of services activity despite recent uptick in COVID-19 cases.
Japan Services PMI came in at 47.4 levels in July 2021, compared with estimate of 46.4 levels and a final 48 levels seen in June 2021. The latest reading pointed to quicker contraction in activity, as COVID-19 restrictions remained in place amid rise in case numbers.
Stocks of crude oil in the United States fell by 0.879 million barrels in the week ended 30th July 2021, following a 4.728 million decrease in the previous week and compared with market expectations of a 2.900 million drop.
