Sensex & Nifty witnessed selling pressure during the week amid negative global cues, sharp rise in oil prices and concerns over rising inflation. Power, Metals and Oil sector stocks gained during the last week. On weekly basis, Sensex and Nifty declined by 2.10% and 1.8% respectively. On macro front, India’s current account surplus narrowed to USD 6.5 billion in April-June 2021, from USD 19.1 billion in the corresponding period of the previous year and was equivalent to 0.9% of the GDP. India’s trade deficit widened to USD 22.94 billion in September 2021, imports jumped 86% to USD 56.38 billion, and exports rose at a softer 21.3% to USD 33.44 billion. Infrastructure output in India jumped 11.6% (Y-o-Y) in August 2021, the biggest annual gain in 3 months.
In the coming week, domestic investors will watch out for RBI policy outcome (click here to view our video on” How to position for rate hike?”). Q2 domestic earnings will start from this Friday with TCS will be reporting after market hours. US jobs report and OPEC+ meeting outcome will be keenly watched.
FIIs/FPIs have invested Rs. 131 billion in September 2021 and sold Rs. 19 billion in October 2021. Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest in index futures. Implied volatility (IV) rose for call options and for put options in the last week. Rise in IV for put option and for call option shows unsteady support for Nifty at present levels.
Wallstreet indices bounced back on Friday after falling sharply on Thursday. Sharp rise in UST yields caused sell-off in equities and Fed chai Mr. Powell said inflation is elevated and will likely remain so in coming months before moderating. During the week, Dow Jones fell by 1.36%, Nasdaq plummeted by 3.5%, and S&P 500 slipped by 1.91%.
European stocks closed lower on Friday, with DAX down 0.7% as fears of rising inflation and the need for tighter monetary policy at a time when the economies are still fragile continue to hit sentiment. Preliminary data showed the Eurozone consumer price inflation soared to a 13-year high of 3.4% in September 2021. During the week, FTSE fell by 0.34% and DAX down by 2.50%.
Brent crude prices touched 3-year highs of USD 79 per barrel on Friday amid tight supplies and strong demand ahead of next week’s OPEC+ meeting. The cartel is set to meet on Monday to discuss whether to boost production by 400,000 bpd or more in November 2021 and December 2021. During the week, Brent crude prices gained by 1.7%.
Global Economy
The ISM Manufacturing PMI in the United States increased to 61.1 levels in September 2021, up for a second straight month and above market expectations of 59.6 levels.
The number of Americans filing new claims for unemployment benefits rose for a third straight period to 362,000 in the week ending 25th September 2021, defying market expectations of a decline to 335,000 and moving further away from a pandemic low of 312,000 reached earlier in the month.
Markets are expecting 13-year high inflation rate of 3.4% for the month of September 2021. Last month inflation rate came in 3%. Energy cost is seen accounting for much of the increase.
The IHS Markit Eurozone Manufacturing PMI stood at 58.6 levels in September 2021, little-changed from a preliminary estimate of 58.7 levels, but a notable step down from 61.4 levels seen in August 2021 and the lowest since February 2021.
The au Jibun Bank Japan Manufacturing PMI was revised higher to 51.5 levels in September 2021 from a preliminary reading of 51.2 levels, and after a final 52.7 levels a month earlier.
Industrial production in Japan dropped by 3.2% in August 2021, after a 1.5% drop a month earlier. This marked the second straight month of falling in industrial output, amid rising Delta strain of COVID-19 cases across the country.
