Dear Subscribers,
The market experienced increased selling pressure this week following last week’s consolidation phase. As the Q2FY25 earnings season progresses, several companies have posted strong numbers, especially those related to capital markets and select banks.
So far, companies like Avantel, AB Money, LTTS, Pondy Oxides, Newgen, Angel One, Just Dial, and Tejas Networks have delivered impressive Q2 results. Expect more action in the upcoming week as more companies report their earnings.
Global Macro Factors 🌍
This week, global macro factors were mostly neutral with a slight positive bias. Crude oil prices dropped significantly by 5.28%, now trading around $72 per barrel. Gold, on the other hand, showed strength, rising by 3.17% to trade at $2,631.60.
The dollar index edged up by 0.20% to 103.51. The rupee weakened slightly, touching a new all-time low as the USD/INR pair inched up by 0.08%. The US 10-year Treasury Yield remained flat, but it stayed above the critical 4% mark at 4.08%, down slightly from 4.10% last week. The S&P 500 managed a small gain of 0.15%, closing at 5869.78.
On the domestic front, India’s forex reserves declined for the second consecutive week, falling by USD 10.746 billion to USD 690.43 billion as of October 11—the sharpest drop in recent times.
Foreign Institutional Investors (FIIs) have been heavy sellers in October, offloading more than Rs. 75,000 Cr. worth of equity in the cash segment. This has been absorbed largely by Domestic Institutional Investors (DIIs), but the sheer volume of FII selling is noteworthy.
Market Performance 📈
After last week’s consolidation, selling pressure dominated this week. Most broader market indices ended in the red, except for small-cap stocks, which managed to buck the trend.
– Nifty 50: Down by 0.44%.
– Nifty 100: Declined by 0.77%.
– Nifty 500: Down by 0.72%.
– Nifty Midcap 100: Fell by 0.95%.
– Nifty Smallcap 100: The standout performer, up by 0.36%.
The advance-decline ratio wasn’t encouraging in the large and mid-cap segments, likely due to weaker-than-expected Q2 results from many companies in these categories.
Top Gainers
– Wipro: Gained 3.85%, leading the Nifty 50 stocks.
– Adani Energy Solutions**: Topped the Nifty 100 with a 6.81% gain.
– Motilal Oswal: The best performer among Nifty 500 companies, with a massive 26.58% increase.
– HPCL: Led the Midcap 100, and Angel One was the top gainer in the Smallcap 100 space.
Sector Analysis 📊
Sectoral performance was mixed once again this week.
– Nifty Bank was the top gainer, rising by over 1.5%.
– Finance followed closely with a 1.38% gain.
However, the Auto and Consumption sectors faced heavy selling pressure, driven by underwhelming Q2 results and high valuations. For instance, Bajaj Auto plunged more than 10% in a single day after reporting lackluster earnings.
Market Breadth
We monitor market breadth by analyzing the percentage of Nifty 500 stocks trading above their 50-day Exponential Moving Average (EMA). This metric fell from 45% over the past two weeks to 42.50% this week. We believe that a range of 40-70% is healthy for the market. As the market declines, good quality stocks may become available at more attractive valuations.
Sectors to Watch
In the coming week, keep a close watch on Metal, Banking, and Realty stocks for potential opportunities.
That’s all from my side this week!
Happy Trading,
Mayank Singh Chandel
SEBI Registered Research Analyst
INH000013350