The Nomura India Business Resumption Index (NIBRI) has risen to yet another high of 114 for the week ending November 21 from 110.3 in the prior week, suggesting the business resumption index is 14 percentage points (pp) above pre-pandemic levels (i.e., 100).
Google workplace mobility rose sharply by 18.1 pp, while retail and recreation fell by 3.3 pp and the Apple driving index rose by 3.6 pp. The labour participation rate remained tepid at 39.8 per cent, while power demand rose by 0.2 per cent w-o-w, as payback from the 5.5 per cent rose in the prior week.
“A mix of supply-side headwinds and demand-side tailwinds continue to obscure the growth outlook. On the demand side, there is evidence of strong festival demand among consumers, an uptick in credit growth and robust core imports in October. Low infection rates and reopenings are also boosting mobility and services activity,” Nomura said.
“However, October auto sales have been lacklustre, reflecting not only semiconductor shortages but also the impact of weak rural demand on two-wheeler sales. The energy crunch seems to be easing, with a rise in coal stocks at power plants. Overall, we maintain our GDP growth outlook of 9.2 per cent for FY22, with a downside risk of ~1 pp due to supply issues,” Nomura added.
The Fed interest rate decision, domestic macroeconomic data announcements and quarterly earnings will be the major sentiment drivers for the equity market in a holiday-shortened week ahead, analysts said. Investors will also take cues from the monthly auto sales numbers to be announced on Monday.
Equity markets will remain closed on Thursday for Diwali Laxmi Pujan and on Friday for Diwali Balipratipada. “Due to the festival of Diwali, markets will have a truncated three-day trading session this week.
“Key events to watch out for this week will be India’s PMI data for October and US Fed meeting which will provide some direction to the market,” Siddhartha Khemka, head (retail research) at Motilal Oswal Financial Services Ltd, said. Selling by foreign funds, weak global markets and mixed earnings weighed on market sentiments last week.
“This is going to be a truncated week on account of Diwali where the market is heading this festival season with a mood of profit-booking. The week will start with auto sales numbers for October where expectations are low, while the market will also gauge the consumers’ sentiments on Dhanteras and Diwali,” Santosh Meena, head (research) at Swastika Investmart, said.
Important earnings are lined up this week including names like HDFC, IRCTC, Tata Motors, Bharti Airtel, HPCL, Sun Pharma, Eicher Motors and SBI, he added. Yesha Shah, head (equity research) at Samco Securities, said, “Although the trading week ahead will be shorter than usual, it can undoubtedly be eventful. The news flow and market sentiment may be largely dominated by the upcoming FOMC (Federal Open Market Committee) meeting.”
Shah added that Indian automakers will report their monthly sales figures. “Despite the advent of the festive season, shortages of semiconductors, rising freight and commodity prices may continue to squeeze margins and weaken sales,” Shah added. Last week, the 30-share BSE benchmark tumbled 1,514.69 points or 2.49 per cent.
“Markets are expected to remain bearish in the short term due to profit-booking across various sectors and weak global cues. The Q2 result season is in progress with the market getting mixed responses from companies declaring their results. Along with the corporate earnings, the market has to deal with macro numbers,” Rahul Sharma, co-founder of Equity99, said.
Vinod Nair, head (research) at Geojit Financial Services, said India’s manufacturing and services PMI data to be released this week will be a key indicator in determining the economic progress for October. “Additionally, decisions of the Fed in its meeting this week will be a major factor that will drive global equities in the coming days,” he added. Also Read:
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