Weekly Market Wrap: Indian equities slide on global jitters, GST collection up

Stock market news: Indian equities, after extending gains in the previous week, saw a setback as benchmark indices Nifty and Sensex closed lower, falling 1.5 per cent and 1.4 per cent respectively. Broader market indices took cue with BSE Midcap index down 1.1 per cent while BSE Smallcap was better off, shedding 0.1 per cent. Weaker global cues, especially from the US where a fresh set of economic data raised alarms on recession, undermined sentiments in broader markets.

US private payrolls for August 2024 grew at a sluggish 99,000 in what has been described as the weakest job growth since January 2021. On the other hand, initial jobless claims for the week ended August 31st came in at 227,000 against a forecast of 230,000. These factors triggered a sell-off in the US markets, which, in turn, influenced the Indian markets also.

The crude oil market was highly volatile too, with prices of Brent crude slumping close to 5 per cent in view of the week, due to subdued demand from China and increased supply by OPEC+ countries. This fall in oil prices came as a relief to FMCG and paint players as lower crude prices reduced their input cost.

Of these, only Healthcare, Consumer Durables and FMCG managed to end the week in positive territory. The rest struggled to keep their nose above water. Of them, PSU, Oil & Gas and Metal indices were the worst-hit, each of which declined over 3 per cent on a week-on-week basis. GST collection in India witnessed YoY growth of 10 per cent for August 2024 at Rs 1.75 lakh crore. This indicated higher domestic consumption and a healthy economic sentiment for the country..

The auto firms stole the limelight this week, as they announced their monthly sales numbers. PV industry continued to face headwinds from high channel inventory levels and slowdown in EV sales while 2W continued showing green shoots, more so in entry-level and rural markets where demand was strong.

On the fund flow front, both FIIs and DIIs turned net buyers in the cash market. While FIIs net bought Rs 9,643 crore, DIIs added Rs 5,321 crore during the week, thus putting up an act of continued confidence in the Indian market.

Domestic & Global Economic Update

GST collection in India increased 10 per cent year-on-year in August 2024 to Rs 1.75 lakh crore, reflecting higher domestic consumption and economic activity. This was marginally lower than the Rs 1.82 lakh crore collected in July this year.

Though payroll data recorded the addition of 99,000, the lowest private sector job increase since January 2021, the number of claims declined to 227,000, a seven-week low. While declining, the numbers are still well above the yearly average and reflect that the job market is yet to get over its issues. US Composite PMI rises to 54.6 for August from July's 54.3, to indicate sustained growth in business activity as the manufacturing sector shrunk for the first time in seven months; both the manufacturing and services sectors recorded higher input costs.

Outlook For Next Week

Going forward, inflation numbers would be keenly watched both in Indian and US markets. US CPI for August will be watched closely ahead of the Federal Reserve monetary policy meet due on September 17-18. India will also report its IIP number for July, giving an insight into the country's industrial growth.

The Nifty index faces critical supports in the 24,500-24400 range, which is a confluence of the 50-day EMA and 61.8 per cent Fibonacci retracement of its previous rally, SBI Securities said in a research report. A break below 24,400 might see the index test supports in the 24,100-24050 range, it added. On the upside, resistance would be placed in the 25,050-25,100 zone. The report also said that it would segmentally exercise the bearish outlook on Nifty CPSE, Nifty PSE, Nifty PSU Bank, Nifty Auto, and Nifty Private sectors, while Nifty Healthcare, Nifty Pharma, and Nifty IT would outshine the near-term outlook.