Stock Market Updates for June, 2023
2nd June, 2023
Indian Inc Premier League: Q4FY23 Highlights!
The earnings season for India Inc’s fourth quarter of FY23 concluded this week. The report card has been decent with some pockets reporting impressive numbers while others disappointed.
The quarter gone by also marked Nifty 50 companies reaching a revenue milestone of Rs 11.11 lakh crores. Many constituents of Nifty witnessed a record quarter in terms of Revenue/EBITDA/Profit.
Despite global headwinds, India's footprint has remained solid, and the future outlook appears to be brighter than ever. A slump in raw material prices and favorable high-frequency indicators are some of the factors that benefit our domestically oriented economy.
Let us deep dive into which sectors drove India Inc’s March’23 corporate quarter earnings!
Overall India Inc’s star performers of the quarter were financials and automobiles.
The cleansed balance sheets, strong credit uptick, improved asset quality of the banks, declining non-performing assets (NPAs), margin improvement, and steady slippages have aided the growth of the banks.
Auto earnings have been in a fast lane, thanks to healthy volume growth, softening of commodity prices, favorable product mix, price hikes, and better operating leverage. A gradual recovery in rural demand and export markets should augment well for the sector in the future.
The Pharma sector had a fruitful quarter as the firms saw a turnaround in their financials, primarily due to the moderation of inflation and supply constraints. Though the US market may not have been a jolly-go-ride, the companies have started to well-diversify into other geographies, which can be witnessed in the easing financials.
The street has been excited with the performance of infrastructure sector too. The sector performed reasonably well, emulating strong growths in their financials supported by the pick-up in execution. The outlook for the sector is also much touted which is testified by their strong order books and government support.
Being a seasonally weak quarter for IT companies, the players have seen a rollercoaster ride. The uncertainty in the macroeconomic environment has caused delayed decision-making and has softened the deal TCV for some large-cap companies. While certain mid-cap IT companies reported better numbers.
FMCG has witnessed a mixed bag of numbers. The profits and revenue have displayed good growth but the margins are yet to show a complete recovery. However, the price hikes and cost optimization measures taken in the previous quarters have started to work their magic for some companies’ margins. The volumes, nonetheless, continue to remain a concern despite the decline in inflation due to muted demand. The management commentaries suggest that the green shoots of improving rural demand are visible and the expectation of a normal monsoon will act as a catalyst for the overall growth.
Coming to consumer durables, growth was witnessed in the cables and wires segment owing to the infrastructure boost. The white goods performance was not so bright despite the peak season.
Considering India Inc’s March’23 quarter corporate earnings displayed a decent show, the commentary across sectors was largely optimistic. India is in a better position now and the pain point for many industries seems to be left behind. Domestically oriented themes are now dominating market dynamics. This coupled with rising DII participation and FIIs inflows has the ability to propel the markets to new heights once prevailing clouds of global uncertainty lift.
Nifty rose by 34.75 points, gaining a meagre 0.19% in this week. It has formed an inside candle on the daily chart. The Relative Strength Index (RSI), a momentum indicator, is showing negative divergence on the daily chart of both Nifty and Bank Nifty. A negative divergence is observed when the price moves in a higher high formation while the RSI moves in a lower high formation.
The FII Long-Short Ratio, a sentiment indicator, has fallen from 60.21% on Monday to 45.60% on Thursday, indicating that the FII’s now hold more short positions relative to long positions. The India VIX, also known as the fear index, fell by 6.51% during the week, from 11.90 to 11.12.
Nifty has filled the 18508-18581 gap which was created on Monday this week. It has taken resistance from the 88.6% retracement level of 18,648 on 30th May, drawn from 1st December high of 18887.60 to 20th March low of 16828. Nifty, however is still trading above the 13-day exponential moving average (DEMA). Bank Nifty, on the other hand, closed marginally above the 13 DEMA on Friday after closing below it a day earlier.
For the Nifty to resume uptrend, it needs to give a decisive close above 18600. The call writers were seen strengthening their position at 18600 during the week, which acted as a strong resistance. 18500 will act as an immediate support while a break below it can take Nifty to 18200 levels, where its next support is placed. For Bank Nifty, 44000 will act as a make-or-break level. The option activity at 44000 Strike will provide cues about the future direction of Bank Nifty in the coming week.