Return Of Foreign Funds, Highest Purchase Of Banking Stocks After February 2021

ndian equity markets recorded their best weekly performance during the trading session till Friday. The week was particularly good with fresh buying in banking and IT stocks as well as the return of foreign investments in the Indian markets. However, Indian stocks have been climbing for six consecutive sessions. The domestic equity market closed at its highest level in seven weeks, marking its best week since February 2021. Due to this, Sensex and Nifty rose about 3-4 percent on a cumulative basis.

Foreign portfolio investors (FPIs) have been selling equities in the Indian markets for the past nine to ten months for various reasons, including tightening of monetary policy in major economies and rising dollar and bond yields in the US. Data from NSDL (National Securities Depository Limited) shows that they have withdrawn Rs 226,420 crore so far in 2022.

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Sumeet Bagdia, Executive Director, Choice Broking said that the Indian market witnessed a one-sided rally during the week as the bulls had total control over the bears. The market ignored negative sentiments last week, as the ECB (European Central Bank) hiked rates by 50 basis points.

Let us tell you that next week, financial markets will react to the outcome of the US Fed's monetary policy meeting, apart from the first quarter earnings of companies in India.

Bagdia said that the Sensex closed with a gain of 2311 points or 4.30 percent at 56072.2 last week, while the Nifty closed at 16719.45 with a gain of 670 points or 4.18 percent on a weekly basis. Whereas Bank Nifty closed with a strong jump at the level of 36738.95 with a gain of 5.93 percent in a week.

IndusInd Bank, UltraTech Cement, Axis Bank, Grasim Industries, and Hindalco Industries were the top gainers for the week, while Dr. Reddy's Labs, HDFC Life Insurance, NTPC, and Sun Pharma Industries were among the top losers. Good buying by overseas investors after a long time has changed the positive sentiment in the short term.

Apoorva Sheth, Head of Market Perspectives, Fed Samco Securities, said the coming week will be full of activity. The FOMC meeting and press conference will take center stage, while the rate hike is expected to be aggressive.

Fall in Indian foreign reserves due to depreciation of the rupee

The Indian rupee slipped below the psychologically important 80 levels against the US dollar for the first time this week even as higher crude oil prices amid tight global supply boosted demand for the US currency. However, the continuous depreciation of the rupee is a matter of concern for investors. At the same time, India's foreign exchange reserves, in the six months from January 2022, have declined by over US$ 47-48 billion. The country's forex reserves declined by $7.541 billion to $572.712 billion in the week ended July 15, the lowest level in 20 months.

All eyes are on the Fed's statement and policy next week, said Jatin Trivedi, VP Research Analyst at LKP Securities. The rupee range can be seen between 79.75-80.20 for further signals and direction.