Market Recap: Navigating Record Highs During Budget Week and What Lies Ahead

Budget week saw markets climb to record highs, continuing their upward trend for the eighth straight week. Here's our take on this week gone by, some stories you might have missed out on, and our thoughts on what to do going ahead, in your weekly report.

Weekly Recap

Record-breaker

• Markets continued to scale new highs in the Budget week, with the Nifty climbing 1.24% from last Friday's levels. The broader indices outperformed the key benchmarks, with the BSE Small-Cap, Mid-Cap and Large-Cap indices rising 3.5%, 3% and 1.5%, respectively.
• The rally was mainly driven by positive global cues, including strong US GDP data. Meanwhile, F&O expiry, Budget announcements, and mixed earnings reports added to market volatility.

The big story

• The Budget of course took center stage last week, introducing significant changes to income tax and capital gains tax slabs, which briefly unnerved the market. 
• The Budget also made big pushes on fiscal consolidation and infrastructure/capex spending. Get detailed insights on the major wins and unexpected setbacks in Budget 2024 here

The winners

• Tata Motors had a phenomenal week, climbing 12.9% to reach record highs following Nomura's upgrade to a “Buy” rating, as Jaguar Land Rover shifts its focus to the luxury segment. 
• HDFC Life also saw a significant rise, jumping 10.6%, driven by its superior claim settlement ratios compared to competitors and reduced tax and interest demands from tax authorities.

The losers

• Axis Bank had a challenging week, plummeting 8.9% due to deteriorating asset quality reported in the June quarter. More details here
• Wipro also had a rough week, with a 5.8% decline, marking its worst one-day drop since April 2013, as its Q1 earnings fell short of expectations.

Meanwhile…

• Wall Street tumbled to multi-week lows, with the NASDAQ experiencing its sharpest one-day decline since October 2022, pressured by lacklustre earnings from Tesla and Alphabet. 
• In India, the Flash PMI for July showed that business activity accelerated at its quickest rate in three months and companies hired at their fastest pace in over 18 years.

Market Brief

Market Outlook

Our take

• We saw a strong flurry of buying last week due to positive global cues and Budget reactions, which may cool down as the focus returns to earnings this week.
• We anticipate that a shift towards consolidation and earnings will likely keep the Nifty fluctuating within a range of 24,400 to 25,100 next week.
• Additionally, global economic updates such as the US Federal Reserve and Bank of England's monetary policies, US employment statistics, and GDP figures from the Eurozone are likely to influence market movements.

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