Weekly Recap: Inflation, Earnings Disappointments, and Sector Highlights

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Markets declined for the second straight week, with the Nifty plunging 2.6% amid consistent, broad-based selling throughout the truncated trading 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 stock market report.

Weekly Recap

Panic at D-Street

  • Broad-based selling and persistent volatility dominated the markets last week, leaving investors hard-pressed to find any silver linings. 
  • The markets ended their second consecutive week in the red, with the Sensex and Nifty shedding over 2% each. The Mid-cap Index took a harder hit, plunging 4%, while Nifty Bank fell nearly 3%.
  • The India VIX fear gauge spiked to elevated levels on Tuesday and Wednesday amid the worst of the sell-off, before easing slightly on Thursday.
  • Also Read: 5 Key Factors Impacting Nifty50 & What To Expect Next

What gives?

  • Globally, a strengthening dollar and volatility fuelled by developments in Washington kept investors on edge. However, the US CPI meeting expectations offered a glimmer of relief.
  • At home, an unexpected rise in the trade deficit and domestic inflation shattered hopes for policy easing, sparking a sell-off. Weak Q2 earnings and growing concerns about sluggish consumption demand further weighed on market sentiment. 

The winners

  • The IT sector was the only one that closed in the green, with its sectoral index ending the week up 0.8%.
  • Leading the pack were IT giants Infosys and Tech Mahindra, fuelled by expectations of a demand recovery in FY25 and optimism over a potential Fed rate cut.

The losers

  • Britannia Industries led the pack of underperformers, crashing 13.6% after its Q2 earnings fell short of expectations, erasing $2 billion in market cap in just two days.
  • Asian Paints also faced a sharp sell-off, tumbling 12.6% to its lowest level since April 2021, as disappointing Q2 numbers weighed heavily on investor sentiment.

Meanwhile…

  • Industrial growth showed signs of recovery in September, climbing to 3.1% from a dismal 0.1% in August. However, quarterly growth remained subdued at 2.6%.
  • Crypto is skyrocketing on speculation about President Trump’s purported affinity for the asset class, though what his administration will do in this area remains unclear.

Market Brief

Key Indices
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Other Key Data

Market Outlook

Market Outlook
Sectors To Watch
Stocks in Radar: Infosys, PVR Inox, Tips Music, Zomato, Indian Hotels

Our take

  • Markets have taken significant hits in the past couple of weeks, now down more than 10% from all-time highs reached at the end of September. 
  • Given the current scenario, we believe it will take time for optimism to return. Consequently, we expect the Nifty to remain rangebound between 23,200 - 23,900 levels next week.
  • Traders should focus on level-based strategies with strict stop-losses, while long-term investors are advised to stay invested in fundamentally strong stocks, remain patient, and trust the power of compounding.

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