• Domestic equity markets rose during the week after witnessing a fall in the previous week as key benchmark indices S&P BSE Sensex and Nifty50 rose 1.16% and 1.19% respectively. The mid-cap segment closed the week in green, however, the small-cap segment closed the week in red.

• The market extended its gain following the ease in domestic retail inflation data of Jan 2024, which remained under the RBI’s upper tolerance level for the fifth consecutive time. Sentiments were improved following the lower-than-expected inflation data from the U.K. for Jan 2024.

• However, higher–than–expected retail inflation of Jan 2024 in the U.S. dampened the optimism of rapid rate cuts by the U.S. central bank, which capped the gains.

• On the BSE sectoral front, S&P BSE AUTO rose 4.97% following the encouraging sales data released by the Society of Indian Automobile Manufacturers that showed Passenger Vehicles, Three Wheelers, and Two Wheelers posted growth of 14%, 9%, and 26% in Jan 2024 compared to Jan 2023, respectively.

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• Bond yields fell marginally ahead of the release of domestic and U.S. retail inflation data of Jan 2024. However, gains were restricted following the surge in U.S. Treasury yields after higher-than-expected U.S. inflation data dampened the expectation of an early rate cut by the U.S. Federal Reserve.

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•  Yield on the 10-year benchmark paper (7.18% GS 2033) fell by 1bps to close at 7.10% from the previous week’s close of 7.11%
• Gold prices rose and reclaimed the psychological $2,000 level on Thursday, propelled upward by a weaker U.S. dollar and depressed U.S. Treasury yields in the aftermath of lackluster U.S. macro data.

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• Industrial production growth in India (IIP) increased by 3.8% YoY in Dec 2023, as compared to 2.4% rise in Nov 2023. Production in the manufacturing industry increased by 3.9%, mining by 5.1% and electricity by 1.2% in Dec 2023.

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• India’s wholesale price index (WPI) based inflation eased to 0.27% in Jan 2024 YoY as compared to 0.73% in Dec 2023. The positive rate of inflation in Jan 2024 is primarily due to an increase in prices of food articles, machinery & equipment, other manufacturing, minerals, and other transport equipment.

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• India’s merchandise trade deficit widened to $17.49 billion in Jan 2024 from $17.03 billion in Jan 2023. Exports increased by 3.1% to $36.92 billion in Jan 2024 from $35.80 billion of the same month of the previous year and imports also rose by 3% to $54.41 billion from $52.83 billion during the same period.

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• The consumer price index-based inflation eased to 5.10% in Jan 2024 YoY compared to 5.69% in Dec 2023 due to a cool-off in food prices. The retail inflation remained below the central bank’s upper tolerance level for consecutive five months. The consumer food price inflation fell to 8.30% in Jan 2024 from 9.53% in Dec 2023.

Best Regards,

Alpha Research Team