Indian Stock Market: Big events that shaped the week to 1-Mar-24

The week to March 01, 2024 was busy, with lot of data flows on the domestic front and the global front. On the last day of the week, the Nifty and Sensex closed with bumper gains after the GDP for the third quarter came in much higher than expected. Here is a quick take on the big events that shaped the week.

Domestic data flows that shaped the week to 1-Mar-24

The big news was the GDP data announcement. At 8.4% growth for Q3-FY24, it was above the most optimistic estimates of 7.2% and sharply above the consensus estimate of 6.7% GDP growth for the third quarter. Post the revisions, the GDP growth for the first 3 quarters of FY24 is now above 8%. The MOSPI is pegging full year  GDP growth at 7.6%, which already looks conservative since it factors in 5.9% growth in Q4. Now 8% for full year looks very likely and that would be a good 100 bps above the RBI estimate for FY24.

During the week, the core sector data, and the fiscal deficit update as of the end of January 2024 were also published. The core sector growth at 3.6% for January 2024 was the lowest in 15 months, but that is more due to the high base. Also, the December data has been revised up by 106 basis points, so expect something similar on the current core sector too. The government is taking its fiscal prudence very seriously with the fiscal deficit at just 63.6% of the full year target with just 2 more months to go for FY24. It now looks like the 5.8% fiscal deficit target for FY24 and the 5.1% fiscal deficit target for FY25 should be easily achieved. More importantly, this will happen without compromising on capex spending.

Read India's $5 Trillion GDP Goal: Third Largest Economy in Three Years?

Global data flows that shaped the week to 1-Mar-24

For the week, there were two major global data points. The US Bureau of Economic Analysis (BEA) announced the second estimate of fourth quarter GDP for 2023 on February 28, 2024. The GDP growth at 3.2% was marginally lower than the 3.3% pegged in the first advance estimate. The full year GDP growth for the US is well above early estimates at 2.5%, but the third estimate will only be out by end of March.

The other data point announced was the PCE inflation, based on personal consumption expenditure. The PCE inflation for January 2024 came in 20 bps lower at 2.4%. Now the US inflation reading is just 40 bps short of the eventual target of 2%. Will that induce the Fed to cut rates? If you go by the words of governor Chris Waller, when inflation is headed lower and GDP is robust, what is the urgency to cut rates. This segment will be closely watched.

Other news items that influenced the week to 1-Mar-24

Among other news flows that influenced the economy and markets in the week, here are some major highlights.

1. The cabinet has approved 3 semiconductor plants in India worth ₹1.26 trillion. This is likely to change the face of chip manufacturing in India.
    
2. According to a report by CRISIL, the rise of OTT in India is likely hit multiplex revenue growth hard. From 18% in FY24, it is likely to slow to below 15% in FY25.
    
3. Adani group has reported record EBITDA of nearly ₹79,000 crore for calendar 2023 with a cash stash of Rs44,500 crore. It has come a long way since Hindenburg saga last year.
    
4. In the biggest media of all, Reliance and Disney will merge their India businesses in an $8.5 billion deal. It will have 2 OTT platforms with a customer base of over 75 crore.
    
5. NCLT Bengaluru Bench wants Byju’s to extent its rights issue closure date and also refrain from the using the funds, till the investor objections are sorted out.
    
6. SEBI has allowed select FPIs to disclose less where they have no identified promoters. This was to prevent promoters skirting the MPS norms through the FPI route.
    
7. In the same breath, SEBI has also asked the mid-cap and small cap mutual funds to go slow on fresh issue and fresh flows as liquidity could pose a constraint.
    
8. US may tighten sanctions on Russia, and this could even hit India, which has been one of the major importers of oil from Russia after the EU imposed a ban on Russian oil.
    
9. Jefferies upgrades TCS and expects the company to outperform its peer group.

But the big story of the week was the positive surprise on the GDP growth front. That defined the emerging India story the best!