During this short but action-packed week, D-Street failed to embrace the festive spirit. The week commenced with a spark but quickly fizzled out toward the end. Nevertheless, markets have managed to hit milestone after milestone since last Diwali, despite some trepidation as our economy continues to tackle the pandemic!

In hindsight, the pandemic has resulted in several lasting structural changes, the most notable of which being the fast expansion in the Information Technology industry. Businesses across the world have never been more eager to expedite their digital transformation. Technology adoption, which was once restricted to certain industries, has now become mainstream.

Earlier technology used to be a support division but now technology is at the core of any company. This transition to online caused fundamental transformations in sectors such as travel, hotels, restaurants, entertainment, and education, to mention a few, with the boom of e-commerce. With expanded internet, smartphone penetration, and 5G modernization in India, there is a tremendous acceleration in the user base of Indian tech-driven fintech, edtech, healthtech and e-commerce start-ups.

This trend is also supported by India’s rising list of Unicorns, which has resulted in the country having the world’s third biggest start-up ecosystem. As a result, it is unsurprising that 2021 presented an opportune time for several such start-ups to make their public market debuts, with Zomato being the trendsetter. This positive reaction to

IPOs might also be an indicator of a structural shift in investors’ perceptions of start-ups; growth potential rather than their operational metrics. However, whether or not this shift sustains will be determined only by the ability of these start-ups to deliver on their ambitious promises and eventually expand the wealth of their investors in the medium to long term!

Event of the week
The festival of lights has arrived, and with it, the hope for better business for automotive OEMs. Auto numbers did disappoint on a YoY basis with PV being the hardest hit given the ongoing chip crisis followed by two-wheelers witnessing a double-digit decline. But there was light at the end of the tunnel as CVs and three-wheelers saw good traction. Moreover, when compared sequentially, all segments delivered higher MoM growth as OEMs took the matter into their own hands and growth rebounded. The EV segment, in particular, dazzled after hitting a new peak, as increase of EV infrastructure continued to act as a catalyst towards sales numbers. While green shoots have begun to appear, investors may tactically choose to take exposure to auto stocks, keeping in mind the dynamic supply-side disruptions currently underway.

Technical Outlook
After two weeks of sharp decline, the Nifty50 index closed mildly positive and is 0.89% up as compared to last week. However, the index continues to trade under pressure and is likely to do so as long as it remains below 18,000, which is the immediate resistance level. A break below 17,600 may trigger a retest of the crucial support level placed at 17,350. We maintain a bearish bias on the markets in the short term at least, till the immediate resistance level isn’t broken.

Expectations for the week
Given a spate of major economic data releases and the current earnings season, the volatility experienced this week is expected to continue into the following week. Inflation figures for the United States and China will influence global markets. As inflation continues to be an overhang, even D-Street investors will be watching the domestic inflation rate closely, which until now has been within RBI’s comfort zone. However, having an inflation rate sustainably higher than its tolerance threshold coupled with interest rate hike calendar adopted by the FED in its meeting this week, may nudge RBI to adopt a hawkish attitude and begin policy tightening sooner than expected. Nifty50 ended the week at 17,829.20, up by 0.89%.

Wishing everyone a very happy and prosperous Diwali!