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Weak inflation and fed decision drives market lower

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The Indian stock markets ended the week lower over the past week. 2 broad market developments seem to have shaped this. Inflation data in India suggested that inflation is kicking in – as consumer price inflation and wholesale price inflation, both came in higher than the previous month numbers.

Secondly, the US federal reserve met this week and even though they kept the benchmark interest rate unchanged, they suggested that they will hike interest rates from 2023 – a year earlier than was expected before.

Before moving into further details about the market, here’s your quote of the week…

Quote of the week

“Wealth isn’t primarily determined by investment performance, but by investor behaviour.”

Wealth isn’t primarily determined by investment performance, but by investor behaviour. Click To Tweet

Markets Update

Nifty50

15,683.35

0.73% ▼

Sensex

52,344.45

0.25% ▼

Nifty500

13,386.55

1.31% ▼

Nifty Bank

34,558.00

1.40% ▼

The Big Picture

India’s Wholesale Price Inflation (WPI) rose by about 12.94% YoY in May 2021, coming in higher than last month’s 10.49%. This was the highest wholesale inflation rate since December 1998, amid low base effect last year – when the coronavirus pandemic weighed on demand and prices.
The annual consumer inflation rate (CPI) in India increased to 6.3% in May of 2021 – the highest in 6 months, from a downwardly revised 4.23% in April. Figures came well above market forecasts of 5.3%, as higher global commodity prices including crude, edible oils and gold weighed.
India’s trade deficit (imports minus exports) stood at $6.28 billion in May 2021. This is more than double last year’s figure of $3.51 billion – which was India’s lowest trade gap and was due to the pandemic taking a toll on global demand.
Deposit growth, which measures the growth in commercial bank deposits, stood at 9.9% in the fortnight ended June 4th, 2021 when compared to the same period last year.
Loan growth, which measures the growth in commercial bank loans, stood at 5.70% in the fortnight ended June 4th, 2021 when compared to the same period last year.

Inside smallcase

Windmill Capital smallcases have been rebalanced!

smallcase managers periodically review smallcases to make sure that the constituents of a smallcase appropriately align to its underlying theme/idea/strategy. Rebalancing entails stocks to be either added or deleted from the smallcase. This ensures that only the most suitable constituents are present in the smallcase.

🚨Rebalance alert🚨
smallcases created by us at Windmill Capital have been rebalanced & are fresher than ever! They'll continue to appropriately work towards the ideas you believe in!
Check & apply these Rebalance updates on your @smallcaseHQ dashboard of the app or website NOW! pic.twitter.com/7We6CCZoCJ
— Windmill Capital (@windmillcapHQ) June 17, 2021

Windmill Capital has rebalanced its smallcases and they’re now fresher than ever. If you have invested in a smallcase by them, it would be a good time to check and apply for rebalances. If you haven’t yet invested in them, this is a chance for you to add freshly rebalanced smallcases that are ready to work towards the ideas that you believe in. Check out how Windmill Capital rebalanced its smallcases, here.

That’s a wrap for this week. Take care, and happy investing! 🙂

Abhishek Jadon

VP, Investment Products at Windmill Capital.

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