Weekly Market Wrap: Markets ended the week lower as US inflation rises

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Representational Picture of the Stock Market (Credits: Pixabay)

The Indian stock markets ended the week lower as benchmark indices witnessed broad-based selling. The banking sector saw the vast majority of the selling pressure. Experts suggest that the likelihood of reduced profits for businesses over the June quarter was one factor contributing to markets falling.

The other factor is that inflation has been rising in the United States. Growing inflation means that too much money chases too few goods and services. This causes prices to rise — also called inflation. To curb this, central banks raise interest rates — to make it harder for businesses and consumers to borrow and spend. However, this might impact Indian markets since foreign investors will tend to pull out money from India and put it in the US. After all, increasing interest rates would indicate a rise in returns.

Markets Update


Investors’ Mood

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The Big Picture

India’s industrial output grew by 22.4 per cent in March’21 compared with the same month last year. This is mainly because of a base effect since last year that a national lockdown was in place due to which industrial output was low. Likewise, Manufacturing Production in India increased 25.80% in March compared to the same month last year.

The Inflation rate (also called the consumer price inflation rate) eased to 4.29% in April 2021. This is the lowest reading in 3 months. RBI chief Shaktikanta Das said last week that the length of the covid-19 pandemic would shape inflation levels, and global commodity prices climbing has caused inflation concerns.

India’s trade deficit (imports minus exports) stood at $15.1 billion in April 2021, from $6.76 billion in the same period last year, as demand for products increased from the previous year’s drop (due to covid-19).

Social Commerce: E-commerce, but better?

E-commerce changed the way we bought goods. It became more accessible to everyone under the online realm to buy things while being in the comfort of their homes. The pandemic only accelerated this trend. But, e-commerce has some drawbacks.

First, a consumer had to visit different e-commerce websites to buy different items. Secondly, e-commerce websites are not designed for users to locate new products that they can buy. Social commerce, or sCommerce, is changing that. It allows users to find products and purchase them — everything on one platform — the social networking website. Facebook, Instagram, Tiktok are bullish on this trend and helping users buy products on their platform.

Also Read: Weekly Market Wrap: RBI surprise meet uplifts markets 🏦