Market outlook for the week (06-Jan to 10-Jan)

6 Jan 2025 , 10:09 AM

SECTORAL STORY IN THE WEEK TO JANUARY 03, 2025

The week to January 03, 2025 saw Nifty and Sensex up 0.80% and 0.67% respectively. During the week, FPIs were net sellers of $(645) Million in Indian equities; as fresh allocations are awaited in 2025. Here is how the 20 key sectors performed in the week.

Sectoral Index	Weekly Returns	Index (03-Jan)	Index (27-Dec)
Nifty Consumer Durables	4.06%	43,222.35	41,534.85
Nifty Non-Banks	4.00%	26,261.70	25,252.20
Nifty Automobiles	3.92%	24,005.00	23,099.05
Nifty Oil & Gas	3.40%	11,046.65	10,683.05
Nifty CPSE	3.31%	6,272.95	6,072.20
Nifty MNC	2.74%	28,684.70	27,918.80
Nifty Energy	2.44%	35,894.05	35,039.40
Nifty FMCG	2.43%	57,817.00	56,444.25
Nifty Mobility	2.04%	20,136.25	19,732.85
Nifty Healthcare	1.36%	14,899.90	14,699.85
Nifty India Digital	1.36%	9,807.30	9,675.65
Nifty Infrastructure	1.19%	8,596.25	8,495.00
Nifty PSU Banks	0.73%	6,619.00	6,570.90
Nifty Capital Markets	0.69%	4,042.50	4,014.95
Nifty Private Banks	0.40%	25,018.10	24,919.05
Nifty Metals	0.11%	8,729.95	8,720.70
Nifty IT	0.01%	43,726.55	43,721.40
Nifty Banks	-0.63%	50,988.80	51,311.30
Nifty India Defence	-0.70%	6,561.15	6,607.15
Nifty Realty	-2.45%	1,045.10	1,071.35

Data Source: NSE

Here are key takeaways from the tabulation of weekly sectoral returns above.

• Out of the 20 sectoral indices, 17 sectors gave positive returns while 3 gave negative returns. This can be attributed to recovery in consumer driven sectors like auto and FMCG on expectations of tax cuts in the budget. Even oil stocks looked up.
• Out of the 17 sectors that gained during the week, big gainers were Consumer Durables, NBFCs, Automobiles, Oil & Gas, and CPSEs. At the bottom were Realty, Defence, and Banks. For the week, just 1 sector fell more than 1% while 9 sectors rallied over 2%.
• For the week, the arithmetic average of returns of these 20 sectors stood at 1.52%. While the top-10 sectors delivered +2.97%, the bottom 10 sectors delivered +0.07%. The positive returns are heavily concentrated in the consumer facing companies.

During the week, Nifty VIX was flat in a range and closed at 13.54 levels. The flat VIX was also accompanied by positive returns in mainline indices; led by consumer stocks.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

Here is a quick wrap of how key events had a bearing on stock market performance.

• Infrastructure (8 core sectors) growth for November improved for third month to 4.3%; after August contraction. Cement led with 13% growth, while coal and steel followed.
• India’s capex spending trails previous year by -12%, and the centre may have to quickly decide on whether or not they want to embark on pump prime the economy.
• India may have a tough call on whether capex needs to be pushed up, since that is now compensating for lower taxes and tepid disinvestment revenues.
• US dollar index scales a 2-year high at 109.20, but the dollar was largely flat in the week in India as the RBI continuously intervened, selling spot dollars.
• CLSA drops HDFC Bank from its India model portfolio; prefers Tata Motors, NTPC and Nestle India on dips. The 3 stocks corrected sharply from peak levels.
• Trump decision to impose heavy tariffs on India too, would worry Indian trade, where the exports are already under pressure. Unlike China, India cannot just devalue INR.

Let us turn to big data flows in the coming week; for domestic and global market.

 

STOCK MARKET TRIGGERS FOR COMING WEEK TO JANUARY 10, 2025

Here are key triggers to keep a watch for in the coming week to January 10, 2025.

• A positive week for markets with Nifty +0.80%, Sensex +0.67%, mid-cap index +1.67%, and small cap index +1.48%. Week saw a distinct shift in investor sentiments of front line stocks and more towards small caps and mid-cap stocks. That could continue.
• Government has to make a tough choice on capex spending. It remains to be seen if the government is willing to pump price the economy or prefers fiscal prudence.
• The coming week will see the announcement of first estimate of FY25 GDP. It could be a sharp fall from the corresponding estimate of 8.2% last year.
• IIP growth for November 2024 to be announced by MOSPI on Friday. After 3.5% last month, focus shifts to cumulative IIP and manufacturing IIP, the big driver.
• Rupee will be the centre of attention at ₹85.78/$ this week. It looks like more rupee weakness could come and hence the RBI policy paper will be critical in this case.
• FOMC minutes of 18-Dec meet to be out on Wednesday. Focus shifts to timing of the next rate cut, although Fed dot plot has limited to just 2 rate cuts in 2025.
• US Unemployment data will be announced on Friday. The unemployment rate is expected flat at 4.2%, which has not changed much despite 100 bps rate cuts.
• 3 mainboard IPOs to raise ₹2,078 crore next week (Standard Glass, Quadrant Future, and Capital Infra). One IPO is also likely to be listed on the bourses this week.
• Key data for the coming week include FOMC speak, composite PMI, factory orders, trade balance, Atlanta Fed GDP, Oil stocks, jobless claims (US), Caixin PMI, CPI, PPI (China); PMI, CPI, unemployment (EU); Household Spending (Japan); and PMI, Rates (UK).

Let us finally turn to what all this means for the Nifty and the Sensex in the coming week to January 10, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX

For the coming week, there are 3 things to keep an eye on.

• During the week, VIX stayed range bound in the 13-14 range; making the market fairly stable, although it remains vulnerable to sudden spikes.
• Nifty range of 24,000 to 24,500 to be crucial. Any sustained upsides on the Nifty will require a breakout with volumes above 24,500 on the Nifty.
• The big data points for the markets this month will be FOMC minutes, US joblessness, India GDP advance estimates and first phase of Q3FY25 results.

The undertone of the markets remained under pressure; and all eyes are on the allocations in the current year by FPIs.