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Market outlook for the week (20-Jan to 24-Jan)

20 Jan 2025 , 04:44 AM

SECTORAL STORY IN THE WEEK TO JANUARY 17, 2025

The week to January 17, 2025 saw Nifty and Sensex down by -0.97% and -0.98% respectively. During the week, FPIs were net sellers of $(2,568) Million in Indian equities amidst rising macro concerns. Here is how the 20 key sectors performed in the week.

Sectoral
Index
Weekly
Returns
Index
(17-Jan)
Index
(10-Jan)
Nifty Capital Markets 3.67% 3,844.75 3,708.75
Nifty CPSE 3.55% 6,123.90 5,914.00
Nifty PSU Banks 3.43% 6,294.00 6,085.10
Nifty Metals 3.13% 8,521.70 8,262.95
Nifty Energy 2.79% 34,686.10 33,743.00
Nifty India Defence 2.33% 6,400.00 6,254.25
Nifty Non-Banks 2.01% 25,215.25 24,717.20
Nifty Infrastructure 1.71% 8,400.90 8,259.95
Nifty Oil & Gas 1.41% 10,891.70 10,740.60
Nifty Mobility 0.21% 19,183.50 19,143.00
Nifty Banks -0.40% 48,540.60 48,734.15
Nifty Automobiles -0.98% 22,791.10 23,017.75
Nifty Private Banks -1.05% 23,680.05 23,931.15
Nifty MNC -1.10% 27,363.10 27,667.70
Nifty FMCG -2.31% 55,800.85 57,117.70
Nifty Healthcare -2.36% 14,057.75 14,397.80
Nifty India Digital -2.40% 9,223.30 9,449.75
Nifty Realty -2.50% 939.25 963.30
Nifty Consumer Durables -2.93% 39,394.70 40,585.10
Nifty IT -5.78% 42,032.20 44,609.50

Data Source: NSE

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

  • Out of the 20 sectoral indices, only 10 sectors gave positive returns and 10 gave negative returns. If you look at the gainers, the themes were across government owned PSUs and infrastructure being the main themes. The star performer was the capital markets index.
  • Out of the 10 sectors that contracted during the week, big losers were IT, Consumer Durables, Realty, Digital, Healthcare, and FMCG. A total of 6 sectors fell more than -2% in the week while 7 sectors gained more than 2% during the week.
  • For the week, the arithmetic average of returns of these 20 sectors stood at +0.12%. While the top-10 sectors delivered +2.42%, the bottom 10 sectors delivered -2.18%. The dichotomy was clearly favouring government owned companies and sectors.

During the week, Nifty VIX edged higher and closed at 15.5 levels. That is likely to result in a sell-on-rises market for the traders in the coming week.

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

Let us first look at the key events that decided the course of the last week. There were two positives in the week gone by. Firstly, the consumer inflation for December 2024 for the Indian economy tapered to 5.22%. The other positive news was from the Q3FY25 results. Reliance announced stellar numbers for Q3FY25 with strong growth across digital, retail, and O2C. Infosys upped its guidance constant currency revenue growth the third time in this fiscal year, clearly hinting at a return of discretionary spending by global companies. Of course, markets are likely to be relatively neutral about US inflation spiking to 2.9%.

On the positive side, merchandise trade deficit for December 2024 fell to $21.94 Billion. With revisions to gold import numbers, the overall deficit is lower by $10.23 Billion for FY25. Amidst a fall in consumer inflation, India saw a spike in WPI inflation to 2.37%, putting additional pressure on the cost structure of Indian companies. Two of the key parameters were unfavourable last week. Rupee further weakened to ₹86.60/$, and even got close to ₹87/$. The other big overhang comes from crude oils prices, which has rallied over 15% in the last two months after the US threatened to tighten and widen oil sanctions on Russia.

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

STOCK MARKET TRIGGERS FOR COMING WEEK TO JANUARY 17, 2025

Here are key triggers to keep a watch for in the coming week to January 17, 2025.

  • Key indices struggled in the week. Nifty down -0.97%, Sensex -0.98%, Nifty Mid-Cap index up +0.04%; and small cap index +0.15% higher. The pressure came from weak rupee and spike in oil prices, but alpha hunting is showing signs of revival.
  • Big Q3FY25 results this week include Zomato, IRFC, Dixon, HDFC Bank, HUL, BPCL, Reddy Labs, Ultratech, JSW Steel (large caps); and IDBI, Paytm, Tata Technologies, Coforge, TCOM, HPCL, Cyient, Mphasis, KFIN Technologies, and Laurus Laboratories (mid-caps).
  • No major macro news flows are lined up next week and the focus will largely be on the PMI Manufacturing and PMI Services. Both are expected to be flat to higher compared to the previous reading. Forex reserves are down $80 billion and will be closely watched.
  • All eyes will be on the Indian rupee at ₹86.6/$, oil prices, and the all-important FPI flows in the coming week. Oil may not be a major concern, but the rupee weakness is and that is likely to keep FPI flows under pressure.
  • 2 mainboard IPO listings and 1 IPO opening expected next week. Denta Water & Infra IPO will open next week, while the IPOs of Laxmi Dental and Stallion Fluorochemicals will list next week. Stallion Fluorochemicals IPO will also close next week only.
  • Key data points for the week include; Weekly Crude oil stocks, initial jobless claims, Fed Balance Sheet, Composite PMI, Existing Home Sales (the US), PBOC rate, (China); ECB Speak, PMI (EU); Trade Balance,  IIP, BOJ Policy, CPI (Japan); Unemployment, PMI (UK).

Let us finally turn to what all this means for the Nifty and the Sensex in the coming week to January 24, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX

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

  • During the week, VIX surged to the 15.5 levels; which is likely to make it a sell on rises market, especially once VIX crosses 16-17 levels.
  • Nifty support at 23,066 and Sensex support at 22,913 levels 75,426 levels to be crucial. Any sustained upsides on the Nifty will require an upside breakout with volumes.
  • Focus shifts to the upcoming Union Budget on February 01, 2024, Donald Trump swearing in, Trump trade policy, and Fed policy statement.

The undertone of the markets remained under pressure; and that is likely to continue!

Related Tags

  • GDP
  • IIP
  • inflation
  • MonetaryPolicy
  • nifty
  • Q3FY25
  • QuarterlyResults
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