Market outlook for the week (30-Dec to 03-Jan)

30 Dec 2024 , 03:14 PM

SECTORAL STORY IN THE WEEK TO DECEMBER 27, 2024

The week to December 27, 2024 saw Nifty and Sensex up 0.96% and 0.84% respectively. During the week, FPIs were net sellers of $600 Million in Indian equities; with lack of allocations the real issue. Here is how the 20 key sectors performed in the week.

Sectoral Index	Weekly Returns	Index (27-Dec)	Index (20-Dec)
Nifty Automobiles	2.30%	23,099.05	22,580.00
Nifty Mobility	1.57%	19,732.85	19,428.75
Nifty Healthcare	1.55%	14,699.85	14,474.90
Nifty FMCG	1.52%	56,444.25	55,600.80
Nifty Private Banks	1.22%	24,919.05	24,617.60
Nifty Banks	1.09%	51,311.30	50,759.20
Nifty Realty	1.06%	1,071.35	1,060.10
Nifty Oil & Gas	0.71%	10,683.05	10,607.60
Nifty Consumer Durables	0.56%	41,534.85	41,304.65
Nifty India Defence	0.51%	6,607.15	6,573.55
Nifty Infrastructure	0.50%	8,495.00	8,452.40
Nifty Energy	0.37%	35,039.40	34,910.60
Nifty India Digital	0.05%	9,675.65	9,671.15
Nifty PSU Banks	-0.07%	6,570.90	6,575.70
Nifty IT	-0.11%	43,721.40	43,771.05
Nifty Non-Banks	-0.12%	25,252.20	25,282.35
Nifty CPSE	-0.35%	6,072.20	6,093.75
Nifty MNC	-0.64%	27,918.80	28,098.10
Nifty Metals	-1.05%	8,720.70	8,813.25
Nifty Capital Markets	-1.33%	4,014.95	4,069.15

Data Source: NSE

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

• Out of the 20 sectoral indices, 13 sectors gave positive returns while 7 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.
• Out of the 13 sectors that gained during the week, big gainers were Autos, Mobility, Healthcare, FMCG, and Private Banks. At the bottom were Capital Markets and Metals. For the week, 2 sectors fell more than 1% while 7 sectors rallied over 1%.
• For the week, the arithmetic average of returns of these 20 sectors stood at 0.47%. While the top-10 sectors delivered +1.21%, the bottom 10 sectors delivered -0.28%. Year-end short covering helped Nifty and Sensex close in the positive.

During the week, Nifty VIX fell sharply and closed at 13.24 levels. The lower VIX was also accompanied by positive returns in mainline indices.

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.

• RBI MPC policy minutes hinted at a split verdict with 2 out of 6 members voting for a 25 bps rate cut. Concerns over last mile inflation remained paramount.
• Current account deficit (CAD) for Q2FY25 at $11.2 billion was sober at 1.2% of GDP; lower than the expected 1.6% as services surplus and remittances had a positive impact.
• FPI selling for the week stood at $600 million, although it now appears that the selling may not be as intense in December; as in October and November 2024.
• Government may make income up to ₹15 lakhs exempt in the Feb-25 Union Budget to give a proactive boost to consumer spending and demand.
• Rupee touched a low of ₹85.81/$ on Friday, but improved to ₹85.54/$ for the week. Heavy importer demand put pressure on the rupee, apart from strong dollar.
• Reliance could cede market cap leadership to TCS and HDFC Bank next year after the stock corrected 23% from its peak price levels. The coming year could see possible listing of Tata Capital and even Tata Sons.

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

STOCK MARKET TRIGGERS FOR COMING WEEK TO JANUARY 03, 2025

Here are key triggers to keep a watch for in the coming week to January 03, 2025.

• Positive gains from Nifty up +0.96%, Sensex +0.84%, Mid-cap index +0.13%, and small cap index +0.22% last week. Action may shift next week to small and mid-cap space.
• Corporate action focus next week on Red Tape (Dividend RD); Banco, KPI Green, Garware Tech, Shriram Finance, Jagson Pharma (Bonus/Split RD).
• On macro front; November update on core infrastructure sector and fiscal deficit is expected to be announced on December 31, 2024.
• PMI Manufacturing expected to harden from 56.5 to 57.4, while deposit growth may inch closer to loan growth of 10.6%, indicating better balance.
• Focus shifts to FPI triggers for the new year after FPI selling of $600 million in the previous week. Fresh allocations will be the key, as INR touched low of ₹85.81/$.
• One mainboard ₹260 crore IPO of Indo Farm Equipment plus listing of Ventive Hospitality, Senores Pharma, Carraro, and Unimech next week.
• Key global data points; API Crude stocks, initial jobless claims, Atlanta Fed GDP, Fed balance sheet (US); Caixin PMI (China); HPI, PMI, CFTC GBP Speculatives, (UK).

Let us finally turn to what all this means for the Nifty and the Sensex in the coming week to January 03, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX

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

• During the week, VIX tapered to 13 levels; making the market fairly stable, although it remains vulnerable to sudden spikes.
• Nifty range of 23,500 to 24,100 to be crucial. Any sustained upsides on the Nifty will require a breakout with volumes above 24,500 levels on the Nifty.
• The last week of 2024 was subdued, but coming week will see key data points like core sector output, fiscal deficit, FPI allocations, and signals on US unemployment.

The undertone of the markets remained under pressure this week; and it would take a big effort next week, with volumes, for any worthwhile uptrend to commence.