Weekly Musings – Index performance for week ended December 29, 2023

31 Dec 2023 , 08:11 AM

BIG GAINS IN YEAR 2023

It was a year that saw one of the quickest and smartest rallies in recent memory. The Nifty gained close to 3,800 points in around 4 months to close the year at close to record highs. For the year, the Nifty and Sensex gave returns of between 19-20% and that makes equities one of the best performing asset classes of the year. The week saw the markets positive on most of the day, except the last day, where traders were unwinding to stay light ahead of the weekend. It was a truncated with Monday being a market holiday. The week was marked at a macro level by a smart turnaround in macros with the key macroeconomic variables like inflation, IIP growth and GDP growth turning favourable for the economy. Towards the end of the year, the Indian economy almost found itself in the midst of the Goldilocks effect, with growth better than expected and inflation lower than expected.

BIG FPI FLOWS DEFINED DECEMBER AND YEAR 2023

If there was one factor that represented the changing contours of the Indian investment scenario, it was the surge in FPI flows into India. Let us take the month of December alone. FPI inflows into Indian equity were to the tune of $7.94 billion during the month of December 2023, making it one of the best months in terms of FPI flows. If you also add the FPI flows into debt and hybrids, then the month of December saw net inflows of $10.15 billion into India. How does the year 2023 look for FPI flows? Remember, FPIs were net sellers for 4 months of the year and they were net buyers for 8 months of the year. On a net basis, the total infusion by FPIs into Indian equities for the calendar year 2023 stood at $20.74 billion. Nearly 75% of these funds came via secondary markets and 25% through primary markets. If you consider the overall FPI inflows in 2023 into debt, equity, and hybrids, then it stood at $28.70 billion. If there was one factor that actually catalysed the rally in the markets, it was the relentless inflow of FPI money. (For live updates market map)

BSE SENSEX 30 INDEX – CLOSES ABOVE 72,000 LEVELS

The table captures the movement of the BSE SENSEX 30 for the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	72,417.01	72,082.64	72,240.26
28-Dec-23	72,484.34	72,137.45	72,410.38
27-Dec-23	72,119.85	71,473.65	72,038.43
26-Dec-23	71,471.29	71,012.08	71,336.80
25-Dec-23	71,259.55	70,713.56	71,106.96
22-Dec-23	71,259.55	70,713.56	71,106.96
	Weekly Returns	+1.59%

Data Source: NSE

Sensex closed the week with gains of +1.59%. During the week, the data flows remained strong. The core sector growth was robust at 7.84% for November and the fiscal deficit has just crossed 50% of full year target as of end November 2023. In addition, the current account deficit (CAD) at 1% of GDP was also well in control in the second quarter. The previous week had seen a small reversal in the Sensex due to the JN.1 variant, but that was largely overlooked in the current week. The Sensex gained 1,133 points during the week and it even touched its lifetime peak of 72,484 levels during the current week. The next target for the Sensex will be the 75,000 levels; where the first resistance is likely to emerge.

NIFTY 50 INDEX – CLOSES STRONG, DESPITE THE FRIDAY FALL

The table captures the movement of Nifty 50 index in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	21,770.30	21,676.90	21,731.40
28-Dec-23	21,801.45	21,678.00	21,778.70
27-Dec-23	21,675.75	21,495.80	21,654.75
26-Dec-23	21,477.15	21,329.45	21,441.35
25-Dec-23	21,390.50	21,232.45	21,349.40
22-Dec-23	21,390.50	21,232.45	21,349.40
	Weekly Returns	+1.79%

Data Source: NSE

The latest week saw FPI buying of $1.06 billion. This comes on top of $1.75 billion, $1.95 billion, $2.01 billion, $2.20 billion in the previous 4 weeks. The last 5 weeks saw close to $9 billion infused by FPIs into Indian equities. During the week, the Nifty touched its all-time high level of 21,801 before retreating towards close. The Nifty gained 382 points during the week. Amidst this entire frenetic rally, the Nifty VIX closed higher at 14.5 levels, but this sharply lower than the 15.5 levels that the VIX had touched during the week. The rising VIX in the last few weeks has been gradual and it shows that there is some element of fear being built into the markets at higher levels.

NIFTY NEXT 50 INDEX – CLOSES ALMOST FLAT FOR THE WEEK 

The table captures the movement of Nifty Next 50 for the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	53,388.90	52,845.05	53,344.80
28-Dec-23	53,038.65	52,734.80	52,964.10
27-Dec-23	52,875.00	52,428.95	52,680.20
26-Dec-23	52,483.30	52,113.20	52,434.85
25-Dec-23	51,999.50	51,514.95	51,944.00
22-Dec-23	51,999.50	51,514.95	51,944.00
	Weekly Returns	+2.70%

Data Source: NSE

The Nifty Next 50 generally mirrors the Nifty. Like the trend in the last few weeks, the Nifty Next 50 outperformed the Nifty 50 index by a rather comfortable margin. The Nifty Next 50 is the list of 50 companies with potential to become Nifty companies in the near future. For the week, the Nifty Next 50 closed near to its highest ever level at 53,345. The Nifty Next 50, ironically, did not correct even on Friday, when the other indices had come under pressure due to unwinding of longs. The rally was prominent on all the 4 days, gaining 1,400 points int eh week; largely led by defence, railway, and PSU stocks in that space.

NIFTY MID-CAP 100 INDEX – WITNESSES ALPHA BUYING DEMAND

The table captures the movement of Nifty Mid-Cap 100 in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	46,248.65	45,731.15	46,181.65
28-Dec-23	45,846.75	45,549.15	45,815.25
27-Dec-23	45,781.60	45,341.55	45,558.95
26-Dec-23	45,502.25	45,138.00	45,388.10
25-Dec-23	45,234.15	44,758.55	45,094.80
22-Dec-23	45,234.15	44,758.55	45,094.80
	Weekly Returns	+2.41%

Data Source: NSE

The Nifty Mid-Cap index gained 1,087 points during the week as alpha hunting was visible in the mid-cap counters. Unlike the frontline indices like the Nifty and the Sensex, the Mid-cap index did not fall on Friday as it remained a net gainer on all the four trading days of the week. The mid-cap index is at its 52-week high. The index had briefly fallen out of favour after the rally had focused on the large caps, but is back in the reckoning. In the coming year, lot of fresh allocations are also expected in the mid-cap space.

NIFTY SMALL-CAP 100 INDEX – HOLDS VALUE IN A TOUGH WEEK

The table captures movement of Nifty Small Cap 100 in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	15,165.00	15,019.80	15,143.65
28-Dec-23	15,062.70	14,965.15	15,051.25
27-Dec-23	14,989.90	14,821.90	14,933.35
26-Dec-23	14,914.15	14,822.25	14,866.45
25-Dec-23	14,905.05	14,713.45	14,846.05
22-Dec-23	14,905.05	14,713.45	14,846.05
	Weekly Returns	+2.00%

Data Source: NSE

In the last 3 weeks, the Nifty Small Cap index had a cumulative gain of over 8% and the latest week topped it up with another 2% jump. For the latest week, the small cap index closed 298 bps higher. Momentum is surely back in the small cap index in the last few weeks as alpha hunting is back in vogue; and nothing represents that better than the small cap index. The small cap index had struggled around the 14,000 mark for several weeks, but now the index is decisively above the 15,000 mark. The coming months could see a lot more of retail interest coming back into the markets and that is likely to generate a lot of buying interest in the small cap stocks.

BANK NIFTY INDEX – LEADS THE NIFTY HIGHER DURING THE WEEK

The table below captures the movement of BANKNIFTY in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	48,477.70	48,091.85	48,292.25
28-Dec-23	48,636.45	48,343.15	48,508.55
27-Dec-23	48,347.65	47,806.70	48,282.20
26-Dec-23	47,838.45	47,411.65	47,724.85
25-Dec-23	48,071.40	47,415.85	47,491.85
22-Dec-23	48,071.40	47,415.85	47,491.85
	Weekly Returns	+1.69%

Data Source: NSE

Bank Nifty actually led the markets higher during the week. It still has the biggest weightage in the Nifty and so some buying in Bank Nifty stocks was obvious. In previous weeks, the big trigger was positive US data flows and India GDP growth at 7.6%. Also, the RBI monetary policy had set the tone for the end of rate hikes by the RBI and a move towards rate cuts some time in 2024. At a fundamental level; NIIs and NIMs are tapering and that is a worry.

NIFTY IT INDEX – SECOND CONSECUTIVE WEEK OF LOSSES

The table captures the movement of Nifty IT index in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	35,781.10	35,395.05	35,515.00
28-Dec-23	35,850.40	35,614.80	35,691.60
27-Dec-23	35,814.70	35,447.10	35,741.00
26-Dec-23	35,682.65	35,185.45	35,493.40
25-Dec-23	35,770.45	34,740.15	35,637.80
22-Dec-23	35,770.45	34,740.15	35,637.80
	Weekly Returns	-0.34%

Data Source: NSE

For the second week in succession, the IT index was down. The index lost 40 bps in the previous week and 34 bps in the latest week. However, in the 4 weeks prior to that, the IT index had rallied by nearly 15%. Hence, the small correction in the last two weeks is only par for the course. Nothing much has changed fundamentally; and the positive US GDP data and dovish Fed stance will only bring back tech spending for the IT sector. The index is just taking a respite after the frenetic rally. IT stocks were in trouble during the middle of the year, but they have recovered sharply in the second half of 2023 and even ended the year with sectoral gains of more than 25%; bettering the Nifty returns by nearly 600 bps.

NIFTY OIL & GAS INDEX – REMAINS A SHINING SECTOR

The table captures the Nifty Oil & Gas index for the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	9,558.75	9,474.40	9,496.15
28-Dec-23	9,625.55	9,401.45	9,588.75
27-Dec-23	9,491.40	9,376.00	9,399.40
26-Dec-23	9,451.05	9,290.50	9,427.05
25-Dec-23	9,297.40	9,213.25	9,287.05
22-Dec-23	9,297.40	9,213.25	9,287.05
	Weekly Returns	+2.25%

Data Source: NSE

In the previous 7 weeks, the Oil & Gas index had already gained over 22%, so some correction was expected in the latest week. However, oil & gas managed to buck the trend and close the week with gains of 2.25%. It was not just the upstream oil stocks, but even the downstream oil stocks have joined the fray. The week saw Brent Crude tapering to around $77/bbl market, but it hardly mattered. The bet is that oil prices should taper even further with Angola leaving the OPEC and more supply likely to hit the oil markets soon.

NIFTY AUTO INDEX – STAR OF THE WEEK

The table captures the movement of Nifty Auto index in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	18,719.50	18,417.85	18,618.20
28-Dec-23	18,446.55	18,234.75	18,408.60
27-Dec-23	18,242.85	18,009.75	18,224.85
26-Dec-23	17,977.05	17,806.90	17,953.55
25-Dec-23	17,840.60	17,566.85	17,778.90
22-Dec-23	17,840.60	17,566.85	17,778.90
	Weekly Returns	+4.72%

Data Source: NSE

Auto has been one of the major gainers of the last few weeks; even before the current rally began. The current week saw another 4.72% rally in the auto index. In fact, for year 2023, the Auto index with 45% gains was the star sectoral performer. There have been some concerns about the valuation of most auto stocks being above the historical averages. However, now autos are riding multiple stories like revival in global demand and a revival in rural demand. Things are just getting better.

NIFTY FMCG INDEX – MAKES HEFTY GAINS IN THE WEEK

The table captures the movement of Nifty FMCG index in the week to December 29, 2023.

Date	High	Low	Close
29-Dec-23	57,055.80	56,481.10	56,987.20
28-Dec-23	56,580.70	55,789.05	56,504.50
27-Dec-23	55,813.30	55,471.20	55,750.35
26-Dec-23	55,556.75	55,189.85	55,484.40
22-Dec-23	55,143.05	54,643.75	55,101.05
22-Dec-23	55,143.05	54,643.75	55,101.05
	Weekly Returns	+3.42%

Data Source: NSE

It is not often that you see FMCG as the star performer of the week. This is the third week in a row that FMCG index has gained over 1%. Most FMCG stocks, barring Hindustan Unilever, are close to their 52-week highs, but the sentiments over rural demand are still quote ambivalent. However, defensive bets on the FMCG stocks continued in this week. FMCG stocks are expected to gain on bets of lower crude oil prices. Despite Hindustan Unilever lagging the market, others like ITC and Colgate are chipping in to play Big Boys.