Weekly Market Outlook

Extending their winning streak for a sixth straight week, Indian equity benchmarks ended the passing week with a gain of around three and a half percentage points, on strong macroeconomic data, elevated bets of a U.S. rate cut in March, and the ruling Bhartiya Janata Party’s win in key state elections.

Markets made an optimistic start to the week as traders took encouragement with the finance ministry stating that GST collections jumped 15 per cent to nearly Rs 1.68 lakh crore in November on increased domestic activity and festive season buying.

Some optimism also came with the latest data by the Reserve Bank of India (RBI) showing that India’s foreign exchange reserves increased by $2.54 billion to $597.94 billion for the week ending November 24.

Markets extended gains after Industry Chamber CII expects the country’s economy to grow at 6.8% in the current fiscal and accelerate to 7% in 2024-25, driven by the government’s continued focus on infrastructure development and promotion of ease of doing business.

Sentiments remained upbeat with S&P Global Ratings’ statement that India will become the world’s third-largest economy by 2030, as it forecast the nation’s GDP growth reaching 7 per cent in the 2026-27 fiscal year.

However, markets pared some of their gains later in the week as traders got anxious with a private survey showing that India’s service sector activity expanded at its slowest pace in November.

According to S&P Global, India’s services Purchasing Managers’ Index (PMI) in November fell to 56.9 as compared to 58.4 in October. This is the lowest figure in 2023 so far. Before this, the services PMI was recorded at 57.2 in January.

Some concern also came with a report that India’s gross foreign direct investment (FDI) inflows dropped almost 16% in the first six months of FY24 from a year before to $33.12 billion, the second straight fall in the first half of a fiscal.

But markets regained traction on the final day of the week as the monetary policy committee (MPC) of the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.5 per cent for the fifth policy meeting in a row.

It also raised the FY24 GDP projection to 7% from 6.5% earlier while leaving the inflation projection for FY24 unchanged at 5.4%. Sentiments also got a boost as Niti Aayog vice chairman Suman Bery said India could grow at 8 per cent as the country is labor-rich with enough institutional maturity of a functioning democracy.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 2344.41 points or 3.47% to 69,825.60 during the week ended December 08, 2023.

The BSE Midcap index gained 704.15 points or 2.04% to 35,290.91 and small cap index surged 538.41 points or 1.33% to 41,104.37.

On the sectoral front, S&P BSE Power was up by 653.13 points or 13.07% to 5,651.20, S&P BSE Oil & Gas was up by 1,581.55 points or 7.66% to 22,226.58, S&P BSE PSU was up by 830.66 points or 6.05% to 14,550.37, S&P BSE BANKEX was up by 2,692.97 points or 5.31% to 53,426.53 and S&P BSE Capital Goods was up by 2,458.07 points or 4.84% to 53,203.28 were the top gainers.

S&P BSE Healthcare was down by 142.59 points or 0.47% to 30,335.71 and S&P BSE Fast Moving Consumer Goods was down by 68.68 points or 0.35% to 19,382.52 were the few losers on the BSE.

NSE movement for the week

The Nifty surged 701.50 points or 3.46% to 20,969.40.

On the National Stock Exchange (NSE), Bank Nifty was up by 2447.80 points or 5.46% to 47,262.00, Nifty IT was up by 794.20 points or 2.44% to 33,392.90, Nifty Mid Cap 100 was up 1017.80 points or 2.35% to 44,400.20 and Nifty Next 50 was up 2122.35 points or 4.38% to 50,608.75.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 77,965.87 crore and gross sales of Rs 61,204.61 crore, leading to a net inflow of Rs 16,761.26 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 9,666.05 crore against gross sales of Rs 4,069.39 crore, resulting in a net inflow of Rs 5,596.66 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 113.74 crore and gross sales of Rs 96.14 crore, leading to a net inflow of Rs 17.60 crore.

Outlook for the coming week

Markets continued their gaining streak for the sixth straight week and ended with gains of over three per cent each in the passing week.

Sensex and Nifty settled above 69,800 and 20,950 levels, respectively as the BJP’s victory in assembly polls in three states boosted investor sentiment. Besides, the RBI Monetary Policy Committee decided to keep the repo rate unchanged at 6.50%.

The coming week will be heavily loaded with macro-economic data. Market participants will be eyeing the data of the Index of Industrial Production (IIP), which is scheduled to be released on December 12. On the same day, market participants would also be watching the data of the Consumer Price Index (CPI).

On December 14, traders will be looking forward to the Wholesale Price Index (WPI) data. Moreover, the balance of trade (Export and Import) data, the deposit growth, bank loan growth foreign exchange reserves data and passenger vehicle sales will be released on December 15.

On the global front, investors will be eyeing macro-economic reports from world’s largest economy, the United States, starting with Consumer Inflation Expectations on December 11 followed by CPI, Redbook on December 12, Core PPI on December 13, Fed Interest Rate Decision, FOMC Economic Projections, Fed Press Conference, Retail Sales, Import & Export Prices.

Industrial Production, Manufacturing Production, S&P Global Composite PMI, S&P Global Manufacturing PMI, S&P Global Services PMI and Baker Hughes Oil Rig Count on December 15.


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