Weekly Market Outlook

Snapping a seven-week gaining streak, Indian equity benchmarks ended the passing week with a cut of half a per cent as traders opted to book profit at higher levels.

Markets made a cautious start to the week as traders were anxious with Former Reserve Bank Governor Raghuram Rajan’s statement that India will remain a lower middle country if the growth rate remains at 6 per cent annually without any rise in population by 2047 (Amrit Kaal) and will be reaching the end of the demographic dividend by then.

Some cautiousness came in with the commerce ministry’s data showing that India’s merchandise exports declined by 2.83 per cent to $33.90 billion in November 2023 as compared to $34.89 billion a year ago. Imports also declined to $54.48 billion in the month under consideration, as against $56.95 billion recorded in November 2022.

Sentiments remained pessimistic after economic think tank Global Trade Research Initiative (GTRI) in its latest report has showed that India’s exports and imports of goods and services are likely to dip by 2.6 per cent to $1,609 billion in 2023 as against $1,651.9 billion in 2022.

Losses remain restricted with the report that domestic rating agency Icra revised its FY24 GDP growth forecast to 6.5 per cent from 6.2 per cent earlier. It said the revision is being done because Icra feels the deflation in commodity prices will be sustained and there are expectations of better growth in the October-December period than previous estimates.

However, local bourses, after hitting record highs, witnessed a bout of profit taking and lost over a percent in a single day during the week after the new Covid-19 scare with the detection of new variant JN.1 in states like Goa, Kerala and Maharashtra dented sentiments in markets.

Traders got anxious with Union Agriculture Minister Arjun Munda’s statement that share of agriculture in India’s GDP declined to 15 per cent last fiscal year from 35 per cent in 1990-91 due to rapid growth in the industrial and service sector.

Markets managed to cut some of their weekly losses in last two sessions of trade as some solace also came as formal job creation under the Employees’ Provident Fund Organization (EPFO) increased 18.2% year-on-year in October with the addition of 1.53 million net new subscribers.

Traders also took a note of an article published in the Reserve Bank of India (RBI) bulletin stated that broad-based strengthening of economic activity in India will likely be sustained and retail inflation is expected to ease to 4.6 per cent in the first three quarters of 2024-25 from the latest print of 5.6 per cent.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex slipped 376.79 points or 0.53% to 71,106.96 during the week ended December 22, 2023.

The BSE Midcap index losses 315.67 points or 0.87% to 35,882.68, while small cap index slipped 81.46 points or 0.19% to 42,001.75.

On the sectoral front, S&P BSE Finance was down by 172.18 points or 1.64% to 10,311.01, S&P BSE Auto was down by 646.33 points or 1.57% to 40,478.20, S&P BSE Power was down by 88.39 points or 1.53% to 5,693.24 were the top losers, while S&P BSE Consumer Durables was up by 692.30 points or 1.43% to 49,247.39, S&P BSE Fast Moving Consumer Goods was up by 264.49 points or 1.35% to 19,837.87 were the top gainers.

NSE movement for the week

The Nifty slipped 107.25 points or 0.50% to 21,349.40.

On the National Stock Exchange (NSE), Bank Nifty was down by 651.70 points or 1.35% to 47,491.85, Nifty IT was down by 144.65 points or 0.40% to 35,637.80, Nifty Mid Cap 100 decreased 491.75 points or 1.08% to 45,094.80 and Nifty Next 50 decreased 13.35 points or 0.03% to 51,944.00.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 89,296.86 crore and gross sales of Rs 74,717.07 crore, leading to a net inflow of Rs 14,579.79 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 12,768.83 crore against gross sales of Rs 6,159.94 crore, resulting in a net inflow of Rs 6,608.89 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 4,451.56 crore and gross sales of Rs 318.80 crore, leading to a net inflow of Rs 4,132.76 crore.

Outlook for the coming week

Indian markets snapped seven-week gaining steak and ended lower with cut of around half a percent in the passing week as traders booked some profit after strong upward move seen in recent sessions. Also, the new Covid-19 scare with the detection of new variant JN.1 in states like Goa, Kerala and Maharashtra dented sentiments in markets.

The coming week will be the final week of the calendar year 2023. The domestic traders may witness volatility due to F&O December series expiry slated during the week.

In economic releases, market participants will be watching India’s infrastructure output or eight core sector data to be out on December 29, for further cues. Infrastructure output in India rose by 12.1% year-on-year in October 2023, accelerating from an upwardly revised 9.2% growth in the previous month. 

Also, India’s fiscal deficit, current account deficit, deposit growth, bank loan growth, foreign exchange reserves and external debt data will be released on the same day.

On the global front, the coming week will be a holiday shortened as the US markets will close on December 25 on account of Christmas.

On the economic data front, investors will be eyeing Chicago Fed National Activity Index, Redbook, Dallas Fed Manufacturing Index on December 26; Richmond Fed Manufacturing Index, Richmond Fed Manufacturing Shipments, Richmond Fed Services, Dallas Fed Services on December 27.

Goods Trade Balance, Initial Jobless Claims, Continuing Jobless Claims on December 28; Chicago PMI and Baker Hughes Oil Rig Count on December 29.

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