Weekly Market Outlook

Indian equity benchmarks ended the last week of Calendar Year 2023 with a gain of over one and a half percentage points.

Key gauges started the holiday truncated week on an optimistic note after credit rating firm Fitch Ratings stated that it expects that India’s resilient economic growth will boost demand of the corporates. It said rising demand and easing input cost pressure should boost margins of the corporates in the next financial year.

Sentiments remained optimistic with Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh’s statement that foreign direct investments into India is likely to gather momentum in 2024 as healthy macroeconomic numbers, better industrial output as well as attractive PLI schemes will attract more overseas players amid geopolitical headwinds and tighter interest rate regime globally.

Some comfort also came with Union Food and Consumer Affairs Minister Piyush Goyal’s statement that the Centre has taken many proactive steps in the past few years to control retail prices of food items, and that the government would keep inflation under control while ensuring the country’s economic growth.

Traders continued taking support from a private report stating that the Indian economy is likely to grow 6.7% in FY24, staying resilient despite external headwinds as domestic demand and improving investments provide support.

Local bourses extended gains and kept hitting fresh highs during the week as optimism over the outlook for the US interest rates into the New Year generated renewed buying interest.

Sentiments remained up-beat with a report that as many as 746 applications have been approved till November 2023 under the Production Linked Incentive (PLI) schemes for 14 sectors such as pharma, white goods, and electronics.

The schemes for 14 sectors were announced with an outlay of Rs 1.97 lakh crore to enhance India’s manufacturing capabilities and exports.

Traders took support with the Reserve Bank of India’s statement that India’s current account deficit narrowed in the July-September quarter largely due to a lower merchandise trade deficit while services exports also grew.

Markets continued northward journey, taking support from data showing that investment in the Indian capital markets through participatory notes (P-Note) jumped to Rs 1.31 lakh crore by the end of November 2023, bouncing back from a decline in the previous month, owing to the robust performance of the domestic market.

However, traders’ book some of their weekly gains on last day of the week as traders turned little cautious after the RBI’s Financial Stability Report said that the increase in risk weights for personal loans and loans to non-banking financial companies (NBFCs) may lead to a decline in the capital adequacy ratio of 71 basis points (bps) of the banking system.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex increased 1133.30 points or 1.59% to 72,240.26 during the week ended December 29, 2023.

The BSE Midcap index gained 956.54 points or 2.67% to 36,839.22 and the small-cap index surged 672.01 points or 1.60% to 42,673.76.

On the sectoral front, S&P BSE Auto was up by 1,750.84 points or 4.33% to 42,229.04, S&P BSE Metal was up by 1,054.78 points or 4.07% to 26,990.69, S&P BSE Fast Moving Consumer Goods was up by 630.11 points or 3.18% to 20,467.98 were the top gainers.

S&P BSE Information Technology was down by 190.77 points or 0.53% to 36011.09 and was the only loser on the BSE.

NSE movement for the week

The Nifty increased 382.00 points or 1.79% to 21,731.40.

On the National Stock Exchange (NSE), Bank Nifty was up by 800.40 points or 1.69% to 48,292.25, Nifty Mid Cap 100 gained 1086.85 points or 2.41% to 46,181.65 and Nifty Next 50 gained 1400.80 points or 2.70% to 53,344.80, while Nifty IT was down by 122.80 points or 0.34% to 35,515.00.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 45,114.31 crore and gross sales of Rs 36,292.80 crore, leading to a net inflow of Rs 8,821.51 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 5,056.67 crore against gross sales of Rs 2,300.00 crore, resulting in a net inflow of Rs 2,756.67 crore.

In the hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 253.87 crore and gross sales of Rs 266.45 crore, leading to a net outflow of Rs 12.58 crore.

Outlook for the coming week

The passing week was the last week of the calendar year 2023 and Indian equity markets posted significant gains with Nifty and Sensex ending near their crucial levels of 21,700 and 72,200, respectively, as the markets wager on aggressive interest rate cuts by the Federal Reserve next year.

The coming week marks the start of a new month and the start of New Calendar Year 2024. The first week of 2024 is likely to be a data-heavy week. Investors would first be looking forward to the release of monthly auto sales data followed by S&P Global Manufacturing PMI for December on January 03.

Traders would also be eyeing S&P Global Services PMI for December which will be released on January 05, 2024. The S&P Global India Services PMI declined to 56.9 in November 2023 from 58.4 in the previous month. On the same day, Foreign Exchange Reserves data will be released. 

On the global front from the US, traders in a holiday truncated week will be eyeing some important macro-economic data, starting with S&P Global Manufacturing PMI on January 2, followed by ISM Manufacturing PMI and Redbook on January 03.

FOMC Minutes, API Crude Oil Stock, Initial Jobless Claims, S&P Global Services PMI, EIA Crude Oil Stocks on January 04, Non-Farm Payrolls, Unemployment Rate, Factory Orders, ISM Services PMI and Baker Hughes Oil Rig on January 05.

Leave a Reply

Your email address will not be published. Required fields are marked *