Weekly Market Outlook

Markets extend gaining streak for fourth straight week; eke out slender gain

Indian equity benchmarks ended the first week of New Year 2024 slightly in negative terrain as lingering concerns over the Red Sea disruptions pose short-term risks to global supply chains and freight costs. Key gauges started the New Year cautiously in green as traders supported with Finance Ministry’s statement that the Indian economy’s GDP growth rate in 2023-24 to ‘comfortably’ exceed its forecast of 6.5 per cent despite the risks to growth and stability outlook that mainly emanate from outside the country. Moreover, optimism on rate cuts, easing global inflation, and softer bond yields too provided some strength to the markets. Major indices slipped into red terrain as traders got anxious with a report by the Global Trade Research Initiative (GTRI) stating that India, despite being one of the few developing countries self-sufficient in food, still shipped in $33 billion of farm products in 2023 with more than half of it just accounted for by vegetable oils. Besides, fears over the new Covid variant along with the depreciation in the Indian rupee against the dollar also weighed on market sentiments. Traders shrugged off reports that the gross GST collections in December 2023 were recorded at Rs 164,882 crore, 10.3% higher than Rs 149,507 crore in December 2022. Markets extended losses with the HSBC India Manufacturing PMI survey, conducted by S&P Global, showing India’s manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, was recorded at an 18-month low of 54.9 in December as against 56.0 in November. Sentiments also got some support as India’s services sector ended 2023 on a firm footing, with activity expanding at its fastest pace in three months in December on buoyant demand and an optimistic year-ahead outlook. The HSBC India Services Purchasing Managers’ Index, compiled by S&P Global, rose sharply in December to 59.0 from November’s one-year low of 56.9.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex decreased 214.11 points or 0.30% to 72,026.15 during the week ended January 05, 2024. The BSE Midcap index gained 867.33 points or 2.35% to 37,706.55 and Smallcap index surged 1145.63 points or 2.68% to 43,819.39. On the sectoral front, S&P BSE Metal was down by 506.96 points or 1.88% to 26,483.73, S&P BSE Information Technology was down by 514.70 points or 1.43% to 35,496.39, S&P BSE Auto was down by 498.32 points or 1.18% to 41,730.72 while S&P BSE Realty was up by 489.11 points or 7.91% to 6,676.05, S&P BSE Power was up by 197.76 points or 3.40% to 6,016.40, S&P BSE Healthcare was up by 1,030.27 points or 3.27% to 32,579.48

NSE movement for the week

The Nifty decreased 20.60 points or 0.09% to 21,710.80. On the National Stock Exchange (NSE), Bank Nifty was down by 133.25 points or 0.28% to 48,159.00 and Nifty IT was down by 663.30 points or 1.87% to 34,851.70. On the other side, Nifty Mid Cap 100 gained 1214.65 points or 2.63% to 47,396.30 and Nifty Next 50 gained 950.45 points or 1.78% to 54,295.25.

Industry and Economy

Citing the resilient economy, sustained government capex and the prospect of a new private corporate capex cycle, India Ratings and Research (Ind-Ra) has revised up India’s Gross Domestic Product (GDP) growth estimate for the current fiscal (FY24) to 6.7 per cent, from earlier 6.2 per cent. It flagged weak global growth and trade as risks that weighed down the growth estimates, besides the volatile geopolitical situation. It said ‘All these risks will continue to weigh on and restrict India’s GDP growth to 6.7 per cent in FY24. The quarterly GDP growth, which came in at 7.8 per cent YoY and 7.6 per cent YoY in 1QFY24 and 2QFY24 respectively, is slated to slow down sequentially in the remaining two-quarters of FY24’.

Top Gainers

Adani Ports and Special Economic Zone (APSEZ) up by 13.50% was the top gainer on Nifty for the week – APSEZ gained traction after it handled 35.65 MMT of cargo volumes in December 2023, resulting in a strong 42% year-on-year (YoY) increase. Dry bulk cargo handling was up 63% while handling of containers increased by over 28% on a YoY basis.

Tata Consumer Products (TCPL) up by 7.87% was another top gainer on Nifty for the week – Tata Consumer Products’ Registrar and Share Transfer Agent (RTA) — TSR Darashaw Consultants has merged TSR Consultants with Link Intime India. This merger became effective on December 22, 2023, under the Order dated December 18, 2023, issued by the Mumbai Bench of the NCLT. Meanwhile, TCPL’s merger with Tata Coffee became effective on January 1. As part of the scheme, Tata Coffee’s plantation business shall be demerged into TCPL Beverages and Foods.

Top Losers

JSW Steel down by 5.84% was the top loser of the week on Nifty – Some of metal companies traded under pressure on profit booking amid fresh concerns over the economic prospects of China, one of the largest consumers of commodities like steel, aluminium, and copper among others. The United Nations in its latest report said that investment prospects in China face ‘headwinds’ from a struggling property sector.

Mahindra & Mahindra (M&M) down by 5.33% was another top loser of the week on Nifty – M&M came under pressure as its Farm Equipment Sector (FES) reported 17.66% fall in total tractor sales (Domestic + Exports) during December 2023 at 19,138 units, as against 23,243 units for the same period last year. Exports for the month stood at 1,110 units.  Domestic sales in December 2023 were at 18,028 units, as against 21,640 units during December 2022.  Meanwhile, the company reported a 6% growth in total automotive sales at 60,188 units in December 2023, as compared to the same month a year ago.

Outlook for the coming week

Indian markets ended the first week of new calendar year 2024 in red terrain as sluggish global cues continued to hurt sentiments ahead of the closely watched monthly US jobs report. The next week would assume importance as it would mark the start of Q3FY24 earning season which will kick start with Tata Consultancy Services (TCS) and Infosys reporting their number on January 11, 2024. HCL Technologies, HDFC Life Insurance Company and Wipro are among others to report their numbers in the next week.

On the economy front, market-participants would be eyeing the data of Index of Industrial Production (IIP) for the month of November, which is scheduled to be release on January 12. Industrial production in India climbed 11.7% year-on-year in October 2023. On the same day, Consumer Price Index (CPI) for the month of December also will be releasing. Annual retail price inflation in India went up to 5.55% in November 2023 from 4.87% in October.

On the global front, investors would be eyeing few economic data from world’s largest economy, United States (US), starting with Consumer Inflation data on January 08, followed by Balance of Trade, Redbook and RCM/TIPP Economic Optimism Index on January 09, API Crude Oil Stock, Wholesale Inventories and EIA Crude Oil Stocks on January 10, Core Inflation and Initial Jobless Claims on January 11, Monthly Budget Statement, Producer prices in the US and Baker Hughes Oil Rig data on January 12.

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