Weekly Market Outlook

Indian equity benchmarks ended the passing week on fresh closing highs supported by better-than-expected Q3 numbers reported by IT giants TCS and Infosys.

Markets made a pessimistic start to the week as traders were concerned with a report by economic think tank GTRI stating that the increasing Red Sea crisis may impact trade as it is expected to push shipping costs by up to 60 per cent and insurance premiums by 20 per cent.

Traders overlooked the first advance estimates of national income released by the National Statistical Office (NSO) which projected the Indian economy to grow at 7.3 per cent in 2023-2024 – higher than the Reserve Bank of India’s estimate of 7 per cent – assuming an investment-led recovery in the world’s fifth largest economy.

Traders remained anxious with a private report that India may see around $30 billion shaved off its total exports in the current fiscal year, as threats to cargo vessels in the Red Sea led to a surge in container shipping rates and prompted exporters to hold back on shipments.

However, key gauges took a U-turn and started moving northward taking support from a foreign brokerage report stating that the Indian economy is likely to grow at 6.2 per cent in the next fiscal, mainly due to the favourable combination of neutral policy settings, positive credit momentum, and manageable macros amid a 15-year high household debt levels.

Sentiments also got support with the World Bank’s Global Economic Prospects report where it retained India’s economic growth forecast at 6.3% for the current financial year (FY24). It said India is anticipated to maintain the fastest growth rate among the world’s largest economies, but its post-pandemic recovery is expected to slow.

Some support also came with a private report stating that the IPO and deal-making activities are likely to be brisk this year and may even surpass the record set in 2021 with around $50 billion funds being raised across equity issuances and deals.

Markets extended gains after Finance Minister Nirmala Sitharaman stated that India will become the third largest economy by 2027-28, with a GDP of over $5 trillion.

A massive rally on the final day of the week mainly helped markets to enlarge gains and took markets to fresh closing highs aided by strong gains in software counter after the December quarter earnings of TCS and Infosys cheered Dalal Street.

Traders also took encouragement with the Central Board of Direct Taxes’ (CBDT) statement that the net direct tax collection so far, this fiscal rose 19.41 per cent to Rs 14.70 lakh crore from the corresponding period of last year. The provisional figures of Direct Tax collections up to January 10, 2024, continue to register steady growth.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 542.30 points or 0.75% to 72,568.45 during the week ended January 12, 2024.

The BSE Midcap index gained 168.88 points or 0.45% to 37,875.43 and the small-cap index surged 684.31 points or 1.56% to 44,503.70.

On the sectoral front, S&P BSE Information Technology was up by 1,624.06 points or 4.58% to 37,120.45, S&P BSE Realty was up by 290.13 points or 4.35% to 6,966.18, S&P BSE TECK was up by 621.88 points or 3.93% to 16,437.50 were the top gainers.

S&P BSE Fast Moving Consumer Goods was down by 366.39 points or 1.77% to 20,372.55, S&P BSE BANKEX was down by 473.66 points or 0.87% to 53,798.38, S&P BSE Finance was down by 59.47 points or 0.56% to 10,476.25 and S&P BSE Metal was down by 40.43 points or 0.15% to 26,443.30 were the few losers on the BSE.

NSE movement for the week

The Nifty surged 183.75 points or 0.85% to 21,894.55.

On the National Stock Exchange (NSE), Nifty IT was up by 1670.00 points or 4.79% to 36,521.70, Nifty Mid Cap 100 gained 116.30 points or 0.25% to 47,512.60 and Nifty Next 50 gained 447.65 points or 0.82% to 54,742.90, while Bank Nifty was down by 449.20 points or 0.93% to 47,709.80.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net sellers in the equity segment in the week, with gross purchases of Rs 54,559.98 crore and gross sales of Rs 55,469.23 crore, leading to a net outflow of Rs 909.25 crore.

They stood as net buyers in the debt segment with gross purchases of Rs 7,168.74 crore against gross sales of Rs 3,255.49 crore, resulting in a net inflow of Rs 3,913.25 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 118.79 crore and gross sales of Rs 107.38 crore, leading to a net inflow of Rs 11.41 crore.

Outlook for the coming week

In the passing week, Indian markets witnessed modest gains with Sensex and Nifty hitting new record closing highs in last trading session led by a sharp rally in IT stocks.

In the coming week, traders will be eyeing the India’s wholesale prices index (WPI), slated to be released on January 15.

On the same day, investors will watch for the Balance of Trade (Export & Import) data and Passenger vehicle sales data from the Society of Indian Automobile Manufacturers (SIAM). Further, Foreign Exchange Reserves data is scheduled to be released on January 19.

Earnings will be in focus next week too, and market participants will be eyeing some important quarterly numbers to be released next week.

Jio Financial Services, Angel One, HDFC Bank, L&T Technology Services, Federal Bank, Network 18 Media & Investments, Asian Paints, LTIMindtree, Steel Strips Wheels, IndusInd Bank, Polycab India, Tata Communications, Hindustan Unilever, UltraTech Cement, ICICI Bank, Kotak Mahindra Bank, Union Bank of India, IDFC First Bank, Persistent Systems, J. K. Cement among others to report their numbers in the coming week. 

Investors will be looking forward to the World Economic Forum at Davos 2024, to be held from January 15 to January 19. The Annual Meeting 2024, taking place in Davos, Switzerland, will primarily focus on exploring the opportunities enabled by the new technologies and their implications on decision-making and global partnership.

On the global data front, investors would be eyeing few economic data from the world’s largest economy, the United States (US), starting with the NY Empire State Manufacturing Index on January 16, followed by Retail Sales, Export & Import prices, Retail Sales, Redbook, Industrial Production, Business Inventories and NAHB Housing Market on January 17.

API Crude Oil Stock, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, EIA Crude Oil Stocks on January 18, Michigan Consumer Sentiment, Existing Home Sales, Baker Hughes Oil Rig on January 19 and Net Long-term TIC Flows on January 20.

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