Investors will eye a host of stock market triggers in the third week of December including the domestic macroeconomic indicators, primary market action, foreign capital inflow, crude oil prices, and global cues.
Domestic equity benchmarks Nifty 50 index and BSE Sensex rose about 2.3 per cent in the week, extending gains for the seventh consecutive week, marking their longest winning run since January 2018.
Specifically, the BSE benchmark jumped 1,658.15 points or 2.37 per cent on the week, while the Nifty climbed 487.25 points or 2.32 per cent. Global cues triggered foreign capital inflows into Indian markets after the US Federal Reserve signalled the end of its tightening cycle.
The surge in domestic equities closely follows Fed Chair Jerome Powell’s acknowledgment of the risks of delaying rate cuts on Wednesday, bolstering expectations of a 25 basis points (bps) rate cut by March and fueling a rally across global stock markets.
On Friday, Sensex breached the 71,000 mark during the session, as domestic macroeconomic data and easing concerns over the US economic growth bolstered market sentiment.
Rising for the third straight session, the 30-share BSE Sensex surged 1,091.56 points or 1.54 per cent to 71,605.76, logging its all-time intra-day high level. The Nifty 50 also zoomed 309.6 points or 1.46 per cent to hit its record intra-day peak of 21,492.30.
In the broader market, the BSE smallcap gauge climbed 0.58 per cent and the midcap index dipped 0.07 per cent. The Nifty Midcap 100 touched record high, hitting a 52-week high-mark of 45,814.45, and closed up 0.11 per cent at 45,586.55 level, while the Nifty Smallcap 100 ended 0.71 per cent higher.
Vinod Nair, Head of Research at Geojit Financial Services. said, “The IT sector rallied 7.6 per cent this week in expectation of a rise in demand from the US, optimism about AI-based opportunities, and hope that the Fed will cut interest rates in 2024. We expect a near-term consolidation in the market due to elevated valuations, concerns over El Nino, and a slowdown in world GDP.”
Going forward, a busy week awaits the primary market as a string of new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The upcoming week will be crucial from the domestic and technical point of view as investors will closely eye the global cues along with key domestic economic data.
Overall, analysts expect that markets may consolidate in near term but the optimism on a stronger outlook continues on the back of a liquidity driven rally. The short-term technical outlook continues to be in favor of bulls -who eye Nifty 50 at the 22,000-mark, after the benchmark seized its lifetime-high level last week.
Here are the key triggers for stock markets in the coming week:
12 new IPOs, 8 listings to hit D-Street:
In the mainboard segment, eight new IPOs are opening for subscription in the coming week. Muthoot Microfin IPO, Motisons Jewellers IPO, and Suraj Estate Developers IPO re opening on December 18.
Happy Forgings IPO, RBZ Jewellers IPO, and Mufti Menswear IPO are opening on December 19. Azad Engineering IPO will open for bidding on December 20 and Innova Captab IPO will open on December 21.
In the SME segment, Sahara Maritime IPO will open for bidding on December 18. Shanti Spintex IPO and Electro Force India IPO will open on December 19, while Trident Techlabs IPO will open for bidding on December 21.
Among new listings, shares of India Shelter Finance and DOMS will get listed on stock exchanges BSE, NSE on December 20, while shares of Inox CVA will get listed on December 21.
Also, shares of Presstonic Engineering will get listed on NSE SME on December 18. S J Logistics will also get NSE SME on December 19. Shares of Benchmark Computer Solutions and Siyaram Recycling will get listed on BSE SME on December 21. Shares of Shree OSFM E-Mobility will get listed on NSE SME on December 21.
Among the ongoing IPOs, INOX India Ltd IPO, Benchmark Computer Solutions IPO, Siyaram Recycling IPO, and Shree OSFM E-Mobility IPO will close for subscription on December 18.
‘’India became the global leader and shown a record-breaking year with the largest number of IPOs in 2023. Market seen an impressive increase in the activity of IPO despite global uncertainties showcasing a strong belief in the Indian economy. It is expected that this trend will continue well in 2024 also,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
FII Activity:
Foreign institutional investors (FIIs) continued their sustained inflows in Indian equities as benchmark indices Sensex and Nifty 50 continued their bull run and posted their longest weekly winning streak in six years on Friday, December 15, on strong global cues after the US Federal Reserve signalled the end of its tightening cycle and raised expectations of a rate cut in March 2024.
FIIs have emerged as net buyers of Indian equities for all five out of five sessions this week and pumped a total of ₹18,858.34 crore. Foreign portfolio investors (FPIs) continued their buying streak and have purchased ₹42,733 crore worth of Indian equities in December so far.
The Fed’s dovish stance led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India, which is likely to sustain in the near-term, say analysts. The state election results in India and Reserve Bank of India’s monetary policy outcome on maintaining status quo on rates also attracted foreign capital.
‘’The other factors contributing FPIs to pump liquidity in Indian market are RBI’s inflation forecast at 5.4 per cent, positive signs on improved capex and valuations. The Sensex touching an all time high also acted as an icing on the cake,” ‘said Manoj Purohit, Partner & Leader – FS Tax, Tax & Regulatory services, BDO India.
‘’The momentum for the Indian cash equities market reflects a promising wind up of 2023 and a strong base for 2024 to start with, taking the foreign investments inflows to a new horizon, ‘’ added Purohit.
Global Cues:
The US Fed reserve kept the interest rates unchanged at 22-year high mark at 5.25 per cent-5.5 per cent indicating end of rate hikes. It is expected that the rates will remain higher for sometime as inflation is not fully under control but hinted at three rate cuts in 2024.
The Fed’s decision to hold its benchmark lending rate at the same 22-year high mark gives policymakers time to “assess additional information and its implications for monetary policy,” the central bank said in a statement.
‘’Investors expressed confidence that clouds over US economic growth would dissipate in H2CY24, anticipating a soft landing facilitated by normalization in monetary policy.’,” said Geojits’ Vinod Nair.
While the previous week was predominantly shaped by developments in US Federal Reserve policy, attention will now shift to the Bank of Japan’s policy decision on December 19. Santosh Meena, Head of Research, Swastika Investmart Ltd said, ‘’This becomes particularly crucial as the Japanese Yen experiences strengthening, and any tightening from the Bank of Japan could pose a risk of unwinding the Yen carry trade.”
Analysts expect that the market will remain in the positive territory in the near term due to economic growth, rising capex cycle, companies are expected to continue showing robust earnings. Factors such as macroeconomic data from both the US and China will wield considerable influence on market dynamics.
‘’A steady upmove in the US markets has been a playing a catalyst in maintaining the prevailing trend. The key index, the Dow Jones Industrial Average (DJIA), has reclaimed its record high after two years and we expect the tone to continue. It can gradually inch towards a new milestone of “39,000″ and is likely to find support around the 36,300-36,600 zone in case of any dip,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.
Oil Prices:
Brent crude and US crude futures finished at a small loss following a see-saw session, in which prices fell more than $1 a barrel at one point on Friday, December 15, as traders tried to reconcile mixed signals for oil demand in the coming year.
The oil market declined in the session after a Federal Reserve Bank manufacturing survey showed a third month of declines in new orders, which could be a sign of weaker demand for oil in the coming year.
Brent futures settled down 6 cents, or 0.08 per cent, at $76.55 a barrel. US West Texas Intermediate (WTI) crude finished down 15 cents, or 0.21 per cent, at $71.43, according to news agency Reuters.
Corporate Action:
Shares of some companies, including Easy Trip Planners, and few others will trade ex-dividend in the coming week, starting from Monday, December 18. Some other companies will also trade ex-ex-bonus, while some have announced a buy back of shares next week. Check full list here.Technical View:
From a technical standpoint, the Nifty is maintaining its bullish momentum, marked by a breakout from a flag formation. ‘’The immediate target stands at 21,700, with the possibility of further upward movement to 22,000, although some consolidation may follow. On the downside, 21,200 serves as immediate support, while 21,000 is a crucial support level in the event of any pullback,” said Swastika Investmarts’ Santosh Meena.
The rotational buying across the key sectors has been pushing the index higher with marginal correction in between. ‘’All indications are in the favor of ongoing trend continuing and we expect the Nifty to inch towards 22,150 levels. Traders should continue with the “buy on dips” approach, with the support zone now around 20,700-21,000 levels,” said Religare’s Ajit Mishra.
‘’A sharp up move in the IT and banking heavyweights has strengthened our favorable view while others are also contributing on a rotational basis. Traders should align their trades accordingly and stay selective in midcap and smallcap space.”
Shifting focus to Bank Nifty, a strategic approach involves leveraging downward market movements as favourable buying opportunities, contingent upon the resilience of the support level at 47,500. ‘’Monitoring this level is critical, as a breach may signal a shift in sentiment. Immediate upward movement is anticipated upon overcoming resistance levels at 48,500-48,800,” said Master Capital Services’ Arvinder Singh Nanda.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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