The recent indications of potential rate cuts by the US Federal Reserve in 2024 have significantly boosted investor confidence. In addition, the surge in the Index of Industrial Production (IIP) to a 16-month high in October, coupled with the RBI’s positive remarks on India’s GDP forecast, has also contributed to positive investor sentiment. The market also benefited from falling crude oil prices and sustained FPI inflows.
Also Read: Over 45 smallcaps rise 10-30% as Sensex crosses 71,000-mark; do you own?
As a culmination of these factors, the Nifty 50 soared to an all-time high of 21,492 points on Friday, concluding the week with a robust rally of 2.32%. 37 out of the 50 constituents of Nifty 50 ended the last week in green. HCL Technologies led the pack with an impressive rally of 9.3%, reaching ₹1,491 apiece and achieving a record high of ₹1,497.
Other notable gainers included LTIMindtree, Hindalco Industries, NTPC, Hero MotoCorp, NTPC, Tech Mahindra, UltraTech Cement, Adani Enterprises, and Infosys, all closing the week with gains ranging from 6% to 7.5%.
The S&P Sensex also reached a new record high of 71,605 points, wrapping up the week with a gain of 2.37%. The mid and small-cap stocks also continued their upward trajectory last week, with the BSE Mid-Cap Index gaining 2.57%, while the BSE Small-Cap Index rallied 2.38%.
Tech Titans Rise
The Nifty IT index, which remained underperforming when compared to other major sectoral indices, experienced a robust surge of 7.15% last week. The catalyst for this impressive rally was the Federal Open Market Committee’s (FOMC) decision to maintain its key interest rate at 5.25–5.5% on Wednesday.
However, the noteworthy shift was the committee’s more dovish stance, hinting at potential 75 basis point cuts in 2024, compared to previous guidance of only 50 basis points worth of rate cuts.
Also Read: India 10-year bond yield logs biggest weekly fall in over 7 months on dovish Fed
This improved outlook has fueled strong buying interest in Indian IT stocks. Last week, the Nifty IT index soared from 33,392 to 35,782 points, marking a substantial gain of 2,390 points, or 7.15%. Persistent Systems stood as the top gainer with a rally of 11.8%, followed by Coforge, MphasiS, and HCL Technologies, gaining between 9.5% and 11.5%.
Inflow Continues
FPIs have extended their investment streak for the second consecutive month in December. Following three months of consecutive selling, FPIs reversed course in November, injecting ₹9,000 crore into Indian equities.
This trend has only gained momentum in December, with FPIs further increasing their buying activity and acquiring ₹42,733 crore worth of Indian equities so far. This buying interest came after the Fed signalled the end of the tightening cycle, triggering a crash in U.S. bond yields, with the 10-year going below 4%.
“India is one of the top investment destinations for FPIs. There is a near consensus now in the global investing community that India has the best prospects among the emerging economies for sustained growth for many years to come. This growth has the potential to create phenomenal wealth through the stock market. FPIs are investing to benefit from this potential wealth creation.”
“After the inclusion of India in the JPMorgan Emerging Market Bond Index, there is high enthusiasm to invest in Indian government bonds. Some institutions may have already started buying. Now that the U.S. bond yields have corrected significantly, Indian bonds will attract more investment,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Crude oil snaps a two-week losing streak
Following a two-week decline, crude oil prices saw a little increase last week as a result of dovish comments from the US Federal Reserve. Brent crude futures concluded the week at $76.78 per barrel, reflecting a 1.24% increase, while WTI crude futures saw a 0.28% rise, closing the week at $71.43 per barrel.
Despite this short-term recovery, both Brent and WTI are on track for their third consecutive monthly loss, as both are down 5% and 5.96%, respectively, in the current month so far.
Also Read: OMC stocks on uptrend over lower crude oil prices; IOC hits 52-week high
Factors contributing to this downward trend include an increase in US gasoline inventories, a surge in US crude exports, particularly to Europe and Asia, and heightened economic uncertainties in China, a leading crude importer.
On the other hand, the US dollar index, measuring the strength of the dollar against six major currencies, recorded a 1.34% decline over the la week.
Nifty 50: Technical Outlook
Rupak De, senior technical analyst at LKP Securities, said, “The Nifty’s upward momentum persists with the bulls maintaining control in the market. Achieving a new all-time high, the index has marked its seventh consecutive weekly gain. The prevailing sentiment appears strongly in favor of the bulls, as indicated by the absence of any reversal signals on the technical charts. Resistance is observed at 21,500, while a potential further rally in the Nifty could occur upon breaching this level. Support is currently positioned at 21,300.”
“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.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 17 Dec 2023, 09:26 AM IST