Domestic equity benchmark Nifty 50 hit fresh record highs logging its best week in five months as strong macroeconomic data, continuous foreign fund inflows added to optimism over the global interest rate outlook. The midcap index also ended at a record high for the 15th consecutive session. Out of the 50 Nifty stocks, 31 showed gains since the last record high on September 15, 2023.
Sensex hit its 11-week high, closing at the highest closing level since September 18, and logged its fifth straight weekly gain, along with Nifty 50. The blue-chips Nifty 50 and BSE Sensex gained 2.39 per cent or 473.2 points and 2.29 per cent or 1,511.15 points, respectively. All 13 major sectors logged gains for the week, while the more domestically-focused small- and mid-caps extended their outperformance over the blue-chips.
The Nifty Smallcap 100 index jumped 12 per cent in November while the benchmark Nifty 50 rose 5.5 per cent. On the other hand, the Nifty Midcap 100 index rose 10.4 per cent in November. In 2023, the Nifty is up 12 per cent, the Nifty Midcap is up 38 per cent, and the Nifty Small Cap is up 46 per cent.
In the previous session, the domestic equity market achieved record-high levels, starting December on a bullish note over all-round buying after India’s July-September quarter gross domestic product (GDP) data exceeded expectations.
The benchmark Nifty 50 hit its fresh record high of 20,291.55 -up 158.4 points or 0.78 per cent, during the intraday session. Nifty 50 closed 135 points, or 0.67 per cent, higher at 20,267.90 on Friday, December 1.
Sensex ended the day at 67,481.19, up 493 points, or 0.74 per cent. Sensex remained 446 points away-less than 1 per cent shy, from its all-time high of 67,927.23 which it hit on September 15 this year.
Vinod Nair, Head of Research at Geojit Financial Services said, “The market soared to new heights this week, decisively breaching the key resistance level and closing strongly above 20,000 levels…The IPO market maintained its vibrancy, highlighted by Tata Technology’s monumental listing, fostering increased investor confidence in riskier assets.”
‘’The broader market outperformed, with mid and small caps displaying resilience and no signs of fatigue. Investors remain optimistic about government spending and heightened consumption, driven by easing inflation, propelling growth in H2FY24,” added Nair.
Going forward, the primary market will witness a few new initial public offerings (IPO) across the mainboard and small-and-medium enterprises (SME) segments. The week will be crucial from the technical point of view as investors will closely eye the political developments for state election results along with domestic economic data.
Overall, analysts expect some volatility over assembly election results, however, the short-term technical outlook for benchmark indices continues to be in favor of the bulls. Investors will keenly eye crude oil prices, global trends, and central bank announcements.
Here are the key triggers for stock markets in the coming week:
RBI MPC Meeting:
Amid expectations that the central bank will keep the benchmark interest rates unchanged, the rate-setting monetary policy panel will begin deliberations in the coming week. Headed by RBI Governor Shaktikanta Das, the six-member MPC will meet for three days – from December 6 to December 8, and the decision will be announced on Friday, December 8 at 10 am by the RBI Governor.
The RBI has kept the repo rate unchanged at 6.5 per cent since February this year. This will be the central bank’s fourth MPC meeting for fiscal 2023-24. In the run-up to the MPC decision, rate-sensitive stocks will be in focus throughout the week.
The market largely expects the central bank to continue its current stance as India’s retail inflation continues to remain above its 4 per cent target and the US Federal Reserve has decided to keep a hawkish stance.
State assembly election results:
The state assembly elections’ results for Madhya Pradesh, Chhattisgarh, Rajasthan, Telangana, due on December 3, could trigger near-term volatility in the markets, said analysts. Mizoram results will be declared on December 4.
‘’The upcoming state polls are being considered a semi-final before the 2024 assembly elections. A stable political environment could boost investor confidence and drive the market higher. If the election outcome is not favorable, then we can expect a fall of 1-2 per cent in the market, but that will be a buying opportunity as the market will look for the general election in 2024,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
Exit polls of the five state elections have indicated political stability ahead of the General Elections 2024. Most exit polls on Thursday put the BJP ahead in Madhya Pradesh and gave it an edge in Rajasthan while predicting that it was an advantage for Congress in Telangana and Chhattisgarh.
Emkay Global Securities said that a decisive BJP win will reinforce the consensus view that the party is on the front foot for the 2024 general elections. This will likely add a further leg of the rally to the markets as policy continuity will be viewed as a positive growth shock in the medium term, it added.
“While state elections are largely a non-event for equity markets from a long-term perspective, there might be some sharp reaction early next week,” said Pramod Gubbi, founder of Marcellus Investment Management.
2 IPOs, 1 listing to hit D-Street:
In the SME segment, two new issues will open for subscription in the coming week. Sheetal Universal IPO will open for bidding on December 4 and Accent Microcell IPO will open for subscription on December 8. Among listings, shares of Swashthik Plascon will get listed on BSE SME on December 6.
FII Activity:
Foreign institutional investors (FIIs) have made a stellar comeback in Indian markets over the country’s strong macroeconomic fundamentals along with the resilience shown by the economy and stock markets. Foreign investors have emerged as net buyers of Indian equities for the six straight sessions pumping a total of ₹13,474 crore during these day.
Foreign portfolio investors (FPIs) also snapped a two-month selling streak in November as the net inflow stood at ₹9,001 crore, compared to over ₹39,000 crore worth of shares sold in September and October together.
“FPIs have reversed their selling strategy in India as the decline in US bond yields and the resilience of the Indian market have forced them to halt the streak. During the last six days, FPIs too were consistent buyers in India. The total buy figure of FPIs for 2023, so far, now stands at ₹10,4972 crore.
‘’Going forward, FPI response will be crucially determined by the market trend, which, in turn, will be influenced by the state election results. If the state election results turn out to be favourable for the ruling dispensation, the market will stage a rally,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
‘’FPIs are unlikely to miss that rally by big selling. They might buy into financials where the valuations are fair. However, since overall market valuations have reached high levels, FPIs may turn sellers at higher market levels,” he added.
Global Cues:
Global markets witnessed a bullish trend, buoyed by expectations that the European Central Bank has concluded its rate-hiking cycle amid a backdrop of easing inflation. The US market showed almost 10 per cent rallies only in the month of November. US 10-year bond yields and the dollar index are also cooling off, which gives strength to the market.
Aside from that, the US Federal Reserve Chairman Jerome Powell said on December 1 that ‘inflation is slowing steadily, but it’s too early to declare victory or to discuss when the Federal Reserve might cut interest rates.’ Investors gain confidence that US central bank heads and fellow policymakers are ready to call an end to interest rate increases.
Global bond yield, crude oil prices, movement of rupee against the dollar index will dictate market trends. Global macroeconomic data including S&P services PMI for USA and the UK, US ISM non-manufacturing prices, US trade balance, Initial jobless claims, employment rate, and nonfarm payrolls will also influence market sentiments.
‘’The buoyancy of the global markets, especially the US, has played a critical role in the recent up move and we expect the same to continue. The Dow Jones Industrial Average (DJIA) has surpassed the hurdle of the previous swing high of 35,700 levels and is likely to inch gradually towards its record high i.e. 36,952.65 levels. In case of any dip, the 35200-35700 zone would offer the needed cushion,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.
Oil Prices:
Oil prices declined more than 2 per cent in the previous session as investors remained cautious over the depth of supply cuts announced by the Organisation of Petroleum Exporting Countries and its allies (OPEC+). Concerns over sluggish global manufacturing activity also weighed on market sentiments.
Brent crude futures for February settled down $1.98, or 2.45 per cent, at $78.88 a barrel. US West Texas Intermediate crude futures (WTI) dropped $1.89, or 2.49 per cent, to $74.07 a barrel. For the week, Brent posted a decline of about 2.1 per cent, while WTI lost more than 1.9 per cent, according to news agency Reuters.
OPEC+ producers agreed on Thursday to remove around 2.2 million barrels per day (bpd) of oil from the global market in the first quarter of next year, with the total including a rollover of Saudi Arabia and Russia’s 1.3 million bpd of current voluntary cuts. Traders viewed the announcement with some skepticism, say analysts.
Corporate Action:
Panchsheel Organics Ltd will trade ex-dividend in the coming week, starting from Monday, December 4. Apart from this, Dhyaani Tile and Marblez Ltd and Pooja Entertainment And Films Ltd will trade ex bonus this week. Check full list here.
Technical View:
As long as Nifty 50 holds 20,000 (psychological mark-19,800 low of the week), marching towards 20,500 looks likely in the coming days despite intermittent consolidation. With the hurdles placed at 20350-20400, where 20000 will act as an immediate support, according to Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
While all the sectors are contributing to the move, a catch-up move in banking, FMCG and IT pack may result in selective outperformance so align your trades accordingly.
‘’We are eyeing the 20,500-20,750 zone in Nifty 50 and expect the index to hold the 19,850-20,050 zone, in case of any profit taking. Though the broader indices have been consistently beating the benchmark, we feel it is now time to be careful in stock picking in midcap and smallcap space and prefer high quality names,” said Religare’s Ajit Mishra.
The Bank Nifty continued its higher highs and higher lows formation for five days in a row. The index rebounded after a day of small profit-taking and climbed 332 points to 44,814 on Friday with above-average volumes, forming a bullish candlestick pattern with a minor upper shadow on the daily scale.
‘’On the downside, a substantial support level rests at 44,300, where the immediate hurdle on the upside is positioned at 45,000,” added Nanda.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 03 Dec 2023, 05:58 AM IST