Dalal Street
The market as a whole continued to do well for the second week in a row, with gains of 2.5% for the Nifty Midcap 100 and 1.9% for the Nifty Smallcap 100.
The Indian stock market finished the week on Friday, January 5, with no changes. The next trading week will be affected by a number of things, such as the start of the third-quarter earnings season, inflation data, and other special events that affect individual stocks.
The key equity indices, the Sensex and the Nifty 50, both finished the day higher on Friday for the second day in a row. At the end of the day, Sensex was 72,026.15, up 179 points, or almost 0.25%. The Nifty50 ended the day at 21,710.80, up 52 points, or 0.24%.
The market as a whole continued to do well for the second week in a row, with gains of 2.5% for the Nifty Midcap 100 and 1.9% for the Nifty Smallcap 100. Analysts still warn investors to be careful because of the upcoming results season and the fact that the Red Sea area is still uncertain.
“The market ended on a flat note, following weak global cues. The US 10-year yield edged higher before the release of US payroll data later today, which may change what people think the Fed will do.” Investors are also being careful before today’s inflation figures from the eurozone. Vinod Nair, Head of Research at Geojit Financial Services, said, “On the domestic front, the market is moving toward results season. We expect the overconfidence of the broader index may be put to the test if the December quarter earnings do not justify the valuation.”
Earnings in Q3
The BSE earnings calendar says that between January 8 and January 13, about 65 companies will report their profits. It will be January 11 for TCS, January 12 for Infosys, January 12 for HCL Tech, January 12 for Wipro, and January 12 for HDFC Life Insurance. These are the Nifty 50 companies that will report their December end results.
Analysts at Elara Securities think that the IT companies will have soft results, with growth of 1.4% to 1.6% in constant currency (CC).
The December quarter’s slow growth was caused by higher prices that lasted for a long time, delays in discretionary projects, and general slow growth. The holiday season in the US and Europe, which are Indian IT firms’ biggest businesses, makes the third quarter (October to December) usually not very busy.
Numbers for US inflation and data on the world economy
The US Bureau of Labor Statistics will tell us about the CPI (consumer price index) on January 11. The headline CPI is expected to go up 0.3% month-over-month in December. Reports say that the core CPI, which doesn’t include changes in food and energy prices, will also rise by 0.33 percent each month. How long the US Federal Reserve keeps rates high will depend on how inflation moves. The Fed has already said that rates could be lowered three times this year.
The Red Sea Crisis
The problem isn’t going away; Houthi rebels are still attacking commercial ships in the Red Sea, and the conflict between Israel and Hamas is getting worse. Maersk, a big shipping company, has already said that all of its ships will stay away from the Red Sea for the immediate future. Customers have been warned that this will cause problems.
As the crisis in the Red Sea gets worse, shipping costs are expected to rise by up to 60% and insurance rates by 20%, according to a study released on January 6 by the GTRI economic think tank. Last week, Indian government officials met with shipping companies to figure out what the situation meant for them.
The price of oil
Brent and WTI both went up at the end of the first week of the year. This week, WTI went up 3% to $73.81 per barrel. At the same time, Brent prices went up 2.2% and ended the day at $78.76 a barrel.
“Because of the trouble in the Middle East, the geopolitical trading premium needs to go up,” Reuters spoke with John Kilduff, partner at Again Capital LLC. “It’s hard for traders to fight the headlines.”
Data Points on the Domestic Economy
On the home front, people will be paying close attention to the CPI inflation rate for December, which is set to be released on January 12. Most experts think that inflation will rise by 10 to 20 basis points from the 5.5% reported in November. This is because food prices are likely to go up, but they think that core inflation will drop from 4.05 percent in November.
Along with CPI, November industrial production figures, foreign exchange reserves (for the week ending January 5), and bank loan and deposit growth (for the two weeks ending December 29) will also be made public on January 12.
Action on the primary market
It will be the first mainboard IPO of the year, and Jyoti CNC Automation will be it. People can start signing up on January 9 and end on January 11.
There will also be more activity in the SME IPO area. On January 8, Kaushalya Logistics will go public, and IBL Finance, New Swan Multitech, and Australian Premium Solar will also go public. Investors should keep an eye on these companies.
The flow of FII and DII
Foreign institutional investors bought during the first trading week of the year, while local institutional investors sold. Last week, FIIs bought Rs 3,290.23 crore worth of stocks, while DIIs sold Rs 7,296.50 crore worth of stocks.
FII inflows are similar to what they were in the last two months of 2023, when foreign investors came back because US bond prices fell sharply and the dollar fell.
When December came around, FPIs bought a lot of banking services and IT. FPIs also bought in the car, capital goods, oil and gas, and telecom industries. This is because U.S. interest rates are likely to go down even more in 2024. “FIIs are likely to make more purchases in 2024 as well, especially in the first few months of 2024 before the general elections,” Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
A technical look
Nifty is making new higher highs every day on the charts, and support levels can be seen at 21,500 and 21,400. Arvinder Singh Nanda, Senior Vice President of Master Capital Services, said that there will be immediate opposition at 21,800 and 21,900.
Pravesh Gour, a senior technical analyst at Swastika Investmart, said that the next targets for Nifty will be 22,000 and 22,200 if it can stay above the 21,800 line.
“Bank Nifty is staying close to its 20-DMA at around 47,800.” On the upside, the area between 48,500 and 48,800 is a supply zone right now. If prices go above this, we can expect a move to the 49,500–50,000 level. It will be important to keep above 47,000 if it falls below the 20-DMA, Gour said.
F&O Signals
Options data showed that the 21,800 level would be an instant resistance for the Nifty 50, as a break of that level could take the index above the 22,000 mark. The 21,700–21,500 level, on the other hand, would be the important support area.
On the options market, the most active strike was the 22,500 strike, followed by the 23,000 strike and the 21,800 strike. There was meaningful writing at these strikes in a similar order. On the other hand, the most active strike was the 21,000 strike, followed by the 21,500 strike and the 21,700 strike. There was writing at this strike, then the 21,000 strike and the 21,500 strike.
During the last week, volatility dropped sharply after steadily rising for five weeks. This made the trend favorable for bulls. From 14.5 levels last week to 12.63 levels this week, the India VIX fear index fell 12.91 percent.
IPOs coming up next week
Early-stage company Jyoti CNC Automation will be the first mainboard IPO to hit Dalal Street in 2024. From January 9 to January 11, people can sign up to receive the issue.
At the same time, things are still going on in the SME IPO field. On January 8, Kaushalya Logistics will go public. Also, keep an eye on the planned IPOs of IBL Finance, New Swan Multitech, and Australian Premium Solar.
“The year 2023 was a busy one for the Indian primary market.” Even though the beginning of the year was a little rough, things got better in the secondary market, which led to more fund-raising starting in the second quarter of 2023. The market is likely to pick up even more speed now that more companies are lining up. A total of at least ₹1 lakh crore is expected to be raised, which is more than twice as much as was raised in 2023. As of now, reports say that as many as 28 companies have already gotten the go-ahead from SEBI to go ahead with their IPOs, which are meant to raise more than ₹30,000 crore. In the meantime, 36 other companies have sent SEBI drafts of their “red herring prospectuses” (DRHP) for approval. A managing director of Pantomath Capital Advisors Pvt. Ltd., Mahavir Lunawat, said, “These companies want to raise a total of ₹50,000 crore.”
Corporate Activity
On Monday, the boards of Bajaj Auto and Chambal Fertilisers & Chemicals will meet to discuss and approve a share buyback.
The ex-date and record date for the sub-division of Cochin Shipyard shares will be January 10; the ex-date and record date for a 1:1 bonus share of Integra Essentia and Newgen Software Technologies will be January 11.
Bond Yields
The benchmark bond yield in India began the New Year with a rising bias, with the benchmark bond yield registering its highest weekly climb in three months, amid increased supply pressure and a reversal in the downtrend seen in US yields in recent weeks.
The 10-year benchmark bond yield finished at 7.2348%, up from 7.2208% the previous day. The yield increased by 6 basis points last week.
US rates surged this week, with the 10-year US yield jumping above 4%, as robust economic data caused investors to reduce expectations of aggressive Fed rate cuts through 2024.
“The fear of over-tightening will also influence Fed timing.” Labor markets and economic growth should provide signs in this regard. While the Fed may lower rates in March, we feel a mid-year rate cut, most likely in May, is more plausible,” said Sandeep Yadav, head of fixed income at DSP Mutual Fund.
According to the CME FedWatch tool, the odds of the Fed cutting rates in March are now around 65%, down from about 90% last week. The probability of a 150 basis point rate cut in 2024 has also fallen to 54%, down from 79% last week.
Gold
Gold concluded the week with weekly losses due to a stronger dollar and rising bond yields. On Friday, the February contract on the MCX finished at Rs 62,579 per 10 gram, up Rs 22 or 0.04%, while March Silver contracts settled at Rs 72,580, down Rs 7.
Yellow metal futures closed at $2,052.60 on the Comex, up $2.60 or 0.13%, while silver futures closed at $23.385, up $0.198 or 0.850%.
“With a moderate baris bias, gold prices are expected to trade in a broader range of $2017-2070.” A drop below the 2017 level will open the door to more declines towards the $1994 level. “The upside appears to be limited to the $2070 and $2088 levels,” said Anuj Gupta, Head Commodity & Currency, HDFC Securities.
Support is anticipated at Rs 61,950-61,400 for MCX February gold futures, while resistance is projected at Rs 63,080-63,320. Guta stated.
Silver’s short-term trend remains bearish, and it may drop to the $21.80 level in the near term, according to an HDFC Securities analyst. According to this analyst, support for MCX March silver futures is at Rs 71,080-69,900, while resistance is at Rs 74,140 (60-DEMA)-75,000.
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