Dalal Street
More quarterly figures, BoJ and ECB interest rate decisions, US GDP data, and pre-Budget emotions are expected to impact market dynamics in the holiday-shortened week.
In the third week of December, investors will watch local macroeconomic indicators, primary market action, foreign capital inflow, crude oil prices, and global cues.
The Nifty 50 index and BSE Sensex climbed 2.3% in the week, extending their longest winning streak since January 2018.
Over the week, the BSE benchmark rose 1,658.15 points or 2.37 percent, while the Nifty rose 487.25 points or 2.32 percent. After the US Federal Reserve ended its tightening cycle, global cues drove foreign investments into Indian markets.
Domestic equities rose as Fed Chair Jerome Powell acknowledged the risks of delaying rate cuts on Wednesday, boosting expectations of a 25 basis points (bps) rate cut by March and rallying global stock markets.
Q3 earnings
Over 200 corporations would report Q3 FY24 earnings. The biggest are Axis Bank (Jan 23), Tata Steel (Jan 24), Cipla (Jan 25), and Bajaj Auto. Karntaka Bank, Blue Dart, Oberoi Realty, Railtel, VST Industries, Tata Chemical, Indian Bank, UCO Bank, SBI Cards, and others are listed.
ECB and BoJ rate decisions
The Bank of Japan’s January 23 rate decision is likely to maintain ultra-loose monetary conditions. Reuters said that markets predict a rate hike in March or April.
The European Central Bank is likewise anticipated to maintain rates on January 25. Bloomberg predicted four 25-bps cuts starting June.
US GDP
Advance estimates from the US Bureau of Economic Analysis predict Q4 GDP growth of 2% (seasonally adjusted annual rate) on January 25. That’s down from Q3’s 4.9 percent surge.
GDP growth will indicate if the US is entering a recession and what the Federal Reserve will do next.
Pre-budget mood
The Street expects huge capex announcements again this year. Last week, railway and electricity equities reached fresh highs amid large trade volumes, showing optimism.
Fiscal consolidation may limit government capex growth below 10%, according to Jefferies. This could disappoint the market and force declines in government capex stocks.
FII flows
Foreign institutional investors (FIIs) sold Rs 24,147 crore in stock in three days from 17th to 19th January. Dr. V K Vijayakumar, Geojit Financial Services Chief Investment Strategist, believes FPIs sold for two main reasons.
“One, the 10-year US bond rate rose from 3.9 percent to 4.15 percent, causing capital outflows from emerging countries like India, Taiwan, South Korea, and Hong Kong. Two, since India’s valuations are high, FPIs utilized HDFC Bank’s disappointing results to push large sales. FPI shorts rose, he stated.
This tendency must be observed if it continues.
Primary market action
Medi Assist and Epack Durable will list on January 23 after closing their Rs 640 crore IPOs. Nova AgriTech’s IPO will have a January 23–25 bidding period. Plans to raise Rs 143 crore.
Brisk Technovision opens January 23, DelaPlex and Fhonebox Retail on January 24 in the SME segment. Harshdeep Hortico and Megatherm Induction IPOs begin January 25.
The technical view
Analysts say the Nifty’s support is 21,300-21,400, and breaking it might increase selling pressure. The 21,750-21,850 zone is expected to represent a higher-side challenge. Master Capital Services Senior Vice President Arvinder Singh Nanda said maximum option writing is 21,500 and 21,800.
With Bank Nifty, a significant support level is 45,000, and the price may trade sideways between 45,000 and 47,000. The hurdles are 46,500–47,000. He added that a breach might cause selling pressure and a drop.
F&O signals
In weekly options, the 22,500 strike had the most Call open interest, followed by 22,000 and 21,700 strikes, with meaningful Call writing at 21,700, 22,400, and 21,900 strikes. On the Put side, the maximum open interest was at 20,500, followed by 21,000 and 21,500 strikes, with writing at 21,000 and 21,100 strikes.
According to the options data, 21,700 is anticipated to be immediate resistance for the Nifty 50, which might push the index toward 21,900-22,000, while 21,500 and 21,000 are likely to provide support.
Option activity at 21,500 strike will indicate Nifty’s direction in the coming days. If put writers leave the 21,500 strike, the decline might reach 21,000 “Samco Securities derivatives & technical analyst Ashwin Ramani warned.
D-Street gets 12 IPOs, 8 listings:
Eight mainboard IPOs begin subscribing next week. On December 18, Muthoot Microfin, Motisons Jewellers, and Suraj Estate Developers IPOs reopen.
On December 19, Happy Forgings, RBZ Jewellers, and Mufti Menswear IPOs begin. On December 20 and 21, Azad Engineering and Innova Captab IPOs will begin bidding.
On December 18, Sahara Maritime IPO will open for SME bidding. IPOs for Shanti Spintex, Electro Force India, and Trident Techlabs will begin on December 19 and 21, respectively.
On December 20, BSE and NSE will list India Shelter Finance and DOMS shares, and on December 21, Inox CVA shares.
December 18 will see Presstonic Engineering shares launched on NSE SME. December 19 will provide S J Logistics NSE SME status. Benchmark Computer Solutions and Siyaram Recycling will list on BSE SME on December 21. December 21 will see Shree OSFM E-Mobility shares launched on NSE SME.
December 18 marks the end of subscription for INOX India Ltd, Benchmark Computer Solutions, Siyaram Recycling, and Shree OSFM E-Mobility IPOs.
India led the world with the most IPOs in 2023. Despite global uncertainty, IPO activity increased, demonstrating strong optimism in the Indian economy. Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd., expects this tendency to continue in 2024.
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