Dalal Street
Dalal Street – Going ahead, Bank of Japan’s policy decision, minutes of RBI MPC meeting and main market action will be crucial to observe. All eyes are on whether markets will soar fresh highs and maintain rising run for eighth straight week.
In September, the IT company had forecast for barely 2-5% increase in sales for the current financial year, citing the lackluster demand for IT services amid a downturn in discretionary spending. It will be interesting to observe if Accenture modifies their guidance.
Corporate Action Vedanta’s board will meet on Monday to evaluate payment of interim dividend, and on Tuesday to consider financing through the issuing of non-convertible debentures on a private placement basis.
Recently listed Flair Writing Industries is slated to report its earnings for the September quarter on Wednesday.
Following the robust bounce that Indian stocks enjoyed last week, the bulls are on a firm footing on Dalal Street, and market pundits expect them riding indexes further higher in the short future.
Last week’s surge was fueled entirely by foreign inflows, which will be needed for a prolonged up-move in the market.
After the 7% gains logged in the Nifty 50 so far in December, technical indicators, however, show that the market has slipped into an overbought zone, and some cooling off to that amount is necessary.
“From a technical standpoint, the Nifty is maintaining its bullish momentum, marked by a breakout from a flag formation. The immediate aim is at 21,700, with the prospect of additional upward movement to 22,000,although some consolidation may follow,” said Santosh Meena, head of research, Swastika Investmart.
On Friday, the Nifty 50 concluded at a record closing high of 21,456.65 points with 1.3% gains.
While the forecast for the secondary market remains optimistic, the activity is anticipated to be more in the primary market as a multitude of IPOs are set to enter the Street.
FOMC, IPO action and 10 other factors that will sway D-Street this week
RBI MPC minutes
On December 22, the Reserve Bank of India will issue the minutes of its latest policy meeting. On December 8, the RBI, as predicted, held the repo rate, at which banks borrow short-term loans from the central bank, at 6.5 percent, since inflation continued higher than the central bank’s medium-term aim of 4 percent.
Announcing the MPC decision, RBI Governor Shaktikanta Das said the rate-setting panel was carefully following the inflation and was prepared to act on rate front in keeping with the facts.
Primary market activity
IPO Street was abuzz in the week gone by as a swarm of firms made a beeline toward D-Street. In the mainboard category, DOMS Industries and India Shelter Finance closed their public offerings, while Inox India’s offer is slated to end on December 18. All these firms will list on the bourses as per the T+3 listing requirements, where T is the close day of the offering.
On the same day, IPOs of Suraj Estate Developers, Motisons Jewellers, Muthoot Microfin will open for subscription, followed by Happy Forgings, RBZ Jewellers, Mufti Menswear on December 19. Azad Engineering IPO will launch on December 20 while Innova Captab on December 21.
In the SME market, investors might look out for Sahara Maritime, Shanti Spintex, Electro Force and Trident Techlabs.
FII flows
The conventional perception on D-Street is that foreign investors are returning with a bang. FIIs (foreign institutional investors) have so far acquired Rs 29,700 crore worth of shares in December, after having sold roughly Rs 75,000 crore worth of equities in the prior three months.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services stated, “A major development in December, particularly after the state election results, is FPIs turning buyers.”
“FPIs have substantially acquired equities in banking and IT areas. FPI purchasing is expected to persist, going forward. India is one of the top investment destinations of FPIs. There is a near unanimity currently in the global investing community that India has the greatest potential among the rising countries for sustainable development for many years to come,” he added.
Crude pricing
The International Energy Agency has estimated that world oil consumption will climb by 1.1 million barrels per day in 2024, up marginally from its prior prediction of 930,000 barrels per day. According to Sharekhan, crude oil may soar to $75 in the near-term. Support is at $70/$67. Since, India remains net crude oil importer, the prices will be keenly followed.
US Q3 GDP Growth
Global investors will keep a watch on the final GDP statistics by the world’s largest economy for the September quarter of current calendar year. In the second estimates issued in November, the US economy grew at a 5.2 percent rate, higher than its preliminary projections of 4.9 percent reported in October month. This is better than predictions of approximately 5 percent by majority of experts, and significantly better than the growth rate of 2.1 percent reported in the April-June quarter.
Accenture Results
In the week gone by, the information technology had one of the finest periods in several months, as the Nifty IT index climbed 7%, posting its highest-ever weekly gains in over three years.
This rise occurred on the heels of encouraging statements from the US Federal Reserve on the interest rate trajectory for 2024.
However, durability of the gains in the following week will rest upon the quarterly reports of Accenture Plc. The US’ technology major will report its earnings for the quarter ended in November on Tuesday.
In September, the IT company had forecast for barely 2-5% increase in sales for the current financial year, citing the lackluster demand for IT services amid a downturn in discretionary spending. It will be interesting to observe if Accenture modifies their guidance.
Corporate Action
Corporate Action Vedanta’s board will meet on Monday to evaluate payment of interim dividend, and on Tuesday to consider financing through the issuing of non-convertible debentures on a private placement basis.
Recently listed Flair Writing Industries is slated to report its earnings for the September quarter on Wednesday.
Global Economic Data
Further, new home sales, durable goods orders, personal income & spending and housing starts statistics for November from the US will also be observed. Apart from that, the participants will also focus on United Kingdom’s third quarter (2023) GDP data as well as inflation numbers for November, and inflation rate in Europe for November.
Technical view
Nifty is sustaining its bullish trend, characterized by a breakthrough from a flag pattern. Meena of Investmart feels that the immediate goal stays at 21,700, with the prospect of additional 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,” he noted.
In the case of Bank Nifty, the successful closure over the 48,000 obstacle opens the door for fresh positive momentum into levels of 48,500/48,800.
“Immediate support lies at 47,500, with a critical support zone at 47,000–46,800 in case of a downturn,” Meena added.
F&O Cues
The Options data suggested that the Nifty 50 is expected to march towards 22,000-22,200 zone in coming weeks, with support at 21,300-21,000 area, but considering the Put-Call ratio at 1.47 levels (the highest in the last 12 consecutive sessions), up from 1.37 in previous session, the some kind of consolidation and retracement can’t be ruled out before getting back into action mode again as the index surged more than 6 percent in current month, experts said.
On the Call side, the maximum open interest was visible at 22,000 strike, followed by 21,500 strike, with meaningful writing at 22,200 strike, then 22,000 strike, while in case of Put, 21,300 strike owned the maximum open interest, followed by 21,200 strike and 21,000 strike, with writing at 21,300 strike, then 21,400 strike and 21,200 strike.
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