On the stock-specific front, Mangalam Cement, TVS Holdings, INOX Green Energy, Hudco, HBL Power, Mastek, KPI Green Energy, RBL Bank, Equitas Small Finance Bank, Coforge, Aether Industries, and others are among the smallcaps that logged a double-digit rise in their share prices last week.
Markets’ Weekly Print
The NSE Nifty 50 index and BSE Sensex rose about 2.3 per cent in the week, extending gains for the seventh consecutive week, marking their longest winning run since January 2018.
Specifically, the BSE benchmark jumped 1,658.15 points or 2.37 per cent on the week, while the Nifty climbed 487.25 points or 2.32 per cent. Global cues triggered foreign capital inflows into Indian markets after the US Federal Reserve signalled the end of its tightening cycle.
The surge in domestic equities closely follows Fed Chair Jerome Powell’s acknowledgment of the risks of delaying rate cuts on Wednesday, bolstering expectations of a 25 basis points (bps) rate cut by March and fueling a rally across global stock markets. The dovish stance by US Fed also led to a crash in US bond yields to 4 per cent, which intensified foreign inflows last week.
The high weightage information technology (IT) index gained about 2 per cent and was among the top sectoral gainers. IT companies, drawing a significant share of their revenue from the US, jumped 7.16 per cent this week, logging their best week in 26 months. The metal index climbed 5 per cent, led by an increase in global metal prices as the US dollar came under pressure following the Fed’s commentary on future rate trajectory.
Vinod Nair, Head of Research at Geojit Financial Services said, ‘’The market surged to new highs, buoyed by positive indicators from both domestic and global fronts. Robust domestic industrial production and manufacturing PMI, coupled with the RBI’s positive remarks on India’s GDP forecast, contributed to the bullish trend.
Investors expressed confidence that clouds over US economic growth would dissipate in H2CY24, anticipating a soft landing facilitated by normalization in monetary policy. The IT sector rallied 7.6 per cent this week in expectation of a rise in demand from the US, optimism about AI-based opportunities.”
Previous Session
On Friday, Sensex breached the 71,000 mark during the session, as domestic macroeconomic data and easing concerns over the US economic growth bolstered market sentiment.
Rising for the third straight session, the 30-share BSE Sensex jumped 969.55 points or 1.37 per cent to settle at its record closing high of 71,483.75. During the day, it surged 1,091.56 points or 1.54 per cent to 71,605.76, logging its all-time intra-day high level.
The Nifty 50 climbed 273.95 points or 1.29 per cent to settle at its new closing high of 21,456.65. During the day, it zoomed 309.6 points or 1.46 per cent to hit its record intra-day peak of 21,492.30.
In the broader market, the BSE smallcap gauge climbed 0.58 per cent and the midcap index dipped 0.07 per cent. The Nifty Midcap 100 touched record high, hitting a 52-week high-mark of 45,814.45, and closed up 0.11 per cent at 45,586.55 level, while the Nifty Smallcap 100 ended 0.71 per cent higher.
The Indian rupee jumped 33 paise against the US dollar on Friday, posting its biggest single-day gain in more than eight months amid heavy dollar inflows. The local currency ended at 83.00 a dollar, up 0.4 per cent on the day, as compared to its previous close of 83.33, registering its best single-day performance since April 5.
What’s driving the rally in Indian markets?
Global cues such as the US Fed policy decision and lower crude oil prices have supported the markets. However, among domestic cues, the latest economic data as well as the rate pause by the Reserve Bank of India (RBI) also led to the rally.
The Indian economy grew 7.6 per cent during the July-September quarter for fiscal 2023-24 (Q2FY24), remaining the fastest-growing major economy in the world, according to the gross domestic product (GDP) data released by the statistics ministry.
Also, the BJP winning by a majority of votes in Madhya Pradesh, Rajasthan, and Chhattisgarh in the state assembly elections on December 13, instilled a sense of political stability ahead of General Elections 2024. Market analysts say that a stable political environment could boost investor confidence and drive the market higher.
Falling crude oil prices provided much-needed relief to the Indian economy, as lower oil import bills translate to lower inflation and a more favorable balance of payments. It also becomes a positive factor for oil marketing companies.
Foreign Institutional Investors (FIIs) played a pivotal role in driving market activity, demonstrating their confidence by emerging as net buyers of Indian equities for all five out of five sessions this week and pumping a total of ₹18,858.34 crore. FIIs infused ₹9,239.42 crore on Friday alone.
Foreign portfolio investors (FPIs) continued their buying streak and have purchased ₹42,733 crore worth of Indian equities in December so far. FPI inflow intensified after the Fed policy decision and crash of US bond yields.
Where are markets headed?
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd. said, ‘’Equity Markets are witnessing a Santa rally globally post the dovish outlook by US Fed and fall in dollar index. This along with strong FIIs buying and healthy macros, supported the positivity in Indian Markets. Nifty has surged ~3 per cent in last two day and we expect this optimism to continue next week on the back of a liquidity driven rally.”
Analysts noted that the rotational buying across the key sectors has been pushing the index higher with marginal correction in between. ‘’All indications are in the favor of ongoing trend continuing and we expect the Nifty to inch towards 22,150 levels. Traders should continue with the “buy on dips” approach, with the support zone now around 20,700-21,000 levels.,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd
‘’A sharp up move in the IT and banking heavyweights has strengthened our favorable view while others are also contributing on a rotational basis. Traders should align their trades accordingly and stay selective in midcap and smallcap space,” added Mishra.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 16 Dec 2023, 08:57 PM IST
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