A rally in the last two sessions saw Nifty cut its losses as the index ended with a weekly cut of 0.1%. When markets resume trading on Monday, a host of important domestic and global events are lined up during this week that are likely to impact them.
“Benchmark indices ended the first week of 2024 with minor losses, and the midcap index ended the week with gains for the second consecutive week. Sectoral indices ended the week on a mixed note. Eight out of 12 sectors rose while four declined. The realty sector was the top gainer, rising more than 7%,” Arvinder Singh Nanda, Senior Vice President of Master Capital Services, said.
The market will react to the domestic and global macroeconomic data, global bond yield, crude oil inventories, movement of the dollar index, FII and DII investment activities this week, he added.
Factors that are likely to impact market movement this week:
1) US Markets
US markets ended higher on Friday, though the gains were minor. While Dow 30 closed at 37,466.10, up by 25.77 points or 0.07%, the S&P 500 advanced 8.56 points or 0.18% to finish at 4,697.24. Meanwhile, the Nasdaq Composite settled at 14,524.10, higher by 13.77 points or 0.09%.
When Indian markets reopen on Monday, they will take cues from the Friday closing of the US markets. They will also track movement in GIFT Nifty futures on Tuesday. The latter is an early indicator of movement in the Nifty50.
2) Rupee Vs Dollar
The rupee has made a sturdier start to 2024 compared to Asian peers, most of which fell on Friday and were down week-on-week (WoW), as the dollar gained amid a paring of early rate cut expectations in the United States. The INR closed at 83.15 against the US dollar, higher by 0.1% compared with its close at 83.23 in the previous session. The local unit was a little changed WoW.
“Rupee is expected to move between 83-83.50 in the coming week as RBI keeps a tab on both ends thus keeping the pair in a small range. Exporters need to keep selling the good upticks near to 83.35, while importers need to buy dips near 83.10 and 83.00 if they get it,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said.
3) Q3FY24 earnings
Street will have its eyes on the earnings season with top IT companies Tata Consultancy Services (TCS) and Infosys announcing their results on January 11, Thursday. Next will be Wipro and HCL Technologies who will declare their earnings on Friday.
HDFC AMC, Anand Rathi Wealth, and HDFC Life Insurance Company are other results that investors will be watching out for.
Also Read: Infosys Q3 Results Preview: PAT seen declining by 9.5% YoY to 5,960 crore, says Elara
4) Corporate Action
The boards of Bajaj Auto and Chambal Fertilisers & Chemicals will meet on Monday to consider and approve the buyback of shares.
January 10 will be the ex-date and record date for the sub-division of Cochin Shipyard shares; January 11 will be the ex-date and record date for a 1:1 bonus share of Integra Essentia and Newgen Software Technologies.
Also Read: Bajaj Auto, Chambal Fertilisers’ boards to meet on Monday to mull share buyback
5) Technical Factors
Analysts see strong trends continuing, going into the week. Following a rapid rebound from its positional support at 21,500, bullish activity has resumed in the market, with buying interest evident during dips, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities. The prevailing sentiment is bullish, but Nifty encounters initial resistance at 21,750, facing selling pressure Shah said as he sees immediate support at 21,600. A conclusive close above 21,750 levels could propel Nifty towards the 22,000 mark, signaling further upward movement, he added.
6) FII/DII Action
FIIs and DIIs will be crucial in how markets perform on Monday. On Friday, foreign institutional investors (FIIs) were net buyers and purchased Indian equities worth Rs 1,697 crore. Meanwhile, domestic institutional investors (DIIs) were net sellers at Rs 3,498 crore.
7) IPO Action
The initial public offer (IPO) of Jyoti CNC automation, which opens on January 9, along with two other SME issues will kickstart the primary market activity in 2024. The three-day issue, which closes on January 11, is priced in the range of Rs 315-331 per share. The IPO is completely a fresh equity issue worth Rs 1,000 crore.
8) Crude Oil
On the Comex, US WTI crude oil futures ended at $73.920 per bbl, up by $1.760 or 2.440% while Brent oil futures at $78.840, higher by $1.310 or 1.690%. As for MCX crude oil futures, the February contract ended at Rs 6,165, up by Rs 4 or 0.06%.
Oil prices are critical to Indian macros and also inflation and impact overall sentiments in the markets.
9) Bond Yields
The Indian government bond yields started the New Year with a rising bias, with the benchmark bond yield posting its biggest weekly jump in three months, amid rising supply pressure and a reversal in the downtrend witnessed in the last few weeks in US yields.
The 10-year benchmark bond yield ended at 7.2348% after closing at 7.2208% in the previous session. The yield rose 6 basis points on the week.
US yields rose through the week, with the 10-year US yield rising above 4%, after strong economic data led investors to pare down expectations of aggressive rate cuts from the Federal Reserve through 2024.
“Fed timing will also be driven by the fear of over-tightening. The labour markets and economic growth should provide signals for this. While Fed cuts in March are possible, we believe a mid-year rate cut, probably May, is more likely,” said Sandeep Yadav, head of fixed income at DSP Mutual Fund.
The odds of a rate cut by the Fed in March stood at 65%, down from around 90% last week, according to the CME FedWatch tool. The odds of 150 basis points of rate cuts in 2024 have also dropped to 54%, down from 79% last week.
10) Gold
Gold ended with weekly declines amid a stronger dollar and higher bond yields. On Friday, the February contract on MCX closed with minor gains of Rs 22 or 0.04% at Rs 62,579 per 10 gram, while March Silver contracts settled at Rs 72,580, down by Rs 7.
On the Comex, yellow metal futures finished at $2,052.60, higher by $2.60 or 0.13%, while Silver futures closed at $ 23.385, up by $0.198 or 0.850%.
“Gold prices are expected to trade in a broader range of $2017-2070 with moderate baris bias. A fall below the 2017 level will open further downsides towards the $1994 level. Upside looks limited to $2070 and $2088 levels,” Anuj Gupta, Head Commodity & Currency, HDFC Securities, said.
For MCX February gold futures, support is seen at Rs 61,950-61,400, while resistance at Rs 63,080-63,320, Guta said.
Short-term trend remains bearish for silver and it may correct to the $21.80 level in the short term, the HDFC Securities analyst said. For MCX March silver futures, support is placed at Rs 71,080-69,900 while resistance is at Rs 74,140 (60-DEMA)-75,000, this analyst said.
(With Inputs from Agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
