Key Trends and Insights for Investors

The Indian stock market is set to wrap up 2024 on a resilient note, overcoming multiple global and domestic challenges. The past week was marked by consolidation and subdued trading sentiment, as foreign outflows and muted global cues dampened the year-end momentum. Despite these hurdles, the benchmark indices showed signs of recovery, driven by auto and banking stocks, positioning the market for a dynamic start in 2025.

Market Performance and Key Benchmarks

• Nifty 50: Gained nearly 1%, closing at 23,813.
• BSE Sensex: Climbed 0.84%, ending at 78,699.

The frontline indices rebounded after a sharp 5% drop in the previous week—the steepest decline in 30 months—triggered by the US Federal Reserve’s hawkish stance on rate cuts for 2025. The recovery was supported by oversold auto and banking stocks, attracting institutional investors.

Sectoral Overview

• Winners: Pharma, auto, and FMCG sectors showcased resilience amid the volatility.
• Laggers: Metals underperformed, reflecting cautious investor sentiment.
• Volatility Index (India VIX): Declined 12%, indicating improved investor confidence.

Factors Driving Market Sentiment

1. Q3 Corporate Updates and Auto Sales: Investors eagerly await December quarter updates and auto sales data. A positive surprise in these metrics could set the tone for early 2025.
2. Foreign and Domestic Fund Activity: Foreign Institutional Investors (FIIs) remained net sellers, offloading ₹6,322 crore, while Domestic Institutional Investors (DIIs) provided robust support with net investments of ₹10,927 crore.
3. Global Cues: Rising US bond yields and a strengthening dollar continued to influence FII behavior, but expectations of growth recovery in 2025 could reverse the trend.

Primary Market Action

The upcoming week will see significant activity in the IPO segment. Major listings include Ventive Hospitality, Senores Pharmaceuticals, and Carraro India, alongside IPOs in both the mainboard and SME segments.

Technical Outlook

• Nifty 50: The index is striving to sustain above its 200-day moving average (200-DMA).
  • Support Levels: 23,650 and 23,500.
  • Resistance Levels: 24,100–24,400.
• Bank Nifty:
  • Key Resistance: 51,800–52,000, with a potential for a breakout to 52,500.
  • Support Levels: 50,900 and 50,500.

Traders are advised to adopt a “sell on rise” strategy near resistance levels while focusing on fundamentally strong stocks for long-term gains.

Global and Domestic Triggers to Watch

1. Global Economic Data: Key indicators like US jobless claims, ISM Manufacturing PMI, and China’s Manufacturing PMI will shape global market trends.
2. Oil Prices: Brent crude futures settled at $74.17 per barrel, buoyed by optimism over Chinese demand recovery in 2025.
3. Pre-Budget Expectations: Investors are likely to realign portfolios in anticipation of the Union Budget, with auto, FMCG, and banking sectors under the spotlight.

Sectoral Insights

• Pharma and Healthcare: Continues to outperform, offering potential buying opportunities.
• Auto Sector: Expected to see increased traction, driven by improved valuations and a potential pickup in December volumes.
• PSU and Metals: Remain vulnerable to further downside.

By staying vigilant about these trends and aligning investment strategies accordingly, investors can navigate the evolving market dynamics effectively.