Indian equity benchmarks extended gains and settled at fresh record closing highs for yet another day on Friday led by strong gains in IT, TECK and Metal stocks amid an optimistic trend in global markets. After the initial gap-up opening, the markets remained in a range for most part of the session as traders took encouragement with report that net direct tax collection in the eight months of the current fiscal touched 58.34 per cent of Budget Estimates (BE) at Rs 10.64 lakh crore. The Ministry of Finance said the net tax collection for April-November stood at Rs 10.64 lakh crore, which is 23.4 per cent higher than the corresponding period of last year. Sentiments remained positive with India Ratings' report stating that the liquidity conditions in the Indian banking system are expected to see substantial improvement from January 2024, owing to a surge in government spending ahead of the vote on account and Foreign Portfolio Investment (FPI) flows in equity markets. It added that the liquidity surplus could touch up to Rs 50,000 crore. Markets witnessed a sharp surge in the final hour of trade as traders took support with the provisional payroll data of Employees' State Insurance Corporation (ESIC) revealing that 17.28 lakh new employees have been added in the month of October, 2023. Around 23,468 new establishments have been registered and brought under the social security umbrella of the Employees' State Insurance Corporation in the month of October, 2023, thus ensuring more coverage. Continuous foreign fund inflows into the equity markets also fuelled the rally in stocks. Foreign Institutional Investors (FIIs) bought equities worth Rs 3,570.07 crore on Thursday, according to exchange data. Finally, the BSE Sensex rose 969.55 points or 1.37% to 71,483.75 and the CNX Nifty was up by 273.95 points or 1.29% to 21,456.65.

The US markets, after showing strong performance the past several sessions, turned volatile to end mostly higher on Friday. Despite the choppy trading, the Dow reached another new record closing high. Optimism about the outlook for interest rates has contributed to the recent strength on Wall Street, although hopes for near-term interest rate cuts were partly offset by comments from New York Federal Reserve President John Williams. Williams reportedly said the Fed is not really talking about rate cuts right now and is focused on whether monetary policy is sufficiently restrictive to ensure inflation comes back down to 2 percent. On the economic data front, the Federal Reserve released a report showing a modest rebound in U.S. industrial production in the month of November. The report said industrial production rose by 0.2 percent in November after slumping by a downwardly revised 0.9 percent in October. Street had expected industrial production to climb by 0.3 percent compared to the 0.6 percent decrease originally reported for the previous month. The rebound in industrial production came as manufacturing output increased by 0.3 percent in November after plunging by 1.2 percent in October following the resolution of strikes at several major automakers.

Crude oil futures ended lower on Friday as a dollar rebounded and sent oil prices down. The currency gained after New York Fed President Williams pushed back against market bets of multiple rate cuts by the central bank next year. An upward revision in oil demand forecast by the International Energy Agency (IEA), and a weak dollar pushed up crude oil prices over the past few sessions. The IEA lifted its oil demand forecast for 2024, citing an improvement in the outlook for U.S. demand and lower oil prices. Meanwhile, a report from Baker Hughes showed the oil and gas rig count fell by 3 to 623 in the week to December 15. Benchmark crude oil futures for January delivery fell $0.15 or 0.21 percent to settle at $71.43 a barrel on the New York Mercantile Exchange. However, Brent crude for February delivery was up by $0.01 to settle at $76.62 a barrel on London's Intercontinental Exchange.   

Indian rupee ended higher for the 2nd consecutive day against the US dollar on Friday, following a record-breaking rally in domestic stocks. Sentiments remained up-beat with Ministry of Finance stating that net direct tax collection in the eight months (April-November) of the current fiscal (FY24) touched 58.34 per cent of Budget Estimates (BE) at Rs 10.64 lakh crore. Heavy buying by foreign investors also boosted the rupee sentiment. Foreign Institutional Investors (FIIs) were net buyers in the capital market on Thursday as they bought shares worth Rs 3,570.07 crore, according to exchange data. On the global front, the dollar headed for its biggest weekly drop in five months on Friday as the prospect of rate cuts from the Federal Reserve against a tough line from central banks in Europe on monetary policy fed weekly gains in the euro and the pound. Finally, the rupee ended at 83.01 (Provisional), stronger by 29 paise from its previous close of 83.30 on Thursday.

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 20427.91 crore against gross selling of Rs 16954.13 crore, while in the debt segment, the gross purchase was of Rs 2336.92 crore with gross sales of Rs 792.59 crore. Besides, in the hybrid segment, the gross buying was of Rs 48.19 crore against gross selling of Rs 58.43 crore.

The US markets ended mostly higher on Friday after week's dovish pivot by the Federal Reserve. Asian markets are trading mostly in red on Monday ahead of Bank of Japan's monetary policy decision. Indian markets scaled new record highs on Friday with Sensex hitting a record high of 71,606 and Nifty hit an all-time high of 21,492 intraday, as the US Fed-driven rally continued on the bourses. Today, markets are likely to get negative start due to profit booking after recent rally amid weakness in Asian counterparts. There will be some cautiousness with Former Reserve Bank Governor Raghuram Rajan's statement that India will still remain a lower middle country if the growth rate remains at 6 per cent annually without any rise in population by 2047 (Amrit Kaal) and will be reaching the end of the demographic dividend by then. Traders will be concerned as the Engineering Export Promotion Council of India (EEPC) report showed that India's engineering goods exports registered a 3-per cent year-on-year decline in November to $7.85 billion. It said the dip was primarily attributed to the festive season that disrupted operations in major engineering export belts across the country, particularly in northern and western regions. However, some support may come later in the day as the government data showed that India's merchandise trade deficit fell to $20.58 billion in November. It was primarily driven by a fall in imports, by 4.3 per cent, to $54.48 billion as compared to $56.95 billion in the same month last year, while the exports fell less sharply by 2.8 per cent to $33.90 billion from $34.89 billion a year ago. Traders may take note of former Niti Aayog Vice Chairman Arvind Panagariya's statement that India will become the world's third largest economy by 2026 as its GDP in current dollar terms will reach $5 trillion in that year and further rise to $5.5 trillion in 2027. Besides, the latest data by the Reserve Bank of India (RBI) showed that India's foreign exchange reserves increased by $2.82 billion to $606.86 billion for the week ending December 8. Meanwhile, the finance ministry said the number of GST return filers rose about 65 per cent to 1.13 crore in 5 years till April 2023 as compliance by taxpayers improved. Sugar industry stocks will be in focus as industry body ISMA on Friday said the sudden ban on the use of cane juice for ethanol will have an adverse impact on capacity utilisation of mills, putting at risk their Rs 15,000 crore investment in the last three years to set up plants for green fuel.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Adani Ports & SEZ has entered into a second strategic partnership with Terminal Investment for the operation of Adani Ennore Container.
• LTIMindtree has inaugurated a new Delivery Center in Mexico City, as part of expanding its presence in Latin America.
• Cipla has planned to further invest around Rs 42 crore in digital tech company GoApptiv.
• SBI Life Insurance Company has signed MoU with Shri Kshetra Dharmasthala Rural Development Project BC Trust in Dharmasthala, Karnataka.