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Market Commentary 05 January 2024
Markets likely to get cautious start on Friday

Taking a breather after two days of decline, Indian equity benchmarks rebounded swiftly and gained over half a percent on Thursday, supported by strong gains across Realty, Utilities and Telecom stocks. Markets made a gap up opening and inched gradually higher as the day progressed, as traders took encouragement after India Ratings and Research upped India's GDP growth estimate for current fiscal to 6.7 per cent, from 6.2 per cent, citing resilient economy, sustained government capex and prospect of a new private corporate capex cycle. Some optimism also came with Fitch Ratings' report stating that the economic growth in Asia Pacific will remain strong in 2024 and GDP is expected to grow by about 5 per cent in India and a host of emerging market countries. It also said the outlooks for the banking sectors in India and Indonesia, as well as APAC emerging markets as a whole, move to improving in 2024, partly reflecting the robust economic backdrop. Markets continued their upward trajectory in late afternoon deals, taking support with Commerce and Industry Minister Piyush Goyal exuding confidence that during this fiscal (FY24), the country will maintain the last year's export figures despite slowdown in global trade. He said that India's exports of goods and services rose to $776 billion in 2022-23 from $500 billion two years ago. Some support also came with External Affairs Minister S Jaishankar's statement that the year 2024 will continue to be turbulent for the world but India is well-positioned politically and economically to navigate the challenges, maintain its rising global role and its path of development. Some comfort also came as private report said that rural demand is likely to pick up pace in 2024 owing to moderation in inflation, replenishment of rural savings after the Covid pandemic, increased liquidity on the back of pre-election spending, and a likely stable regime. Finally, the BSE Sensex rose 490.97 points or 0.69% to 71,847.57 and the CNX Nifty was up by 141.25 points or 0.66% to 21,658.60.

The US markets ended mostly in red on Thursday as traders expressed caution ahead of the release of the Labor Department's closely watched monthly jobs report on Friday. Street currently expects employment to increase by 170,000 jobs in December after jumping by 199,000 jobs in November. The unemployment rate is expected to inch up to 3.8 percent from 3.7 percent. Meanwhile, a separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits fell by much more than expected in the week ended December 30th. The Labor Department said initial jobless claims declined to 202,000, a decrease of 18,000 from the previous week's revised level of 220,000. Street had expected jobless claims to edge down to 216,000 from the 218,000 originally reported for the previous week. Energy stocks came under pressure over the course of the session, as the price of crude oil turned lower after seeing early strength. With crude for February delivery falling $0.51 or 0.7 percent to $72.19 a barrel, the Philadelphia Oil Service Index plunged by 2.2 percent and the NYSE Arca Oil Index tumbled by 1.8 percent. Notable weakness also emerged among retail stocks, as reflected by the 1.0 percent drop by the Dow Jones U.S. Retail Index.

Crude oil futures ended lower on Thursday following the release of the Energy Information Administration's report on oil inventories in the week ended December 29th. While the report showed a bigger than expected decrease in crude oil inventories, gasoline and distillate fuel inventories moved sharply higher. The report said crude oil inventories slumped by 5.5 million barrels after tumbling by 7.1 million barrels in the previous week. Street had expected inventories to fall by 3.7 million barrels. Meanwhile, Meanwhile, the EIA said gasoline and distillate fuel inventories spiked by 10.9 million barrels and 10.1 million barrels, respectively. Benchmark crude oil futures for February delivery fell by $0.51 or 0.70 percent to settle at $72.19 a barrel on the New York Mercantile Exchange. Brent crude for March delivery declined by $0.66 or 0.84 percent to settle at $77.59 a barrel on London's Intercontinental Exchange.

Indian rupee appreciated marginally against the US dollar on Thursday, helped by a bullish trend in domestic equities and weakness of the American currency in the oversea market. Traders took support with India Ratings and Research's report where it upped India's GDP growth estimate for current fiscal to 6.7 per cent, from 6.2 per cent, citing resilient economy, sustained government capex and prospect of a new private corporate capex cycle. Some optimism also came with Fitch Ratings' report stating that the economic growth in Asia Pacific will remain strong in 2024 and GDP is expected to grow by about 5 per cent in India and a host of emerging market countries. However, rising crude oil prices capped sharp gains for the local unit. On the global front, the dollar fell on Thursday, after rising to an almost three week high a day earlier, with minutes of the Federal Reserve's last meeting providing few clues on when the United States might start cutting interest rates. Finally, the rupee ended at 83.24 (Provisional), stronger by 6 paise from its previous close of 83.30 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 9119.75 crore against gross selling of Rs 9691.27 crore, while in the debt segment, the gross purchase was of Rs 1572.09 crore with gross sales of Rs 704.91 crore. Besides, in the hybrid segment, the gross buying was of Rs 28.55 crore against gross selling of Rs 34.94 crore.

The US markets ended mostly in red on Thursday ahead of a key jobs report with Wall Street trying to shake off a sluggish start in January. Asian markets are trading mostly in green on Friday as investors will be watching Southeast Asia's economic data due later in the day. Indian markets after two days of selling bounced back on Thursday and ended with gains of over half a percent amid buying across the sectors and broader indices. Today, start of the session is likely to be cautious amid lackluster global cues. Investors will be eyeing Services PMI data to be out later in the day for more directional cues. However, some respite will come later in the day amid overnight fall in crude oil prices and foreign fund inflows. Provisional data from the NSE showed foreign institutional investors (FIIs) bought shares worth Rs 1,513.41 crore on January 4. Some support will come with a private report that India is likely to project higher economic growth estimates of around 7% for the 2023/24 fiscal year ending in March, compared with earlier government forecasts when the National Statistical Office releases its first advance GDP estimates on Friday. Moreover, in a boost to the ethanol blending programme which has been strutting following the decision to stop production from sugarcane juice, the oil marketing companies (OMCs) announced a Rs 5.79 per litre increase to Rs 71.86 a litre in procurement price of ethanol produced from maize for the 2023-24 supply year that started in November. Pharma stocks will be in focus as credit rating agency ICRA expects the revenues of a sample set of 25 Indian pharmaceutical companies which account for 60% of the overall revenues of the Indian pharmaceutical industry to expand by 9-11% in FY24, compared to 10% over previous year. There will be some reaction in aviation industry stocks as the Directorate General of Civil Aviation (DGCA) said domestic airlines inducted a total of 133 planes in 2023, which is 51 per cent higher on an annual basis, as they continued to expand their networks to meet rising passenger demand. Of the 133 aircraft, 21 were taken by the carriers on wet lease. Telecom stocks will be in limelight as latest data from the Telecom Regulatory Authority of India (Trai) showed that Reliance Jio continued to strengthen its position in the Indian telecom market, gaining 3.15 million new users in October. Vodafone Idea (Vi) saw 2.04 million users leave their service, while Bharti Airtel saw its subscriber count increase by 0.35 million.

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

Index

Previous close

Support

Resistance

NSE Nifty

21,658.60

21,586.89

21,707.99

BSE Sensex

71,847.57

71,611.19

72,019.38

Nifty Top volumes

Stock

 

Volume

Previous close (Rs)

Support (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

439.13

134.40

133.49

135.84

NTPC

400.58

317.00

309.81

322.96

ONGC

310.54

214.50

210.74

216.84

ICICI Bank

227.89

988.65

983.99

991.24

Power Grid

196.64

241.70

238.14

244.19

  • L&T has completed the sale of its entire stake in L&T Infrastructure Engineering to STUP Consultants consequent to completion of customary conditions precedent, agreed under the Share Purchase Agreement.
  • Bajaj Finance has launched digital Fixed Deposit offering exclusive rates of up to 8.85 per cent on deposits booked through its app and website.
  • LTIMindtree has integrated its subsidiaries; Syncordis and Nielsen+Partner to form a specialized Banking Transformation Practice.
  • Grasim Industries' board has approved raising Rs 4,000 crore through a rights issue to fund its next phase of growth.

News Analysis