The Indian benchmark indices closed the week almost flat, with strong performances from the banking and pharma sectors helping to offset declines in the IT sector. A lack of major catalysts kept the markets in a narrow range, contributing to a steady yet unspectacular trading week. Even mid and small-cap stocks ended the week largely unchanged, indicating subdued investor sentiment.
However, the stock market showed some resilience as the week ended on a positive note, with sectors like pharma, auto, IT, financial services, FMCG, media, and private banks seeing buying interest.
Market Performance: Sensex and Nifty
The Sensex ended the session up by 226.59 points or 0.29%, closing at 78,699.07. Similarly, the Nifty gained 63.20 points or 0.27%, closing at 23,813.40. These gains were driven by buying across several sectors, though the broader market sentiment remained cautious due to ongoing concerns over external factors.
Meanwhile, the India VIX, which measures market volatility, dropped by 5.68%, ending at 13.24. This decline indicates that market fluctuations have reduced, with experts suggesting that if the VIX stays below this level, the Nifty could potentially make a sustainable move toward the 24,000-24,100 range.
Support Levels for Nifty
As per Rishikesh Yedve, a market expert at Asit C. Mehta Investment Intermediates Ltd., the 23,500 level remains a significant support for Nifty. He further added that in the short term, Nifty is likely to consolidate between 23,500 and 23,900, and a breakout in either direction could define its next movement.
Despite the positive closing, concerns over Foreign Institutional Investors (FII) outflows and a depreciating rupee continue to linger, adding pressure on the market. Additionally, uncertainty surrounding potential adverse tariffs and the limited expectations of rate cuts in 2025 are contributing factors to the market's sluggish trend.
Impact of Donald Trump’s Economic Policies
Another concern for the market is the uncertainty surrounding the economic policies of former U.S. President Donald Trump and the high valuations of stocks. Experts have warned that this uncertainty could affect the Indian stock market in the short term, especially if global risk sentiment weakens.
Market Outlook Before the Budget
Looking ahead to the Union Budget in 2025, experts anticipate that investors will begin aligning their portfolios based on expectations for the upcoming budget announcements. Along with the budget, important economic data points, such as PMI data from India, the U.S., and China, as well as unemployment claims in the U.S., are likely to influence investor sentiment.
As investors await these triggers, market participants will be keenly watching how these data points unfold. These updates could provide further clues about the economic trajectory of India and other major economies, which could play a crucial role in shaping market expectations.
January 2025 Outlook
According to Siddharth Khemka, Head of Wealth Management Research at Motilal Oswal Financial Services Ltd., the market is expected to remain in a limited range in the near term due to the absence of any significant triggers. He mentioned that there are no major catalysts expected in the coming weeks, and the market is likely to consolidate until more concrete news emerges.
Khemka also highlighted that pre-quarterly business updates for January 2025, which will be released in the first week of January, will provide insights into the upcoming earnings season. The market will likely keep a close eye on these updates, as they could impact investor expectations for the broader economy and corporate earnings.
Conclusion
Overall, the Indian stock market ended the week on a positive note, driven by strong performances from the banking, pharma, and auto sectors. However, the market remains cautious, with ongoing concerns about global economic factors, especially regarding the U.S. economy and trade policies. As we move into 2025, the market is likely to continue trading within a narrow range until clearer economic signals emerge. Investors will be particularly focused on upcoming data points and the Union Budget, which will play a significant role in shaping market sentiment in the first quarter of 2025.
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