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Informist, Tuesday, Dec. 24, 2024

By Anjana Therese Antony

MUMBAI – With all the major events in India and other global markets having ended for the year, the domestic equity market is likely to move in a tight range in the coming sessions, analysts said. Participation of foreign investors will also be lower as they will be away for Christmas holidays, they added. This is a usual trend seen every year and the focus will shift to news flow related to the Union Budget due on Feb. 1, Oct-Dec earnings, and trends in the government's capital expenditure cycle, they said. The Indian market will be shut Wednesday on account of Christmas as will be other global markets, including the US, the UK, Canada, France, and Germany. 

Though the domestic market has seen major corrections since October, experts are bullish about the medium term, primarily on more interest rate cuts, likely tracking the government's spending, and better corporate earnings growth. The pace of government spending had slowed down in Apr-Sept due to factors including General Elections and an extended monsoon. Some analysts believe that the return from the market would be lower till the first half of the next financial year compared to the last couple of years.

They also expect the flow of foreign investments to not pick up in the next few months as valuations remain expensive. So far in December, foreign investors net bought shares worth $2.49 billion, compared to $7.02 billion in the full month last year. The recurring depreciation of the rupee was also a factor which contributed to the near-term weakness in the domestic market. On Tuesday, the rupee settled at a record closing low of 85.20 a dollar. 

Benchmark indices Nifty 50 and Sensex clsoed 0.1% lower each at 23727.65 points and 78472.87 points, respectively. Both benchmark indices have risen around 9% so far in 2024, compared with a gain of about 22% during the same period in 2023. The near-term support for the index is pegged at 23660-23690 points and resistance at 23800-23950 points, a senior technical and derivatives analyst at a domestic broking firm said. 

"In the near term, we suggest investors to maintain an overweight position in large-cap stocks while selectively allocating to mid- and small-cap stocks," Motilal Oswal Financial Services said in its 2025 market outlook report. The first half of the year saw robust corporate earnings, a surge in domestic flows, and a resilient macro landscape, driving the Nifty 50 to an all-time high in September, the broking firm said. Its preferred sectors include information technology, healthcare, consumer discretionary, and real estate.  End

US$1 = INR 85.20

Edited by Deepshikha Bhardwaj

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