More Stories

Informist, Wednesday, Jan. 1, 2025

By Anjana Therese Antony

MUMBAI – Equity investors started the new year with a slightly bullish bias towards the domestic market and this trend is likely to continue in the near term, though sharp gains are unlikely as they await key triggers, analysts said. "After three months of correction, the focus is now on earnings growth, interest rate cuts, and (government) capex which are expected to drive growth in the coming quarters," a head of research of institutional desk at a domestic broking firm said.

The market had be on a fall since October, particularly as foreign investors pulled money out of the market due to a slowdown in earnings growth, expensive valuations and lower returns, anticipation of major boost in the US under Donald Trump's regime, stimulus measures in China, and depreciation of the rupee. The return from the market last year was only half of what investors got in the previous year with the benchmark indices rising 8% in 2024 compared with about 20% in 2023.

While FIIs shifted their focus to other markets such as the US, domestic investors continued to support the market. FIIs net purchased over $800 million worth of shares in 2024, which was only 4% of what they bought in the previous year. The market could be well positioned for 2025 with an ease in global liquidity tightening, continued strength in retail participation, political continuity, ease in valuations, and better government spending in Oct-Mar, said Vaibhav Agrawal, chief investment officer – alternates (Public equity) at Motilal Oswal Asset Management Company, in a note. 

On Wednesday, the Nifty 50 ended 0.4% higher at 23742.90 points and the BSE Sensex closed 0.5% higher at 78507.41 points. The near-term support for the 50-stock index is pegged at 23600-23580 points and resistance at 23800-23950 points, according to technical and derivatives analysts at two broking firms. 

The government's fiscal position remained relatively healthy in November, as overall tax collections remained in line with the budget estimates for the current financial year, while expenditure was still largely controlled, Emkay Global Financial Services said in its report. India's current account deficit widened to $11.16 billion in Jul-Sept. The country had recorded a surplus of $4.59 billion in Jan-Mar. Also, data showed that goods and services tax collections of the government rose over 7% on year to INR 1.769 trillion in December, led by year-end spending. In November, the figure had grown nearly 9% to INR 1.823 trillion.

The market awaits the HSBC India Manufacturing PMI data for December, on Thursday, which could give hints about the country's manufacturing activities. In November, manufacturing sector's activity had expanded at a slower pace than in October and the index had declined to 56.5 from 57.5. 

Market participants will react to the automobile sales data of companies for December which are yet to be released. After market hours Wednesday, Tata Motors released its sales data, which showed that the metric grew only 0.3% on year to 235,599 units in December. Bajaj Auto and Escorts Kubota fell after they posted an on-year decline in sales volume, while Mahindra & Mahindra and Maruti Suzuki India ended higher on growth in sales. 

Investors will also closely watch the news flow related to earnings and the Union Budget for 2025-26 (Apr-Mar). For information technology companies, which are scheduled to kick-start the earnings season before mid-January, seasonality may impact sequential revenue growth in Oct-Dec, but may post better earnings from the year-ago period led by recovery in the banking and financial services segment. This, coupled with lower project cancellations, beginning of interest rate cut cycle, and the end of uncertainties around the US elections, will also lead to a better on-year growth, said Emkay Global Financial Services in its earnings preview report.  End

US$1 = INR 85.64

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.