Nifty extends gains 21K mark; Global cues in focus
Markets for the week extended gains for seventh straight week which forced Sensex to cross weekly resistance line of rising wedge placed at 70,400 on back of gains mainly from technology Index. Buying was witnessed across sectors after the US Federal Reserve kept its key interest rate unchanged and signaled rate cuts next year. Also, investors reacted positively to the monetary policy announcements from the Bank of England and the European Central Bank. For the week, the Nifty ended up 2.3 pct to 21,457 and Sensex was up 2.4 pct to 71,484 levels. FIIs turned net buyers to the tune of Rs 187.96 bn and DIIs were net sellers to the tune of Rs 25.91 bn.
Gold recorded weekly gains as the dollar and Treasury yields weakened following the US Federal Reserve’s decision to maintain interest rates and signal three rate reductions in 2024 due to a faster-than-expected drop in inflation. For the week gold prices ended at USD 2,035 an oz. Crude oil prices recorded their first weekly increase in two months, buoyed by a positive outlook from the International Energy Agency (IEA) on oil demand for the upcoming year and a weakening dollar. Brent crude ended the week near USD 76.55 a bbl after touching a low of USD 72.29 a bbl.
On the macro front, India’s wholesale prices increased for the first time in eight months in November, and at a faster-than-expected rate. The WPI, rose 0.26 pct YoY in November, reversing a 0.52 pct decline in October. The CPI registered an annual increase of 5.55 pct in November, following October’s 4.87 pct gain. IIP expanded at the quickest pace in sixteen months in October, underpinned by broad-based growth across all sectors, especially the electricity segment. Industrial production advanced 11.7 pct YoY in October, well above the 6.2 pct growth seen in September.
Stocks/Sector in Spotlight
- HCL Technologies went up by 12.3 pct and was the top gainer on Nifty for the week. HCL Technologies inked a pact with UPES Dehradun, Uttarakhand, to collaborate on developing advanced solutions for the oil and gas industry, with a focus on sustainability. Also, the company has been selected by the Department of Transport and Planning in Victoria, Australia to automate the concession entitlement process for public transport users.
- LTIMindtree up by 10.1 pct after it inaugurated a new Delivery Center in Mexico City, as part of expanding its presence in Latin America. The Delivery Center will enable workforce transformation and localization for LTIMindtree in the Americas. The Center was inaugurated on December 14, 2023. Located in the heart of Mexico City’s financial district, the 100+ seater Delivery Center is a state-of-the-art facility that promotes collaboration, innovation, and is designed to scale for future growth.
- BPCL fell by 5.41 pct after a private report that prices of petrol and diesel may be cut to bring relief to customers. As per a report, the government is contemplating a reduction in the prices of petrol and diesel, with an aim to counter the recent surge in inflation rates.
- Tata Power EV Charging Solutions Limited, a Tata Power Group Company and Indian Oil Corporation Limited have signed a MoU to roll out fast and ultra-fast EV charging points across India. The collaboration will see Tata Power install 500+ EV charging points across multiple IOCL retail outlets.
- PI Industries fell sharply on reports that Chinese player Rainbow Agro received approval to construct a Pyrazolesulfone project with an annual production capacity of 2,000 tons. Pyroxasulfone is the key product for PI Industries with 35 pct revenue contribution.
- Hindalco Industries gained 7 pct after it plans to significantly expand its manufacturing capacity of fine-quality aluminium foil that is used in rechargeable batteries to serve the rapidly growing market for EVs and energy storage systems.
- Mazagon Dock Shipbuilders recently unveiled the “Saurshakti,” India’s fastest solar-electric boat, developed in partnership with NavAlt Solar Electric Boat Pvt. Ltd. This innovative vessel is tailored for eco-conscious maritime transport, boasting a top speed of 12 knots. With a charging capacity enabling up to 7 hours of operation, the Saurshakti represents a sustainable leap in maritime technology.
- Cochin Shipyard Company has scheduled January 10, 2024, as the Record Date to ascertain the eligibility of shareholders for the subdivision/splitting of existing 1 Equity Share, valued at Rs. 10 each fully paid, into 2 Equity Shares, valued at Rs. 5 each fully paid.
- ITC was in focus after it held its maiden analyst meet emphasized the need for growth, driven by broadly based growth across all business segments made possible by Innovation, a flexible and effective supply network, Smart/digital ecosystem and cost-cutting measures. ITC wants to grow its new FMCG business’s margin by 80–100 bps, driven by premiumization, scale, and cost optimization.
International Updates
- The US Federal Reserve decided to keep its benchmark interest rate unchanged for the third time in a row, setting the stage for the many rate reductions that are expected to occur in 2024 and beyond. The Fed’s officials also hinted that they anticipate cutting their benchmark interest rate by three quarter points in 2019 rather than the five that the financial markets and certain analysts had predicted.
- USA’s consumer price index rose by 0.1 pct in November and was 3.1 pct higher than a year earlier. The core CPI grew 0.3 pct this month and 4 pct over the previous year when volatile food and energy prices were excluded.
- The Bank of England opted to maintain its policy rate at 5.25 pct after the December meeting, with a 6-3 majority vote in favor of this decision. Additionally, the BoE’s staff projected that the fiscal plans outlined in November could potentially stimulate GDP growth by approximately 0.25 pct in the upcoming years.
- Governing Council of the ECB decided to maintain the current status of the three key interest rates. Despite a recent decrease, inflation is anticipated to experience a temporary uptick in the near future.
Outlook for the Week
Markets will take cues from global markets, crude oil price movement and institutional flows in the coming week. The Bank of Japan will announce interest rate decision on 19 December 2023 and inflation rate on 22 December. For Sensex, 70,400 should be seen as immediate reversal levels while resistance come in range of 72,000-72,300.
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