Indian Stock Market Experiences Flat Trading as Nifty Remains Above 23,700: What’s Driving the Shifting Market Trends?

NiftyTrader • December 26, 2024

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Index	Price	Change	% Chg
Nifty 50	23,750.20	+22.55	+0.10%
Nifty MidCap 50	15,962.95	+36.15	+0.23%
Nifty SmallCap 50	8,929.15	-4.95	-0.06%
Nifty Bank	51,170.70	-62.30	-0.12%
Nifty Financial	23,743.80	+6.20	+0.03%
BSE SENSEX	78,472.48	–0.39	–0.00%

At the close, the Nifty 50 was at 23,750.20 Up by 0.10%

The NSE Nifty 50 opened in the green with a 0.10% gain and closed slightly higher at 23,750, up by 22.55 points. Despite a positive start, the session ended on a flat note, reflecting indecision in the market. For the past three days, Nifty has struggled near the 23,870 resistance level, while finding support around 23,600, forming a tight trading range.

This tug-of-war between bulls and bears has resulted in the formation of Doji candles and inside bars on the daily charts, indicating hesitation among traders. Additionally, the index is hovering near its 200-day Simple Moving Average (SMA), which is acting as a significant hurdle. The market’s lack of clear triggers, coupled with cautious trading during the monthly F&O expiry session, kept the overall sentiment muted.

Key Highlights:

Nifty traded within a narrow range of 23,650–23,850.
India VIX, the volatility index, surged 6.50% to 14.04, signaling increased market uncertainty.
The index remains below its short-term moving averages, indicating limited upside potential.

According to market experts, Nifty must decisively close above the 200-SMA at 23,850 to unlock a rally towards the 24,000–24,300 zone. On the downside, immediate support lies at 23,500, suggesting the potential for consolidation before a decisive breakout.

“Union Budget 2025: Tax Cuts to Ease Middle-Class Burden?”

As part of its efforts to revive economic growth and boost consumption, the Indian government is reportedly considering income tax cuts for individuals earning up to ₹15 lakh annually in the upcoming Union Budget 2025. This proposal aims to provide relief to the middle class, particularly urban dwellers grappling with high living costs, and encourage spending.

Under the proposed structure, incomes between ₹3–15 lakh would be taxed at 5% to 20%, while incomes above this range would attract a 30% rate. This initiative seeks to promote the adoption of the 2020 tax regime, which offers lower tax rates but does not allow for exemptions like housing rentals or insurance deductions.

If implemented, this measure could benefit tens of millions of taxpayers and inject much-needed momentum into the economy. By increasing disposable incomes, the move is expected to lift domestic consumption, a crucial factor for economic recovery.

Key Highlights:

Proposed tax structure: 5% to 20% for ₹3–15 lakh incomes.
Encourages adoption of the 2020 tax regime, which simplifies taxation.
Aims to boost middle-class spending and address urban living costs.

This reform, if announced, could serve as a catalyst for economic growth, offering relief to the middle class while addressing concerns about slowing consumption.

“RBI’s Ethical AI Initiative: A Step Towards Responsible Innovation”

In a significant development, the Reserve Bank of India (RBI) has formed a high-level committee to craft a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector. Announced as part of the Monetary Policy Statement on December 6, 2024, this initiative underscores the RBI’s commitment to fostering innovation while mitigating risks associated with AI adoption.

The committee will develop governance guidelines for integrating AI across banks, non-banking financial companies (NBFCs), fintechs, and payment system operators (PSOs). This framework is expected to address critical issues like bias, transparency, accountability, and data security, ensuring ethical AI implementation.

Why It Matters:
As financial institutions increasingly adopt AI to streamline operations and enhance customer experience, concerns about ethical practices and data misuse have grown. The RBI’s initiative sets the stage for responsible AI innovation, potentially positioning India as a global leader in ethical AI governance.

Key Highlights:

Framework aims to ensure responsible and ethical AI adoption.
Focus areas include governance, bias mitigation, and data security.
Covers a wide range of financial entities, including banks and fintechs.

This step not only addresses current challenges but also lays the foundation for a sustainable future where AI can thrive within a robust ethical framework.

“What Lies Ahead?”

AI in Finance: The RBI’s FREE-AI framework could redefine how financial institutions implement technology, ensuring innovation is aligned with ethical standards.

Markets: The Nifty’s inability to decisively breach the 23,850 mark suggests continued consolidation. A breakout above this level could pave the way for a rally, while a fall below 23,500 might invite bearish sentiment.

Tax Reforms: Middle-class taxpayers can anticipate potential relief in February’s budget, which could drive consumption and ease financial pressures.

Bank Nifty: Down by 0.12%

The Bank Nifty opened the trading session on a positive note but couldn’t hold on to the early gains. It saw a marginal decline of 0.12%, closing in the red at 51,170.70. The index struggled to find momentum throughout the day, weighed down by selling pressure in banking stocks. Similarly, The BSE Sensex, India’s flagship index, experienced a lackluster trading session, ending the day flat with a negligible decline, closing in the red at 78,472.48.

In the sectorial front, the Auto sector made a bold move today, gaining 0.84%. Mahindra & Mahindra Ltd. stood out with a strong gain of 1.90%, while Maruti Suzuki India Ltd. followed closely with a 1.63% increase.

On the flip side, the Media sector was the biggest loser of the day, falling by 1.46%. But the real shocker? Hathway Cable & Datacom Ltd. plummeted by an eye-watering -4.94%, while PVR INOX Ltd. wasn’t far behind with a -2.68% loss.

The FII buy value stood at ₹4,256.31 crore, whereas their sale value was significantly higher at ₹6,632.98 crore. This resulted in a net outflow of ₹-2,376.67 crore.

DIIs appear to be filling the void left by FIIs. Their buy value surged to ₹11,592.43 crore, surpassing their sale value of ₹8,256.27 crore. This led to a net inflow of ₹3,336.16 crore.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included Canara Bank with a 0.99% increase, Bank of Baroda with a 0.78% increase, Kotak Bank with a 0.58% increase, Punjab National Bank with a 0.40% increase, and Federal Bank with a 0.28% increase.

On the other hand, the biggest losers in the sector included AU Bank with a 1.60% decline, IDFC First Bank with a 0.74% decline, IndusInd Bank with a 0.37% decline, HDFC Bank with a 0.31% decline, and Axis Bank with a 0.15% decline. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 26th December, 2024

22 K Gold / g	₹ 7,125	+ ₹25
24 K Gold / g	₹ 7,773	+ ₹28
18 K Gold / g	₹ 5,830	+ ₹21

Silver / g	₹ 91.60	+ ₹0.10
Silver / kg	₹ 91,600	+ ₹100

Rupee Hits Record Low at 85.27: What’s Driving the Slide?

The Indian rupee has plunged to a new all-time low, closing at 85.27 against the US dollar on Thursday. This marks the third straight session of losses for the currency. But what’s behind this relentless decline, and how might it shape India’s economic landscape?

The Rupee’s Freefall: What’s Happening?

Amid rising crude oil prices and a stronger US dollar, the rupee has tumbled by 12 paise, closing at its lowest-ever level. Earlier in the day, the rupee opened weak at 85.23 and hit an intraday low of 85.28, showcasing its struggle against external pressures.

Key Points:

Rupee closes at 85.27, down 12 paise.
Hit a lifetime low of 85.28 during intraday trading.
Marked its third consecutive session of losses.

The currency had already seen a 4 paise drop on Tuesday and 9 paise on Monday, indicating a consistent downward trend. The forex market was closed on Wednesday due to Christmas, but Thursday’s session resumed with heightened concerns.

Why Is the Rupee Falling?

Strong Dollar Amid Rising US Treasury Yields
The US dollar remains elevated, buoyed by increased demand from importers and fears of aggressive trade policies. Additionally, US Treasury yields have surged to 4.61%, the highest in seven months, further strengthening the greenback.
Crude Oil Price Surge
Brent crude prices climbed 0.56% to $73.99 per barrel, intensifying India’s import costs. As a net importer of oil, India is particularly vulnerable to such price hikes.
Month-End and Year-End Dollar Demand
Increased demand for dollars from importers at the close of the month and year has exacerbated the rupee’s weakness.
Global Economic Pressures
The fear of delayed interest rate cuts by the US Federal Reserve and ongoing foreign institutional investor (FII) outflows are adding to the rupee’s woes.

Key Points:

Rising US Treasury yields (4.61%) are strengthening the dollar.
Higher crude oil prices are inflating India’s import bill.
End-of-year dollar demand is amplifying pressure on the rupee.
Concerns over FII outflows and Federal Reserve policy linger.

The Bigger Picture: Is the Rupee Set to Decline Further?

While the dollar index was marginally lower by 0.09% at 107.93, its strength against the rupee remains significant. Combined with rising crude oil prices, the rupee’s vulnerability is clear. Unless there’s a reversal in external factors such as US monetary policy or crude oil prices, the downward trend could continue.

What It Means for You

For Importers: Rising costs due to a weaker rupee will hit import-heavy industries.
For Investors: Keep an eye on sectors like IT and pharmaceuticals, which might benefit from the depreciating rupee.
For the Economy: Persistent rupee weakness could push inflation higher, leading to tighter monetary policy.

Stocks Highlights

Adani Ports & Special Economic Zone Ltd. is making headlines with a 5.22% jump, closing at Rs 1,243.95, up from its previous close of Rs 1,182.20. This upward movement is catching the attention of investors, especially when we look at its impressive 3-year returns. The stock has delivered a 63.65% return, far outpacing the Nifty 100, which only saw a 42.25% return in the same period. However, while this performance is impressive, Nifty Infrastructure delivered a slightly higher return at 74.26% over the same period.

Key Points:

5.22% increase in Adani Ports stock price
Strong 3-year return of 63.65%, outperforming the Nifty 100
Slightly behind Nifty Infrastructure‘s 74.26% return

Despite the strong performance, Adani Ports has had to spend 10.65% of its operating revenue on interest expenses and 7.1% on employee costs for the year ending March 31, 2024.

Titan Company Ltd. is facing a downturn, with its share price dropping -1.17% from Rs 3,353.40 to Rs 3,314.00. While the stock might be struggling in the short term, there’s a bright spot in the company’s performance. Despite the drop, Titan has posted an outstanding Return on Equity (ROE) of 37.21%, well above its 5-year average of 25.48%. This shows that Titan is still delivering value to shareholders, even in the face of short-term price fluctuations.

Key Points:

-1.17% decline in Titan’s share price
Impressive ROE of 37.21%, outperforming the 5-year average of 25.48%
A Sell Signal triggered by a 50-day moving crossover on Dec 24, 2024, with an average -3.59% decline in the next 30 days

Yet, the stock is showing signs of bearish movement. The recent 50-day moving crossover could signal more downward pressure, with a history of a 3.59% decline following similar patterns in the past five years.

Advance Decline Ratio

Today, the advance-decline ratio was 0.69 and the market breadth was negative. The volatility index India Vix increased by 6.50 to settle at 14.04 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1145
Decliners – 1649
52Wk High – 45
52Wk Low – 67
High Band Hitters – 88
Low Band Hitters – 56
200d SMA – 23854
50d SMA – 24249
20d SMA – 24290

Top Gainers and Losers Stocks

The top gainers were Adani Ports (+5.22%), M&M (+1.90%), SBI Life (+1.66%), Maruti (+1.63%), and Shriram Finance (+1.56%).

The top losers were Titan (-1.17%), Asian Paints (-0.99%), Tata Consumer (-0.80%), JSW Steel (-0.80%), and Nestle India (-0.67%).

Top Gainers and Losers Sectors

The top gainers sector were Auto (+0.84%), Pharma (+0.68%), Consumer Durables (+0.44%), Realty (+0.23%), and Oil & Gas (+0.08%).

The top losers sectors were Media (-1.46%), FMCG (-0.32%), Metal (-0.14%), and IT (-0.01%).

SECTORS – NOTABLE ACTION
AUTO +0.84%
PHARMA +0.68%
CONSUMER DURABLES +0.44%
MEDIA -1.46%
FMCG -0.32%
METAL -0.14%

Stocks Ban List

(SEBI) F&O ban list (RBLBANK close at -162.41) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

LTF, IGL, CANFINHOME, PNB, EXIDEIND, ABFRL, and INDUSINDBK stocks has the possibilities of entrants in the ban list.