Indian Markets Close Higher Amidst Volatility and Global Market Strength: What’s Next?

NiftyTrader • December 27, 2024

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Index	Price	Change	% Chg
Nifty 50	23,813.40	+63.20	+0.27%
Nifty MidCap 50	15,919.40	-43.55	-0.27%
Nifty SmallCap 50	8,942.80	+13.65	+0.15%
Nifty Bank	51,311.30	+140.60	+0.27%
Nifty Financial	23,788.00	+44.20	+0.19%
BSE SENSEX	78,699.07	+226.59	+0.29%

At the close, the Nifty 50 was at 23,813.40 Up by 0.27%

Indian equities closed higher on December 27, driven by gains in Asian markets despite rising concerns over global uncertainties. The Nifty 50 rose by 63.20 points, or 0.27%, ending the day at 23,813.40. The day started with an uptick, but gains were trimmed as the session progressed. Still, Indian benchmark indices managed to maintain their positive momentum, finishing the trading week on a positive note.

Key Market Movements and Highlights:

Nifty 50 finished at 23,813.40, gaining 63 points or 0.27%.
The index traded within a range, hitting a high of 23,938.85 and a low of 23,800.60.
The auto index outperformed the broader market, buoyed by expectations of higher December sales volumes and favorable valuation.
Pharma stocks also performed well, contributing to the market’s positive close.
However, the metal and realty sectors faced pressure, which dampened the overall mood despite gains in other sectors.
The broader indices remained subdued, ending nearly flat after volatile trading.

Global Influence: Asia Rallies, US Markets Falter

Indian markets took cues from Asian market strength, with the MSCI Asia Pacific Index achieving its fifth consecutive gain, the longest streak since July. Tokyo stocks surged as the yen weakened against the dollar, after Bank of Japan Governor Kazuo Ueda gave no clear signals about upcoming interest rate decisions. Meanwhile, European stocks edged up by 0.2% during light holiday trading, reflecting the positivity in Asia.

However, US equity futures dipped following a lackluster session on Wall Street, where Treasury yields and the US dollar remained steady, weighing on market sentiment.

Rupee Struggles: Record Low Hit

The Indian Rupee (INR) tested new record lows against the dollar, hitting 85.81 on December 27, as importer demand and outflows from foreign investors (FIIs) continued to weigh on the currency. The fall in the Rupee can also be attributed to the expectations of fewer Fed rate cuts and a widening trade deficit. Additionally, rising US treasury yields and crude oil prices contributed to the ongoing depreciation of the Rupee.

The USDINR was at 85.54 (spot) at market close, and it’s expected to test 86 by March 2024, as projected by Nuvama Institutional. Kotak Securities also sees potential for the Rupee to breach the 85.50 level.

Key Sectors and Stock Movements

The auto sector surged, powered by optimism around December sales and comfort in valuation.
Pharma stocks displayed resilience amidst ongoing market volatility, with Ajanta Pharma Ltd. up by 8.21% and Glenmark Pharmaceuticals Ltd. gaining 3.15%.
Metal stocks underperformed, with Hindustan Copper Ltd. losing 2.94% and NMDC Ltd. falling 2.84%.
Real estate stocks also faced selling pressure, contributing to the mixed market sentiment.

Indian Market Outlook and Economic Factors

Despite the modest gains in the Indian markets, caution prevailed as the year-end trading period typically sees lower volumes. Investors remain watchful of global and domestic economic factors as they wrap up the year. The third-quarter earnings season and the Union Budget 2024 will likely dictate market direction in the coming months.

Quarterly earnings projections remain modest at 4-5% growth for FY25 and 14-15% for FY26.
The Union Budget will be a key market driver, with expectations of fiscal reforms and policy initiatives that could influence investor sentiment.
Foreign investors remain cautious, with concerns over the weak Rupee and global uncertainties continuing to shape their outlook on Indian equities.

Performance Over the Last Few Years: A Glimpse at the Larger Picture

The Indian market has shown resilience over the years, bouncing back from challenges like the global financial crisis and the COVID-19 pandemic. The benchmark index, BSE Sensex, surged 398% between 2004 and 2014 under the leadership of Prime Minister Manmohan Singh, making India one of the fastest-growing stock markets in the world.

India’s stock market has evolved into a global investment destination, driven by liberalization reforms, especially the 1991 economic reforms under Singh’s leadership, which paved the way for high growth.
Increased foreign investment, along with growth in IT, banking, and pharma sectors, provided a solid foundation for market expansion.
Post-2004, the Nifty 50 delivered significant returns, aided by economic reforms and a favorable global market environment.

What’s Ahead for Indian Markets?

As 2024 progresses, the Indian markets are likely to experience continued volatility, driven by external factors like US economic policy, geopolitical tensions, and the global trade environment. However, opportunities persist in select sectors like pharma, auto, and IT, with strong fundamentals providing a buffer against broader market uncertainties.

Key Takeaways:

Nifty 50 closes at 23,813.40, gaining 0.27% or 63 points.
Rupee hits a record low of 85.81, driven by importer demand and global pressures.
Pharma and auto sectors show resilience, while metal and realty face pressure.
Market volatility likely to persist as earnings growth and the Union Budget remain key drivers in shaping the Indian market’s trajectory.

As the year winds down, investors will keep a close watch on the unfolding economic landscape and market trends, ready to adjust their strategies accordingly for 2024.

Bank Nifty: Down by 0.27%

The Indian stock market saw another positive start today, with Bank Nifty and BSE Sensex both opening in the green. But the real question remains: Is this the start of something bigger, or just a short-lived rally? The Bank Nifty climbed by 0.27%, closing at 51,311.30, while the BSE Sensex surged by 0.29%, ending the day at a high of 78,699.07. Are these gains sustainable, or is the market gearing up for a possible correction?

Pharma stocks soared, with the sector making an impressive 1.30% gain. Ajanta Pharma Ltd. stands out with a massive 8.21% gain – this is no ordinary rise!. Meanwhile, Glenmark Pharmaceuticals Ltd. also saw a respectable increase of 3.15%, contributing to the sector’s strong performance.

The metal sector is struggling. It’s a shocking 0.96% loss – what’s going wrong here? Investors are on edge as Hindustan Copper Ltd. plunges by 2.94%, and NMDC Ltd. isn’t far behind with a 2.84% drop.

Foreign Institutional Investors (FIIs) reported a net outflow of ₹1,323.29 crore, with a total buy value of ₹5,368.36 crore and a sale value of ₹6,691.65 crore.

Domestic Institutional Investors (DII) maintained a more optimistic stance, recording a net inflow of ₹2,544.64 crore. With a buy value of ₹9,436.86 crore and a sale value of ₹6,892.22 crore, domestic investors were more active on the buying side.

Bank Nifty

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

The gainers included IndusInd Bank with a 2.37% increase, IDFC First Bank with a 1.21% increase, ICICI Bank with a 0.79% increase, AU Bank with a 0.67% increase, and HDFC Bank with a 0.57% increase.

On the other hand, the biggest losers in the sector included State Bank of India with a 1.43% decline, Bank of Baroda with a 0.79% decline, Canara Bank with a 0.48% decline, Federal Bank with a 0.47% decline, and Punjab National Bank with a 0.45% decline. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 27th December, 2024

22 K Gold / g	₹ 7,150	+ ₹25
24 K Gold / g	₹ 7,800	+ ₹27
18 K Gold / g	₹ 5,850	+ ₹20

Silver / g	₹ 95.50	+ ₹0.90
Silver / kg	₹ 92,500	+ ₹900

Rupee Hits New Low Against the Dollar: Is the Worst Yet to Come?

The Indian Rupee (INR) continues to face significant pressure, recently testing a new low of 85.81 against the US dollar. The fall extends into a ninth consecutive day, raising concerns about the currency’s stability. Is the worst over, or is the Rupee headed for even deeper losses?

A Steep Decline: 3% Weaker in 2024 and Heading for Seventh Straight Year of Losses
As of now, the Rupee has weakened by 3% against the dollar this year and is on track to post annual losses for the seventh year in a row. This trend shows no signs of abating, and investors are left wondering what could reverse this decline.

Month-End Dollar Demand Adds Pressure on INR
The Rupee’s fall is partly due to strong month-end demand for the dollar, particularly in the non-deliverable forwards (NDF) market, which led to further depreciation. Adding to the pressure is the expiry of December currency futures contracts, which fueled dollar buying activity. Forex traders have noted higher import activity, which often spikes at this time of the month, exacerbating the decline.

Breaking Key Psychological Levels: A New Low Below 85.50
In an alarming development, the Rupee broke below the key psychological level of 85.50 for the first time. This could indicate a potential shift in investor sentiment or market expectations, as traders adjust to ongoing challenges in the currency markets.

Projections and Predictions: How Low Could the Rupee Go?
Experts are forecasting further weakness for the INR. Nuvama Institutional predicts the Rupee could hit 86 against the dollar by the end of March, while Kotak Securities suggests the possibility of breaching that level even sooner. Will the Rupee continue its downward slide as we head into the new year?

Factors Behind the Decline: A Weakened Economy and Rising Trade Deficits
The Rupee’s struggle can be attributed to a variety of factors, notably the expanded trade deficit, which surged to a record $37.8 billion in November. This is primarily driven by weakened export growth amid lower global demand, while imports remain high, putting additional pressure on the Rupee.

Global Risks and Uncertainty Looming
Adding to the uncertainty, the Finance Ministry’s monthly review highlights risks to global growth, particularly in 2025, with threats of higher tariffs looming under the incoming administration of US President-elect Donald Trump. This creates further volatility in the global markets, which could negatively impact the Rupee’s performance.

Key Takeaways:

The Rupee hits a new low of 85.81, extending losses for nine consecutive days.
The currency has weakened by 3% this year, on track for seventh consecutive annual losses.
Experts predict the Rupee could hit 86 against the dollar by March 2024.
High trade deficits and weak global demand continue to weigh heavily on the INR.
The expiry of currency futures contracts and increased dollar buying are adding to the downward pressure.

What’s Next for the Rupee?

The Rupee’s plunge against the dollar shows no signs of stopping, and experts are bracing for further depreciation. As the end of the year approaches, all eyes are on the RBI and whether it will shift its intervention strategy to stem the fall. Will the Rupee find support soon, or are we headed for a rough 2024? Only time will tell.

Stocks Highlights

Dr. Reddy’s Laboratories Ltd. experienced a solid 2.72% increase in its share price today, closing at Rs 1,392.00 after opening at Rs 1,355.15. But is this a sign of a major upward trend, or is it just a flash in the pan? Let’s take a closer look.

Intraday Gains: Not Every Day is a Big Day for Dr. Reddy’s
In the last 20 years, the stock has seen intraday gains higher than 5% in just 1.05% of the trading sessions. This shows how rare and significant a jump like today’s really is.

Strong Performance with ROE Outperformance
Dr. Reddy’s is outperforming its 5-year average with a Return on Equity (ROE) of 19.74% in the year ending Mar 31, 2024, surpassing its 5-year average of 15.62%. This indicates strong and consistent growth—something investors surely love to see.

Controlled Costs: Efficiency at its Best
Despite its strong performance, the company has kept its operating costs in check. Less than 1% of its revenues went towards interest expenses, and 17.96% towards employee costs. This efficiency could be a major factor driving its growth and stability.

Key Takeaways:

Dr. Reddy’s Laboratories shows a strong 2.72% increase today, but gains above 5% are rare.
The company’s ROE of 19.74% outperforms its 5-year average.
The company’s cost structure remains highly efficient, spending less than 1% on interest and 17.96% on employee costs.

In stark contrast to Dr. Reddy’s, Hindalco Industries Ltd. faced a decline of -1.73%, with its share price dropping from Rs 628.75 to Rs 617.90. Could this be the start of a rough patch for Hindalco, or just a temporary setback?

Intraday Gains: A Rare Sight for Hindalco
Over the past 20 years, only 2.46% of trading sessions saw intraday gains higher than 5%—a rare occurrence for Hindalco. This suggests that significant spikes in price are few and far between, adding a layer of caution for investors.

Topline Contraction: A Cause for Concern?
The company’s sales de-grew by 3.12%, marking a revenue contraction for the first time in three years. Could this be a sign of a longer-term trend, or just a one-time blip in an otherwise stable market?

Rising Expenses: Tightening the Belt
Hindalco’s interest expenses are 1.79% of its operating revenues, and 6.84% is allocated to employee costs for the year ending Mar 31, 2024. These figures might not seem alarming, but when combined with the revenue contraction, they raise questions about how the company is handling its financial strategy.

Key Takeaways:

Hindalco Industries saw a -1.73% decline in stock price today, signaling potential trouble ahead.
The company is facing sales contraction for the first time in three years.
Hindalco’s interest expenses and employee costs are rising, which could impact its future growth.

Advance Decline Ratio

Today, the advance-decline ratio was 1.00 and the market breadth was positive. The volatility index India Vix decreased by 5.68 to settle at 13.24 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1396
Decliners – 1401
52Wk High – 47
52Wk Low – 59
High Band Hitters – 85
Low Band Hitters – 65
200d SMA – 23861
50d SMA – 24224
20d SMA – 24285

Top Gainers and Losers Stocks

The top gainers were Dr. Reddy (+2.72%), IndusInd Bank (+2.37%), M&M (+2.23%), Tata Motors (+1.78%), and Eicher Motors (+1.51%).

The top losers were Hindalco (-1.73%), SBIN (-1.43%), Coal India (-1.40%), ONGC (-1.31%), and BEL (-1.02%).

Top Gainers and Losers Sectors

The top gainers sector were Pharma (+1.30%), Auto (+0.97%), Media (+0.38%), FMCG (+0.33%), and Financial Services (+0.19%).

The top losers sectors were Metal (-0.96%), Oil & Gas (-0.68%), Realty (-0.55%), and Consumer Durables (-0.42%).

SECTORS – NOTABLE ACTION
PHARMA +1.30%
AUTO +0.97%
MEDIA +0.38%
METAL -0.96%
OIL & GAS -0.68%
REALTY -0.55%

Stocks Ban List

The SEBI F&O ban list does not include any stocks today.

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.