Investors Eye Key Stock Market Triggers in December
As December unfolds, investors are keenly observing a variety of stock market triggers that could significantly influence market dynamics. The third week of December is particularly crucial, with a focus on domestic macroeconomic indicators, primary market activities, foreign capital inflows, crude oil prices, and global cues.
Recent Market Performance
In the previous week, domestic equity benchmarks, including the Nifty 50 index and BSE Sensex, experienced a notable rise of approximately 2.3%. This marked the seventh consecutive week of gains, the longest winning streak since January 2018. Specifically, the BSE benchmark surged by 1,658.15 points (2.37%), while the Nifty climbed 487.25 points (2.32%). This upward momentum was largely fueled by global cues that triggered foreign capital inflows into Indian markets, particularly after the US Federal Reserve indicated a potential end to its tightening cycle.
On Friday, the Sensex breached the 71,000 mark during trading, buoyed by positive domestic macroeconomic data and easing concerns regarding US economic growth. The 30-share BSE Sensex rose by 1,091.56 points (1.54%) to reach an all-time intra-day high of 71,605.76, while the Nifty 50 also hit a record intra-day peak of 21,492.30.
Broader Market Trends
In the broader market, the BSE smallcap gauge increased by 0.58%, while the midcap index saw a slight dip of 0.07%. The Nifty Midcap 100 index reached a 52-week high of 45,814.45, closing up 0.11% at 45,586.55. The Nifty Smallcap 100 also ended the week 0.71% higher.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the IT sector rallied by 7.6% during the week, driven by expectations of increased demand from the US, optimism surrounding AI-based opportunities, and hopes for interest rate cuts in 2024. However, he cautioned that near-term consolidation might occur due to elevated valuations and concerns over global economic conditions.
Upcoming IPOs and Listings
Looking ahead, the primary market is set to be active, with a series of new initial public offerings (IPOs) and listings scheduled. Eight new IPOs will open for subscription, including Muthoot Microfin, Motisons Jewellers, and Suraj Estate Developers, starting December 18. Other IPOs, such as Happy Forgings and Mufti Menswear, will open on December 19, followed by Azad Engineering and Innova Captab on December 20 and 21, respectively.
In the SME segment, several IPOs are also on the horizon, including Sahara Maritime and Shanti Spintex. Notably, shares of India Shelter Finance and DOMS will be listed on December 20, while Inox CVA will follow on December 21.
Arvinder Singh Nanda, Senior Vice President at Master Capital Services Ltd, highlighted that 2023 has been a record-breaking year for IPOs in India, reflecting strong investor confidence in the economy.
Foreign Institutional Investor Activity
Foreign institutional investors (FIIs) have continued their robust inflow into Indian equities, contributing to the market’s bullish momentum. In the past week, FIIs were net buyers for all five sessions, investing a total of ₹18,858.34 crore. This trend is expected to continue, bolstered by the US Federal Reserve’s dovish stance and the Reserve Bank of India’s monetary policy.
Analysts suggest that the favorable macroeconomic indicators, including the RBI’s inflation forecast and improved capital expenditure, are attracting foreign capital. The Sensex reaching an all-time high has further enhanced investor sentiment.
Global Economic Influences
The US Federal Reserve’s decision to maintain interest rates at a 22-year high has significant implications for global markets. While rates are expected to remain elevated for some time, the Fed hinted at potential rate cuts in 2024. This dovish outlook has instilled confidence among investors, who anticipate a soft landing for the US economy in the latter half of 2024.
Attention will soon shift to the Bank of Japan’s policy decision on December 19, which could impact global markets, particularly if the Yen strengthens.
Oil Prices and Corporate Actions
In the commodities market, Brent crude and US crude futures experienced slight declines, reflecting mixed signals regarding oil demand. Brent futures settled at $76.55 per barrel, while US West Texas Intermediate closed at $71.43.
Additionally, several companies, including Easy Trip Planners, will trade ex-dividend starting December 18, with others announcing share buybacks and ex-bonus trades.
Technical Outlook
From a technical perspective, the Nifty maintains a bullish momentum, with immediate targets set at 21,700 and potential upward movement towards 22,000. However, some consolidation is anticipated. Key support levels are identified at 21,200 and 21,000.
Traders are advised to adopt a "buy on dips" strategy, particularly in midcap and smallcap sectors, while closely monitoring the Bank Nifty for potential buying opportunities.
Conclusion
As the third week of December approaches, investors are poised for a busy period filled with potential market-moving events. With a mix of domestic economic indicators, IPO activities, foreign capital inflows, and global cues, the outlook remains optimistic. However, market participants should remain vigilant and adaptable to the evolving landscape as 2023 draws to a close.