Weekly Market Wrap: D-street ended the year 2023 on a high note. What to expect in 2024?

Sensex 2023: Indian equity benchmarks ended the last week of Calendar Year 2023 with a gain of over one and a half percentage points as the markets expect aggressive interest rate cuts by the Federal Reserve next year. Dalal Street ended the holiday truncated week on an optimistic note after credit rating firm Fitch Ratings stated that it expects that India’s resilient economic growth will boost the demand of the corporates.  

These signals led the BSE Sensex to surge 1,133 points, or 1.59 per cent, at 72,240 during the week ended on December 29, while the Nifty jumped 382 points, or 1.79 per cent, to 21,731. Sector-wise, the BSE Auto index surged the most (4.3 per cent) during the week gone by. While BSE Metal and BSE Fast Moving Consumer Goods indices have registered a gain of 4.1 per cent, and 3.2 per cent, respectively. On the other hand, the BSE Information Technology index dropped by 0.5 per cent.

As many as 45 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 9.6 per cent, Tata Consumer Products emerged as the top gainer in the index. It was followed by Hindalco Industries (7.9 per cent), Tata Motors (7.7 per cent), Bajaj Auto (6.8 per cent), and Divi's Laboratories (5.6 per cent). Mahindra & Mahindra, Ultratech Cement, and Hero MotoCorp also advanced by over five per cent. On the other hand, Infosys, Tata Consultancy Services, and Adani Ports declined 1.2 per cent, 0.8 per cent, and 0.3 per cent, respectively.

Technical Outlook          

Rupak De, Senior Technical Analyst at LKP Securities said, Nifty remained sideways during the session, fluctuating within the range of 21650-21750. A doji pattern has formed on the daily chart, indicating indecisiveness in the market. This sentiment requires confirmation through a decisive breakout above 21750 or a breakdown below 21650. “If it falls below 21650, the Nifty could potentially decline towards 21500. Conversely, if there's sustained trading above 21750, the index might aim for 22000,” De said. 

Market outlook          

Vinod Nair, Head of Research at Geojit Financial Services said, that despite a slight profit booking on the last trading day of the year, the domestic market experienced a gradual rally, riding on the positive global market trend. The optimism is fuelled by expectations of rate cuts by the US Fed and a cooling global inflation scenario. Further, an ease in Red Sea disruption and a reversal of FII inflows supported the market to touch new highs.

Nair added that the anticipation of political stability in the upcoming national poll in 2024 and a positive market outlook are supportive factors. Sector-wise, auto and FMCG outperformed in expectation of a revival in demand, while the IT sector underperformed due to profit booking. The euphoria is expected to continue during the start of the next year on account of the exuberance of rate cuts and the drop in bond yields. We expect a modest return of 10 to 12% on the main market in CY24.

It is advised to diversify the investment pattern to multi-assets. It is suitable to be diverse when equities are trading above the long-term average for a prolonged period.

“We presume CY24 to be a year of reversal in sector and category wise. We like large caps compared to mid and small caps. Generally, it will be a stock- and sector-specific year. Sectors we like are Banks, Manufacturing, Pharma, Chemical, and IT. A correction in the consumer sector should be capitalized in CY24”, Nair said.

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