Weekly Market Wrap: Extending its winning streak for the fourth straight week D-street ends at record highs; Here's what lies ahead

Extending its winning streak for the fourth straight week, Indian equity benchmarks ended the holiday shortened week at fresh record highs. Stock markets ended with gains as global rating agency Moody’s has raised India’s Gross Domestic Product (GDP) growth forecast for 2024 calendar year to 6.8%, from 6.1% estimated earlier, on the back of ‘stronger-than-expected’ economic data of 2023 and fading global economic headwinds

Besides expectations of a rate cut from the Fed and declining bond yields prompted rational investors to shift towards equities. These signals led the BSE Sensex to surge 313 points, or 0.42%, at 74,119.39 during the week ended on March 07, 2024. While the Nifty jumped 115 points, or 0.51%, to 22493.55.  

Sector-wise, the BSE Power index surged the most (1.9%) during the week gone by. While BSE Metal index registered a gain of 1.5% followed by BSE Bankex jumped 1.2%. On the other hand, the BSE Information Technology index fell 1.4%.  

As many as 29 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 10.4%, Bajaj Auto emerged as the top gainer in the index. It was followed by Bharti Airtel (6.1%), Tata Motors (5.2%), HDFC Life Insurance Company (4.9%), and Tata Consumer Products (4.5%). Sun Pharmaceutical Industries and NTPC also advanced by over three percent.  

On the other hand, Ultratech Cement, Shree Cement, and Mahindra & Mahindra declined 4.3%, 3.8%, and 3.3%, respectively.

Market Macros: Vinod Nair, Head of Research at Geojit Financial Services says, amidst mixed signals from the global market, the domestic market exhibited a range-bound movement but concluded on a positive note. Expectations of a rate cut from the Fed and declining bond yields prompted rational investors to shift towards equities, bolstering the market. An improved macroeconomic narrative favoured banking stocks, while uncertainties in the global market led to weakness in the IT sector.

Nair added that the extension of the Fame II scheme and higher demand forecasts for passenger vehicles led to heavy buying in auto stocks. Faster-than-expected economic growth for the current fiscal year buoyed sentiments for metal and capital goods stocks, resulting in a rally in the respective sector indices. However, small and mid-cap stocks underwent corrections due to overvaluation, leading to profit booking and increased demand for large-cap stocks.

“The ECB kept the rate status quo and will wait for further evidence confirming inflation control. The release of US payroll data and upcoming inflation data from the US, China, and India next week will provide investors with insights into the global macroeconomic outlook. We expect volatility to persist in the upcoming week due to high valuations and forthcoming policy rate guidance releases" Nair said.

Nifty outlook: According to Rupak De, Senior Technical Analyst at LKP Securities, The Nifty stayed below the psychological 22,500 mark, with call writers at the 22,500 strikes significantly increasing their positions. On the downside, support is expected to hold at 22,400. “The buy-on-dips strategy is likely to persist as long as it remains above 22,400. On the upside, a decisive move above 22,500 could trigger buying interest in the market, potentially pushing the index towards 22,700 in the short term,” De said.