Market outlook for the week (13-Jan to 17-Jan)

13 Jan 2025 , 09:24 AM

SECTORAL STORY IN THE WEEK TO JANUARY 10, 2025

The week to January 10, 2025 saw Nifty and Sensex down by -2.39% and -2.33% respectively. During the week, FPIs were net sellers of $(2,086) Million in Indian equities amidst rising macro concerns. Here is how the 20 key sectors performed in the week.

Sectoral Index	Weekly Returns	Index (10-Jan)	Index (03-Jan)
Nifty IT	2.02%	44,609.50	43,726.55
Nifty FMCG	-1.21%	57,117.70	57,817.00
Nifty Oil & Gas	-2.77%	10,740.60	11,046.65
Nifty Healthcare	-3.37%	14,397.80	14,899.90
Nifty MNC	-3.55%	27,667.70	28,684.70
Nifty India Digital	-3.65%	9,449.75	9,807.30
Nifty Infrastructure	-3.91%	8,259.95	8,596.25
Nifty Automobiles	-4.11%	23,017.75	24,005.00
Nifty Private Banks	-4.34%	23,931.15	25,018.10
Nifty Banks	-4.42%	48,734.15	50,988.80
Nifty India Defence	-4.68%	6,254.25	6,561.15
Nifty Mobility	-4.93%	19,143.00	20,136.25
Nifty Metals	-5.35%	8,262.95	8,729.95
Nifty CPSE	-5.72%	5,914.00	6,272.95
Nifty Non-Banks	-5.88%	24,717.20	26,261.70
Nifty Energy	-5.99%	33,743.00	35,894.05
Nifty Consumer Durables	-6.10%	40,585.10	43,222.35
Nifty Realty	-7.83%	963.30	1,045.10
Nifty PSU Banks	-8.07%	6,085.10	6,619.00
Nifty Capital Markets	-8.26%	3,708.75	4,042.50

Data Source: NSE

Here are key takeaways from the tabulation of weekly sectoral returns above.

• Out of the 20 sectoral indices, only 1 sector gave positive returns while 19 gave negative returns. This can be attributed to an all-round sell-off in the market with IT being the only sector holding in the green as a hedge against rupee depletion against dollar.
• Out of the 19 sectors that contracted during the week, big losers were capital markets, PSU banks, realty, consumer durables, energy, and NBFCs. A total of 8 sectors fell more than -5% in the week while 13 sectors fell more than 4% in the week.
• For the week, the arithmetic average of returns of these 20 sectors stood at -4.61%. While the top-10 sectors delivered -2.93%, the bottom 10 sectors delivered -6.28%. In terms of market cap, it was the mid-caps and small caps that took it on the chin.

During the week, Nifty VIX edged higher and closed at 14.92 levels. Normally, any VIX level above 16, tends to the market extreme volatile.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

Here is a quick wrap of how key events had a bearing on stock market performance.

• GDP growth for FY25 to slow to 6.4%, as per FAE put out by MOSPI. However, with 6.7% and 5.4% GDP growth in Q1 and Q2, further downsides may be open for GDP growth.
• FPI selling picked up momentum this week with FPIs selling around $2,086 Million in equities. FPIs were aggressive sellers in the week in debt also.
• According to the Fed minutes published during the week, Trump policies on trade and immigration may spur inflation by another 50 bps, complicating monetary policy.
• IIP growth for November 2024 surged to 5.17% in November, compared to 3.66% in October. Manufacturing and electricity were drivers, even as mining was subdued.
• US jobs data showed payroll addition of 2,56,000; but more importantly, the unemployment rate tapered further to the 4.1% mark, ruling out hard landing risks.
• Rupee plummeted to ₹86.20/$ for the week, as the dollar index hardened, Yuan was allowed to weaken, and FPIs have been consistent net sellers in the week.
• TCS, despite not giving guidance, had shown yoy profit growth of 11.9% and revenue growth of 5.6%. Constant currency (CC) revenues were down -1.7% sequentially.

Let us turn to big data flows in the coming week; for domestic and global market.

STOCK MARKET TRIGGERS FOR COMING WEEK TO JANUARY 17, 2025

Here are key triggers to keep a watch for in the coming week to January 17, 2025.

• Key indices struggled in the week. Nifty down -2.39%, Sensex -2.33%, Nifty Mid-Cap index down -5.77%; and small cap index -7.29% lower. The pressure came from weak rupee and the spike in oil prices, which hit smaller companies a lot harder.
• Results takes off in right earnest. Big results this week include D-MART, HCL Tech, HDFC AMC, HDFC Life, Reliance, Infosys, Axis Bank, Havells, LTIM, Wipro, TECHM, SBI Life (large caps); and Himadri, Angel One, Shoppers Stop, OFSS, LTTS, NELCO, Ceat, Mastek, ICICI Lombard, RKFORGE, Aether, Rallis (mid-caps).
• It is a week of key inflation data. The India CPI inflation for December is expected to taper from 5.48% to 5.28%; while the WPI inflation is expected to spike from 1.89% to 2.30%, putting stress on input costs. US CPI inflation will also be announced this week, and it is expected to inch up from the 2.7% last month.
• With the prospects of rising CAD and the gold trade revisions, the focus will be on the trade deficit figure for December. In November, merchandise trade deficit had touched a record high of $37.8 billion; which was alter reduced due to gold double counting.
• All eyes will be on the Indian rupee after it weakened to ₹86.20/$ this week. The recent fall in the rupee has been pretty rapid. With limited RBI intervention, the rupee may weaken further amidst FPI outflows, yuan weakness, and dollar index strength
• 3 mainboard IPOs will list in this week; and 1 IPO will open for subscription. The IPOs of Capital Infra Trust, Quadrant Future Tek, and Standard Glass will list this week; while the IPO of Laxmi Dental opens in the coming week. Generally, the IPO market is subdued due to the rising volatility in the market.
• Key data points for the week include; FOMC member speak, PPI, CPI, EIA inventories, jobless claims, core retail sales, building permits, housing starts (the US), Lending Rate, trade, Q4 GDP (China); IIP, CPI, Trade (EU); Current Account (Japan); CPI, GDP, IIP, retail sales (the UK).

Let us finally turn to what all this means for the Nifty and the Sensex in the coming week to January 17, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX

For the coming week, there are 3 things to keep an eye on.

• During the week, VIX surged to the 14.92; which is likely to make it a sell on rises market, especially if the VIX crosses 16 levels.
• Nifty support at 23,066 and Sensex support at 76,192 levels to be crucial. Any sustained upsides on the Nifty will require a breakout with volumes, but first these levels will have to be protected with volumes.
• From a longer term perspective, the markets will now change focus to the upcoming Union Budget on February 01, 2024 with the hopes that the government will be able to send out a soothingly reformist message to the markets.

The undertone of the markets remained under pressure; and that is likely to continue in the coming week also.