Market outlook for the week (25-Nov to 29-Nov)

25 Nov 2024 , 11:07 AM

SECTORAL STORY IN THE WEEK TO NOVEMBER 22, 2024

The week to November 22, 2024 saw Nifty and Sensex up by 1.59% and 1.98% respectively. During the week the FPIs withdrew $388 Million from Indian equities taking the total FPI outflows to $14.4 Billion since the start of October 2024. Here is how the 20 key sectors performed in the week to November 22, 2024.

Sectoral Index	Weekly Returns	Index (22-Nov)	Index (15-Nov)
Nifty Realty	6.26%	1,006.25	946.95
Nifty Automobiles	2.79%	23,554.10	22,914.50
Nifty Consumer Durables	2.76%	39,775.20	38,705.90
Nifty IT	2.22%	43,332.10	42,390.85
Nifty FMCG	2.10%	56,956.45	55,782.70
Nifty Capital Markets	1.92%	3,677.70	3,608.30
Nifty Private Banks	1.92%	25,083.00	24,610.60
Nifty CPSE	1.91%	6,383.15	6,263.70
Nifty Banks	1.90%	51,135.40	50,179.55
Nifty India Digital	1.53%	9,302.30	9,162.05
Nifty Infrastructure	1.25%	8,537.95	8,432.85
Nifty Healthcare	0.94%	13,996.05	13,865.60
Nifty MNC	0.94%	28,043.45	27,783.30
Nifty Mobility	0.69%	19,764.70	19,628.62
Nifty India Defence	0.32%	6,062.00	6,042.75
Nifty PSU Banks	0.24%	6,508.15	6,492.65
Nifty Non-Banks	0.20%	24,998.70	24,948.54
Nifty Metals	0.20%	8,846.20	8,828.70
Nifty Oil & Gas	-1.23%	10,677.05	10,810.30
Nifty Energy	-1.41%	36,523.50	37,047.55

Data Source: NSE

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

• Out of the 20 sectoral indices, only 2 sectors showed losses and 18 sectors showed gains; which can be largely attributed to the Friday rally. The two losers in the week were the Oil & Gas index and the Energy Index, both the indices getting hit by the uncertainty over oil prices amidst the rising tensions between Ukraine and Russia.
• Let us look at the sectors that gave the best returns during the week. Realty ruled the back at 6.26% on the back of enticing offtake numbers. The consumer stocks like automobiles and consumer durable gained over 2.7% for the week, while the IT index also gained 2.22% on the back of robust dollar. The consumption story for the week also pulled up the FMCG sector to end with gains of 2.1% for the week.
• For the week, the arithmetic average of returns of these 20 sectors stood at 1.37%. However, the top-10 sectors delivered 2.53%, while the bottom 10 sectors delivered 0.21%. The negative theme of the week, as we mentioned before, was oil amidst the rising uncertainty in the global oil market amidst rising tensions in Ukraine.

During the week, Nifty VIX had spiked to 18.67 levels, but thanks to the Friday bounce, it closed the week at 16.10 levels. Markets will turn buy-on-dips, if VIX falls to 11.0-11.5 levels!

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

Here is a quick wrap of the week just gone by and how key events had a bearing on the stock market performance overall.

• Russia responded to Ukraine this week with a chilling reminder about their nuclear capabilities. They fired intercontinental ballistic missile (ICBM), which have a range of up to 10,000 KM into neighbouring Ukraine. The message was clear. If pushed to a corner, the Russians under Vladimir Putin would not hesitate to press the nuclear button.
• If the Russian aggression kept the markets tensed for the better part of the week, the other big factor during the week was the serious allegations levelled upon the Adani group by the SEC and the Department of Justice (DOJ). These are powerful bodies and Adani group may not be able to dismiss these allegations with the same felicity that they pushed aside the Hindenburg allegations. That will remain an overhang.
• FPI selling continued for the eighth week in a row; although in a truncated week the selling was limited to $388 million. The NSDL report for the first half of November indicates that selling continued to be rampant in oil & gas stocks during the month. It was another truncated week with the markets shut on Wednesday due to the Maharashtra Assembly elections.
• Talking of the election outcome, the ruling NDA combine scored a massive win in the commercial capital of Maharashtra. They almost got a two-third majority as the vote was clearly against the MVA. For the centre, that would be seen as a vote for continuation of the reforms process; something the markets will truly appreciate.
• Amidst the ICBM tensions in Ukraine, the price of Brent Crude rallied to above $75/bbl. The week also saw the rupee under pressure, although persistent RBI intervention kept the USDINR under 84.50/$. However, this intervention came at a huge cost with the RBI forex reserves falling from a recent peak of $715 Billion to $657 Billion.
• It was a positive week for the mega IPO of NTPC Green Energy. Interestingly, amidst the secondary market tumult, the IPO markets are still attracting attention. NTPC Green Energy was subscribed 2.42 times overall; with the retail portion getting subscribed 3.44 times and the QIB portion getting subscribed 3.32 times. HNI portion fell short.

The coming week will be a data heavy week with India Q2 GDP, India fiscal deficit and core sector as well as US Q3 GDP and PCE inflation to be announced.

STOCK MARKET TRIGGERS FOR COMING WEEK TO NOVEMBER 29, 2024

Here are some of the key triggers to keep a watch out for in the coming week to November 29, 2024.

• For the week, Nifty was up +1.59% and Sensex up +1.98%; thanks largely to the 550 points Nifty rally and the 2,000 points Sensex rally on Friday. Mid-caps were up at +1.8%, but small cap index was subdued at 0.88%. The focus will continue to be on large caps, especially in the light of the stunning victory of the ruling NDA in Maharashtra.
• Key dividend record dates scheduled for the coming week include IPCA Labs, Balrampur, Sun TV, Kaveri Seeds, Natco, Polyplex, Bayer, GPL, Dynamatic Tech, and VRL Logistics. Also, the coming week could see a sharp positive reaction to the emphatic NDA win in Maharashtra and its larger positive implications for the reforms process. The other big event on which the markets will await updates is the charges against Adani group by the US SEC and the Department of Justice.
• Key data points expected to be announced in India on Friday. The GDP data for Q2FY25 to be announced on Friday and anything above the 6.7% recorded in Q1FY25 should be positive. Core sector growth for October expected to be stable at around 2%, while fiscal deficit expected to be under 40% of full year fiscal deficit target after 7 months.
• Big data points expected from the US too in the coming week. On Tuesday, the FOMC minutes to be released, along with the dot plot charge for likely rate shifts in 2025. The US Bureau of Economic Analysis (BEA) will also put out the second estimate of Q32024 GDP and PCE inflation reading for October in this week. Markest will be hoping for GDP growth around 3% and PCE inflation trending toward 2%.
• IPOs continue to drive the equity flows into India, with secondary markets seeing persistent FPI selling since October. In the coming week, the IPO of Enviro Infra Engineers will close for subscription on Tuesday. The NTPC Green Energy IPO will list next week; while the markets are expecting IPO dates for Avanse.
• Key US markets data points next week include; Building permits, Housing starts, Crude stocks, PCE, GDP, Fed minutes, Fed speak, jobless claims, composite PMI. For ROW, key market data points will include Trade Balance, CPI, PMI (EU); Trade Balance, CPI (Japan); PBOC Prime Rate (China); CPI, PPI, retail sales, PMI (UK).

Let us finally turn to what all this means for the Nifty and the Sensex in the coming week to November 29, 2024.

PARTING THOUGHTS ON NIFTY AND SENSEX FOR NEXT WEEK

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

• During the week, VIX spiked to 18.67 levels, but fell to close at 16.10 levels in the week. That is still too high in absolute terms. Buy on dips will only work if the VIX drops to 11.0-11.5 levels. That appears elusive for the time being.
• Nifty and Sensex have gotten close to crucial resistances. Nifty needs to break decisively above 24,000 while the Sensex has to decisively break above 79,500 to entertain any thoughts of a resumption of the rally. Next week, that is possible.
• In the short term; the markets will be driven by the thumping win in Maharashtra, the Adani group allegations, and the intensifying war in Ukraine. Over a longer period, the markets are likely to look at most substantive factors like GDP growth, next quarter earnings and relative valuations.

For now, traders and even investors, need to take the market each day as it comes!