Investors Awaiting Macro Triggers

Looking ahead, the flow of foreign investments into Indian equity markets will hinge on several key factors. These include the policies implemented under Donald Trump’s Presidency, the prevailing inflation and interest rate environment, and the evolving geopolitical landscape

Sustaining the positive momentum on the back of mixed global cues ahead of US Fed Policy outcome next week, renewed FIIs buying, better than expected CPI and IIP data; the domestic stock market logged gains for the fourth consecutive week. The final trading session of the week was a roller-coaster ride, with both NSE Nifty and BSE Sensex experiencing sharp swings in both directions before ending nearly one per cent higher over previous session closing. The broader indices also saw choppy trading, but managed to close flat.

The Reserve Bank of India (RBI) move to lower the Cash Reserve Ratio (CRR) enhancing liquidity boosted investors’ sentiment. Additionally, Consumer Price Index (CPI) inflation dropped to 5.48 per cent in November from 6.21 per cent in October, enhancing investor confidence and raising hopes for potential monetary policy easing by the RBI in coming weeks. The Sensex rose 623.07 points or 0.76 percent to end at 82,133.12, while the Nifty gained 90.5 points or 0.36 percent to close at 24,768.30. The broader indices underperformed the benchmark indices with the BSE Midcap index closing with marginal gains and the BSE Small-cap index was down marginally.

During the week, the FIIs sold equities worth Rs226.70 crore, while the DIIs bought equities worth Rs2,880.02 crore. In the month of December till date, FIIs purchased equities worth Rs11,706.89 crore, while DIIs bought equities worth Rs4,672.49 crore. Looking ahead, the flow of foreign investments into Indian equity markets will hinge on several key factors. These include the policies implemented under Donald Trump’s Presidency, the prevailing inflation and interest rate environment, and the evolving geopolitical landscape.

Additionally, the third-quarter earnings performance of Indian companies and the country’s progress on the economic growth front will play a crucial role in shaping investor sentiment and influencing foreign inflows. The Indian rupee hit fresh record low of 84.86 during the course of the week and finally ended at 84.79 per dollar. The winter session of Parliament is scheduled to conclude on December 20.

The two bills related to implementation of the simultaneous elections to Lok Sabha and State Assemblies have been circulated among members last week as per the rules of procedure. Ahead of the Christmas festivities, many central banks, including the US Fed, are lining up to announce their policies next week. There will be lots of data fireworks such as inflation, PMIs and trade deficit. Market participants should align their strategies accordingly, prioritizing risk management to navigate market volatility effectively.

This is testament to the fact that investing without education and research will ultimately lead to regrettable investment decisions. Research is much more than just listening to popular opinion.

F&O/ SECTOR WATCH

Tracking the cash market, the derivatives segment witnessed brisk trading in many of the new entrant stock futures. Sector-wise, the IT, Financial services, and FMCG sectors posted strong gains, while the Media, PSU Banks and Energy sectors faced pressure on a weekly basis. In the options market, the highest Call Open Interest for Nifty was seen at the 25,000 and 25,100 strikes, while the notable Put Open Interest was at the 24,500 and 24,700 strikes. For Bank Nifty, the prominent Call Open Interest was seen at the 54,000 strike, whereas notable Put Open Interest at the 53,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 12.36 per cent, while Put options conclude at 13.03 per cent.

The India VIX, a key market volatility indicator, closed the week at 13.19 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 0.96. A ratio greater than 1 means there have been relatively more Put options writing (selling) when compared to calls. The markets may attempt to resume the technical pullback that it started by rebounding off the 50-week MA level. It would be crucial for the Nifty to keep its head above the 24,700 mark. It is also important to note that any slip below the 24,700 level would drag the markets back inside the consolidation zone. Nifty tested the 100EMA (Exponential Moving Average) and bounced back above it. Nifty formed an inverted head and shoulders pattern on the daily chart, indicating further bullishness in the index.

From a technical perspective, analysts say a decisive move above 24,800 on Nifty could trigger further recovery toward the 25,200–25,500 zone. On the downside, the 24,300–24,400 zone is expected to provide strong support on a closing basis. Maintain a ‘buy on dips’ strategy, focusing on selective stock picking, with a preference for IT and Banking stocks. Stock futures looking good are Angel One, CAMS, Delhivery, HPCL, IRFC, Infosys, Max Health, SBI and Voltas. Stock futures looking weak are Alkem Labs, HFCL, LIC Hsg, Paytm, Sona Comstar, Oil India and Zomato.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

STOCK PICKS

Sunflag Iron and Steel Company Ltd

Sunflag Iron and Steel Company Ltd is an ‘state of the art’ Integrated Steel Plant producing high quality Special Steels with manufacturing facilities like Sponge Iron Plant, Mini Blast Furnace, Sinter Plant, Captive Power Plant, Steel Melt Shop, Continuous Casting Machine with EMS facility, Ingot Casting and Rolling Mills. Modern annealing facilities include Bell annealing furnace, hardening and tempering, Electric annealing furnace. Bright Bar facilities like peeling machine, Combined drawing machine, Wire drawing units, coil to bar peeling machine, polishing & grinding lines and heat treatment facilities are available for value addition. The company has become a reputed supplier in Flat Bars, Round Bars, Bright Bars and Wire Rods of Alloy Steel, Spring Steel, Ball Bearing Steel and Stainless Steel and captured better position in these market segments. With Ultramodern Blooming Mill & HV Mill, it is catering requirements for Automobile, Heavy Engineering,

Railways, Defence and Aerospace sectors. Further, with Bottom poured ingot facilities, it is catering special requirements of Railways and Defence for critical / core applications. Super Alloy Steel manufacturing facility has been commissioned and now it shall be able cater to requirements related to Commercial & Fighter jet Parts, Defence, Space Vehicles, Nuclear Reactor, Advanced Ultra Super-critical Power Plants, Industrial and Vehicle Gas Turbines, Petro-Chemical Plants and other High Temp and Corrosive Applications.

This will enable the Company to reduce its dependency on automotive and auto ancillary industries and create opportunity for expansion and foray in new markets. The company is an approved vendor to VSSC, LPSC, HAL, Brahmos, DRDO, Collins Aerospace and GE Gas & Power and has received orders for supply of high-quality Aerospace steels & Ni Alloys. Besides, the company is also looking forward to acquire coal and iron ore mines with the aim to increase its business volume. Buy on declines for medium term target of Rs500.