Uncertainty Still Looming Large Over Bourses

The earnings season begins on Thursday (Jan 9) with the announcement of TCS’ Dec quarter results. The market will also react to the Q3 updates of top companies like Vedanta, Bajaj Finance, Bandhan Bank and Adani Wilmar among others. Further, the investors are likely to align their portfolios based on pre-budget expectations

Navigating through negatives like FII selling, strong dollar and rupee depreciation; the domestic stock market started the new calendar year on a positive note. However, the market concluded the week with a pessimistic note as a sell-on-rally sentiment prevails in the market. BSE Sensex rose 524.04 points or 0.66 percent to close at 79,223.11, while the Nifty added 191.35 points or 0.80 percent to finish at 24,004.75. However, BSE Midcap and Smallcap indices rose1.3 per cent and 2 per cent. FIIs sold equities worth Rs11,041.59 crore, while DIIs bought equities worth Rs9253.7 crore. FPIs have pulled Rs4,285 crore in January over the first three days after remaining net buyers in December at Rs15,446. It is pertinent to observe that for the full year of 2024, FII net buying stood at just Rs427 crore. The rupee depreciated further to close at a record low of 85.79 against the US dollar, as strong dollar demand from importers and a muted trend in domestic equities weighed on investors’ sentiments.

The US dollar index breached the crucial 109-mark. The uptrend in the American currency was underpinned by expectations of fewer rate cuts and a view that the US economy will continue to outperform its peers globally. Most sectoral indices closed in the green, with the Consumer Durable, Financial Services, and Auto sectors emerging as the top gainers for the week. The auto sector outperformed other indices, driven by robust December sales that defied the usual subdued demand. In the near-term, significant market attention is expected for the upcoming Q3 results, with an anticipated improvement on a QoQ basis. The earnings season begins on Thursday (January 9) with the announcement of Tata Consultancy Services’ (TCS) October-December quarter results.

The market will also react to the Q3 updates of top companies like Vedanta, Bajaj Finance, Bandhan Bank and Adani Wilmar among others. Further, the investors are likely to align their portfolios based on pre-budget expectations. Market observers feel that ‘Uncertainty’ surrounding Trump’s economic policies and high valuations may impact the stock market in the short term, particularly in emerging markets.

IPO Musings: The year 2025 is likely to be bigger and better for the primary markets with some experts predicting the primary market fundraising to cross Rs2 lakh crore. Currently, as many as 100 companies have filed their draft offer letters with markets regulator Sebi, which have either received approval or awaiting clearance. The first full week of the new calendar year 2025 is set to be busy for the primary market as investors will see seven new public issues hitting Dalal Street with 6 companies scheduled for listings. These seven companies including InvIT plan to raise more than Rs2,400 crore through initial public offerings next week starting from January 6. Standard Glass Lining Technology that manufactures engineering equipment for pharmaceutical and chemical sectors. Quadrant Future Tek develops new generation train control and signalling systems under Kavach project of the Indian Railways. Capital Infra Trust, an infrastructure investment trust, Indobell Insulation, BR Goyal Infrastructure, Delta Autocorp, Avax Apparels & Ornaments are the other IPO’s on cards in the coming week.

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F&O/ SECTOR WATCH

Amidst heightened volatility, derivatives segment witnessed a brisk trading accompanied by some short covering and fresh bouts of selling. In the options market, the highest Call Open Interest for Nifty was seen at the 24,500 and 24,200 strikes, while the notable Put Open Interest was at the 24,000 and 23,700 strikes. For Bank Nifty, the prominent Call Open Interest was seen at the 52,000 and 51,500 strikes, whereas notable Put Open Interest at the 51,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 13.15 per cent, while Put options conclude at 14.07 per cent. The India VIX, a key market volatility indicator, closed the week at 13.74 per cent. India VIX has been trading in a narrow range of 13-15 for the past few sessions, showing little volatility. There has been a lack of significant movement or activity, indicating a period of relative calm in the market.

The Put-Call Ratio of Open Interest (PCR OI) for the week was 1.23. From a technical perspective, the Nifty continues to trade below the 100 EMA (Exponential Moving Average), after facing resistance at this level. Similarly, the Bank Nifty also encountered resistance at its 100 EMA and saw a correction. For the Nifty, support is anticipated around 23,700, while resistance is expected at 24,400. Most sectorial indices closed in the green, with the Consumer Durable, Financial Services, and Auto sectors emerging as the top gainers for the week. Auto sales numbers surprised the market, triggering buying activity in auto shares last week, which helped the market close on a positive note for the week.

The much-anticipated listing of ITC Hotels, demerged from ITC Ltd, is set to occur during a special pre-open session on January 6, with market analysts predicting a listing price in the range of Rs150 to Rs300 per share. The price discovery will be based on the difference between ITC Ltd’s closing price on January 3 and the opening price determined during the pre-open session on January 6. On Friday, ITC shares closed at Rs483.95. The trading in ITC Hotels shares will commence after its formal listing on the stock exchanges. ITC Ltd has clarified that the listing process will be completed within 60 days from the receipt of the NCLT order on December 16, 2024. Stocks looking good are ATGL, Bata India, Eicher Motors, IRB, IRFC, Max Health, Marico and NHPC. Stocks looking weak areCyient, Cummins, Canfin Homes, Petronet, Tata Chemicals and Tata Elexi.

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

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