Weekly Market Wrap: Bull run halted at D-street amid profit booking at new highs. What lies ahead?

Snapping a seven-week gaining streak, Indian equity benchmarks ended the passing week with a cut of half a per cent amid profit booking at higher levels. The commerce ministry’s data showed that India’s merchandise exports declined by 2.83 per cent to $33.90 billion in November 2023 as compared to $34.89 billion a year ago. Imports also declined to $54.48 billion, as against $56.95 billion recorded in November 2022.  Besides, the new Covid-19 scare with the detection of a new variant in states like Goa, Kerala, and Maharashtra dented sentiments in markets.

These signals led the BSE Sensex to decline 377 points, or 0.53 per cent, at 71,107 during the week ended on December 22, while the Nifty slipped 107 points, or 0.50 per cent, to 21,349. Sector-wise, the BSE FMCG index surged the most (1.4 per cent) during the week gone by. While BSE Healthcare and BSE Oil & Gas indices have registered a gain of 1.1 per cent, and 0.7 per cent, respectively. On the other hand, BSE Auto and BSE Power indices dropped by over 1.5 per cent.

As many as 18 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 5 per cent, Britannia Industries emerged as the top gainer in the index. It was followed by Nestle India (4.1 per cent), Tata Consumer Products (3.9 per cent), Coal India (3.8 per cent), and Wipro (3.6 per cent). Reliance Industries, Cipla, Hindalco Industries, and Hindustan Unilever also advanced by over two per cent. On the other hand, Mahindra & Mahindra, HDFC Life Insurance and UPL India declined 5.3 per cent, 4.9 per cent, and 4.8 per cent, respectively.

Weekly wrap:        

Amol Athawale, Vice President - Technical Research at Kotak Securities said, In the last week, the benchmark indices witnessed a volatile activity, after a roller-coaster movement the nifty ended 0.55 per cent lower while the Sensex shed over 375 points.  During the week, the Nifty/ Sensex registered a fresh all-time high of 21593 /71913 but due to consistent profit booking at higher levels, it corrected sharply. From the weekly highest levels, the Nifty/ Sensex corrected over 600/1900 points. After a sharp decline, it took the support near 21000/70000 and bounced back sharply.

Athawale further said, that technically the short-term texture of the market is volatile hence; level-based trading would be the ideal strategy for the day traders. We are of the view that “as long as the index is trading above 21200/70700 the pullback formation is likely to continue. Above the same, the market could move up till 21500-21550/71500-71650”. On the flip side, below 21200/70700 the sentiment could change. Below the same, the market could retest the level of 21100-21000/70400-70000.

“For Bank Nifty, 47000 could act as a sacrosanct support zone, above which it could rally till 48000-48300. However, below 47000 uptrend would be vulnerable. Below which, it could slip till 46700-46500 “. Athawale said.

Market outlook:        

Vinod Nair, Head of Research at Geojit Financial Services said, the 'buy on dips' strategy continues to drive investors during the subdued week. Mid and small caps remain in the limelight, benefiting from the ease in oil prices and the anticipation of a potential rate cut in CY24, supported by slower-than-expected US GDP growth and weakness in the dollar, signalling early rate cuts.

He added that despite a premium valuation, the short-term positive trend persists, supported by a strong revival in FIIs buying and stock-specific actions. “Heading into the festive season and year-end, we can anticipate a range-bound trade scenario with limited data points”, Nair said.

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