Weekly Market Wrap: Rally in the IT sector led D-street to new highs amid mixed global cues. What lies ahead?  

Stock market this week: Dalal Street ended the last week on fresh closing highs supported by better-than-expected Q3 numbers reported by IT giants TCS and Infosys. Markets also got support from the World Bank’s Global Economic Prospects report which retained India’s economic growth forecast at 6.3 per cent for the current financial year (FY24) as India is anticipated to maintain the fastest growth rate among the world’s largest economies.  Besides the data from CBDT showed that the net direct tax collection so far, this fiscal rose 19.41 per cent to Rs 14.70 lakh crore from the corresponding period of last year.

These signals led the BSE Sensex to surge 542 points, or 0.75 per cent, at 72,568 during the week ended on January 12, 2024. While the Nifty jumped 184 points, or 0.85 per cent, to 21,895. Sector-wise, the BSE Information Technology index surged the most (4.6 per cent) during the week gone by. While BSE Realty and BSE Teck indices have registered a gain of 4.3 per cent, and 3.9 per cent, respectively. On the other hand, the BSE FMCG index declined 1.8 per cent.

As many as 23 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 9.9 per cent, Hero MotoCorp emerged as the top gainer in the index. It was followed by HCL Technologies (7.7 per cent), Infosys (5.2 per cent), Reliance Industries (5.1 per cent), and Bajaj Auto (4.8 per cent). Tech Mahindra, and Adani Ports, also advanced by over four per cent. On the other hand, Nestle India, Bajaj Finserv, and Divi's Laboratories declined 4.4 per cent, 3.4 per cent, and 3.2 per cent, respectively.

Technical Outlook

Kunal Shah, Senior Technical & Derivative Analyst, at LKP Securities said, The Nifty index exhibited significant strength, securing a notable breakout on the daily chart as it surpassed the key resistance level of 21,800.

This bullish move positions the index for potential short-term targets of 22,000 and 22,200. “Traders are advised to consider buying opportunities on any dips toward the support level. The momentum indicator RSI has also provided a buy crossover, further confirming the bullish sentiment in the market” Shah said.

Market outlook

Vinod Nair, Head of Research at Geojit Financial Services, said, “Contrary to expectations of weak Q3 results from the IT sector, better-than-expected results along with green shoots of recovery in the IT sector on the back of an improved outlook for BFSI in FY25 positively influenced domestic market sentiments”. With higher-than-expected US inflation and positive job data, the euphoria over early rate cuts by the US Fed has moderated, which has diminished global market sentiments.

On the other hand, oil prices have surged as the conflict in the Red Sea region appears to escalate further. Domestic inflation data for December was marginally lower than anticipated, while industrial production (IIP) witnessed a deceleration more than expected.

“In the near term, investors' trade positions will be more inclined towards the upcoming result season; the overall forecast for earnings growth remains optimistic, projecting double-digit figures”, Nair said.

Also read: Interim Budget 2024: Sector-wise wishlist, stock market tax sops, divestments & more

Also read: Grasim Industries shares rise for three straight sessions, trading near record high; what’s next?