Week of Respite: Indian markets pause after seven weeks of unstoppable rally

The Nifty 50 concluded last week with a marginal dip of 107.25 points, or 0.50%, settling at 21,349 points. During the week, the index achieved a new all-time high of 21,593 points. Similarly, the S&P BSE Sensex reached a historic high of 71,913 points last week, concluding at 71,106, with a decline of 376.79 points, or 0.53%.

Also Read: 27 Nifty 50 stocks recorded new all-time highs this year; will the rally continue in 2024?

In the sectoral domain, Nifty FMCG, Nifty Oil & Gas, and Nifty Pharma saw gains of over 1%. Conversely, Nifty PSU Bank, Nifty Media, Nifty Auto, Nifty Metal, and Nifty Bank dropped between 1% and 3.08%.

Among the Nifty 50 constituents, 19 closed the week in positive territory. Britannia Industries led the pack with a 5% rally, followed by Nestle India, TCS, Coal India, Cipla, and HUL, all recorded gains between 2% and 4%. Reliance Industries shares posted a notable gain of 2.79% last week, marking their strongest weekly performance since July 2023. Other stocks such as Wipro, Hindalco Industries, and IndusInd Bank achieved new 52-week highs.

Also Read: FPIs’ monthly investments hit 3-yr high in Dec

Meanwhile, the NSDL data showed that FPIs pumped in about ₹24,546 crore in the Indian financial market in November, while in December so far, they poured in ₹77,388 crore.

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 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.”

“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, he further added.

Crude Oil prices achieve highest weekly gain in 2 months

Crude oil prices extended their gains for the second consecutive week, marking their most substantial weekly increase since October. This upswing was fueled by disruptions in global trade, primarily attributed to escalated Houthi attacks on ships in the Red Sea. In response to these attacks, certain ships have been rerouted around the Cape of Good Hope, situated at the southern tip of Africa, resulting in an extended journey time of up to two weeks.

Also Read: Explained | Who are Houthi rebels causing Red Sea crisis, what do they want

Attacks by the Iran-backed Houthi militant group forced more ships to take extensive detours to avoid the vital waterway, with disruptions seen lasting through February, Bloomberg reported.

Amid these uncertainties, crude oil prices climbed last week, marking a 3.45% increase for Brent crude futures, which concluded the week at $79.19 per barrel. Simultaneously, WTI crude futures saw a 2.48% rise, closing the week at $73.56 per barrel.

Despite this short-term recovery, both Brent and WTI are on track for their first annual decline since 2020, owing to the surge in production from the US and other regions, countering the efforts of the OPEC alliance to stabilise the market through output cuts. Additionally, heightened economic uncertainties in China, a significant crude importer, contribute to the challenges faced by the oil market.

Bullish Outlook

Nifty 50 has notched several record highs this year, surpassing 19,000 in June and reaching 20,000 and 21,500 levels in September and December, respectively. Looking ahead to 2024, ICICI Securities forecasts a trajectory akin to 2023 for the Nifty 50.

Anticipating a robust continuation of the rally, ICICI Securities sets a target of 24,200 for the Nifty 50 in 2024. The brokerage expects persistent volatility around current levels in the upcoming months. Therefore, in the first half of 2024, ICICI Direct recommends investors to adopt a ‘Buy on Dips’ strategy.

Also Read: Will the Indian market continue its strong run? Here’s where experts see Nifty by 2024-end

Under the base case scenario, Axis Securities sets its December 2024 Nifty target at 23,000. In its base case scenario, the brokerage assumes the continuation of political stability and consequent visibility on policy continuity after the 2024 general elections.

Global brokerage firm Goldman Sachs has upgraded the Nifty 50 target to 21,800 by December 2024, citing robust earnings growth witnessed by India Inc. in Q2 and better valuations.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 24 Dec 2023, 10:18 AM IST