Week Ending December 27th 2024

Dear patrons, let me first apologize for not being able to write this blog for last week. Markets remained subdued in the truncated week even though it was an expiry week for the December series derivatives contracts. Nifty managed to gain close to 1% over the week, whereas BankNifty also gained more than 1%.

After touching 24800 in the first week of December, Nifty lost momentum falling well below 24000 mark and closed the last week tad above 23800. Fall in Nifty can mainly be attributed to the falling Rupee. The INR has been falling for some time now against the USD and is currently at record low levels.

Solid rally in CY24 faltered in Q4 due to weak earnings, FII selling, and a stronger U.S. Dollar. With mid-cycle slowdown and earnings growth moderation in FY25, indices may consolidate, and sector rotation is expected. However, we believe India's economy remains on track for multi-year growth driven by real estate revival, strong infrastructure activities, and rising corporate capex. Interest rate cuts are expected to boost consumption, reflecting in corporate earnings.

Market momentum remains weak with only 25% of stocks above the 20 EMA and many below the 50 EMA. It is advisable to wait for stability and momentum to return. A pre-budget rally may begin post Uttarayan/Makar Sankranti. In the mean, one can use this time for study and analysis.

Let's take a look at the charts and try to figure out what lies in store for the coming week.

As we can see in the above pic. Nifty spent the entire week in a small range. It squandered all the gains in early trade Friday. We believe Nifty to remain in consolidation phase for some more time. Resistance for Nifty is placed around 24000 to start with and 24300-24350 thereafter. A break above 24350 should lead Nifty higher. Support for Nifty lies around 23700
and move below this support may lead Nifty towards recent lows of around 23200. 

BankNifty also spent the week doing nothing. We expect BankNifty to consolidate between 50500 and 51500 for some time. It may face resistance in 51600-51800 range while support lies around 50500. Break above 52600 is needed for BankNifty to move upwards while break below 50500 may lead it towards 48000 levels.

Sectoral rotation may happen during this phase of consolidation. It is advisable for traders to look for opportunities in such rotation. In our view Capital Goods, Pharma and Consumer Durables should outperform the benchmark indices.

Investing demands smart work and patience, while trading requires hard work and emotional control. Don't mistake trading for an easy wealth path. Understand the difference and choose wisely.

Stay Invested!!!

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.