Week Ending January 03rd 2025

Dear patrons, the roller coaster ride continues in the markets, with the benchmark indices oscillating wildly to gain some and lose some sessions. While the week before last week saw movement in a very small range last week the markets saw positive closing on three out of five sessions.

World over, the festive atmosphere lead the markets northwards albeit on low volumes. The new year began quite well for the Indian markets as well. Markets now await Q3 results which should decide the markets direction in the coming weeks. Stock specific movements are likely to prevail over broad rallies.

There is rising talk of another virus (Human MetaPneumo Virus or HMPV) wreaking havoc in China. This chatter, however, is more vigorous on the social media. In view of some of the experts, the virus is 60 years old and is found commonly in winter. As the temperature rises after Uttarayan, the virus should vanish. As of today, there seems nothing to be worried about HMPV.

New year should bring along rate cuts in India to the tune of 50 bps in the first half. Capex is likely to increase in the budget.

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

Nifty took support around 23700 as suggested in the last blog and reversed strongly to move towards 24200. Resistance for Nifty lies around 24325. Nifty needs to close above 24325 at least for a couple of sessions to show first sign of trend reversal. It should find support in 24000-23900 range, while strong support lies around 23700. We believe the uptrend should resume in Nifty in coming few sessions leading towards 25000 and above.

BankNifty has looked weaker than Nifty for last few sessions. Support for BankNifty lies around 50500. A break below this level will be bad news for BankNifty. We believe the BankNifty may remain choppy for coming few sessions before a robust rally preempting rate cut in first week of February. Resistance for BankNifty lies around 51200-51300 followed by 51700-51800. Move above 52700 is needed for BankNifty to come out the current trend.

Government of India has declared 2025 as the year of Defence Reforms. This may be time to look at some of the defence stocks. We have been suggesting sectoral rotation in the markets for some time now. 

Top Sectors to Watch: Capital goods, consumer discretionary, data centers, lab-grown diamonds, electronics manufacturing services (EMS), export-oriented sectors, CDMO/CMO pharmaceuticals, precision engineering, semiconductors, real estate, solar and wind energy, textiles, transmission and wastewater treatment.

Stock market wisdom: "The stock market builds wealth over time, not instantly. Trade with a plan, strategy, risk management system, rules, stop loss and profit target."

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.