The stock markets kicked off 2025 on a positive note, with benchmark indices gaining nearly 1% despite volatility. While the initial sentiment was subdued, subsequent sessions showed gradual improvement.
However, the real momentum emerged on Thursday, enabling the indices to close higher despite a lacklustre final session. As a result, the Nifty and Sensex ended the week at 24,004.7 and 79,223.1, respectively.
Index | December 27 , 2024 | January 03, 2025 | % Change |
Nifty | 23,813.4 | 24,004.0 | 0.80 |
Bank Nifty | 51,311.3 | 50988.8 | -0.63 |
Midcap Nifty | 56,972.6 | 57,931.0 | 1.68 |
Sectoral performance was mixed - Auto, FMCG, and Energy sectors emerged as the top gainers, while Realty and Banking sectors ended in the red.
The Auto sector stood out as it carried momentum upwards from the positive move it exhibited in the preceding week as well. The Nifty Auto index moved up by 3.9% last week, after seeing an up move of 2.3% in the preceding week.
Similar was the scenario with FMCG and Pharma sectors as well. Positive momentum was visible in both thee sectors.
Indices | Change (%) |
Nifty Auto | 3.92 |
Nifty Energy | 2.44 |
Nifty FMCG | 2.43 |
Nifty Select Midcap | 1.84 |
Nifty Pharma | 1.11 |
Nifty PSU Bank | 0.73 |
Nifty Media | 0.43 |
Nifty Metal | 0.11 |
Nifty IT | 0.01 |
Nifty Financial Services | -0.22 |
Nifty Bank | -0.63 |
Nifty Realty | -2.45 |
FII outflows continued into the first week of the new year as well with the following table clearly indicating the intensity of the outflows. 2024 overall has been the worst year in the past one decade in terms of outflows.
India Equity - Institutional Funds Flow Rs. Crore
Date | FII | FII (Futures) | DII |
December 30, 2024 | -1,893 | 487 | 2,174 |
December 31, 2024 | -4,645 | -4,617 | 4,547 |
January 1, 2025 | -1,783 | -1,526 | 1,690 |
January 2,2025 | 1,507 | 13,480 | 22 |
January 3, 2025 | -4,227 | -3,344 | 821 |
Total | -11,041 | 4,480 | 9,254 |
Midcap and small cap companies managed to outperform large cap companies and it is clearly visible in the list of top performers on the bourses. Stocks like ITI, Lloyds’ Metals and Energy were top gainers in the week.
Weekly Top Gainers (Nifty 500)
Company | Weekly Gain (%) |
ITI | 39.27 |
Lloyds Metals & Energy | 21.95 |
Saregama India | 17.97 |
Indian renwable Energy | 17.07 |
Century Plyboards India | 14.69 |
Weekly Top Losers (Nifty 500)
Company | Weekly Loss (%) |
Triveni Engg. & Ind. | -10.45 |
Balaji Amines | -8.88 |
Cyient | -7.97 |
Jindal Stainless | -7.93 |
Crompton Greaves Consumer | -7.47 |
Positive Sentiment Ahead?
Looking ahead to the second week of the year, several key events are likely to influence market sentiment.
The earnings season begins with IT major TCS - a key trigger as any signs of improvement in 3QFY25 numbers could reverse the ongoing trend of FII outflows.
We reckon, the results season is likely to bring back the positive sentiment in the market. In 2QFY25 the street expectations were higher and results came below estimates, thereby affecting sentiment.
However in 3QFY25 we see that estimates are on the lower side, and we expect results to be better than expectations.
Additionally, a host of economic data, including HSBC Composite PMI, HSBC Services PMI, fiscal year GDP growth, and IIP, will be closely monitored for further cues.
Positive News Around the Globe
In Global markets, in the US the number of Americans filing new applications for unemployment benefits dropped to an eight-month low of 211,000 last week, below the 222,000 estimate. The dollar index climbed to 109.54, the highest since Nov. 10, 2022.
In Europe, Turkey’s consumer price index fell to 44.38% on an annual basis in December, down from 47.09% in November. Investors are also watching out for the latest inflation figures from Poland, as well as unemployment reports out of Germany and Spain and mortgage data from the UK.
In Asia, the People’s Bank of China is reportedly planning to cut interest rates from the current 1.5% level “at an appropriate time” this year. China will also expand issuance of ultra-long bonds and ramp up efforts to boost consumption. In South Korea the investigator has failed to detain impeached President Yoon Suk Yeol.
Technical View
During the week, the market not only cleared the 200-day Simple Moving Average (SMA) but also comfortably closed above it, which is largely positive.
Technically, it has formed a reversal formation on both daily and weekly charts, supporting a further uptrend from the current levels.
We are of the view that the short-term texture of the market is bullish; however, before any fresh breakout, we could see range-bound activity.
From a technical perspective, the recent price action indicates that bulls are striving to defend the 200-day exponential moving average (DEMA).
A successful breach of the 100-day DEMA, currently at 24,250, could provide further momentum, targeting the 24,400–24,800 range.
Conversely, a decisive break below 23,700 could weaken bullish sentiment, with the next significant support at 23,250, the November 2024 low.
For Bank Nifty, the 200-day SMA, or the 50,500-50,600 range, would act as a critical support zone. On the upside, the 50-day and 20-day SMAs, or the 51,800-52,200 range, could be crucial resistance areas for the bulls.
Strategy to Navigate the Markets
Given the current market dynamics, trading opportunities exist on both sides. A stock-specific approach is advised until a clearer trend emerges on the benchmark front.
For short-term trades, sectors such as FMCG, Auto, and Energy are preferred, while a cautious stance is recommended for midcap and smallcap stocks.
As the earnings season often brings heightened volatility, managing overnight risk remains crucial.
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