Markets Enter Sell on Rise Zone
Ahead of the Maharashtra State Elections and a truncated trading week, caution gripped investors, and its impact was evident in Indian equities. The markets resumed their corrective trend, shedding over 2.5% for the week after a brief consolidation. Despite a flat start, pressure from heavyweight stocks dragged benchmarks lower, resulting in a muted session to close out the week.
Mounting concerns over rising CPI inflation and persistent disappointments in corporate earnings weighed heavily on sentiment. As a result, the Nifty and Sensex settled near the week's lows at 23,532.70 and 77,580.30, respectively.
Index | November 8, 2024 | November 14, 2024 | % Change |
Nifty | 24,148.20 | 23,532.70 | -2.55 |
Bank Nifty | 51,561.20 | 50,179.55 | -2.68 |
Midcap Nifty | 56,352.00 | 54,043.10 | -4.10 |
Sectoral trends mirrored the market's dip, with metals, FMCG, and auto stocks taking the biggest hits. However, IT emerged as a lone warrior, gaining nearly 1% amidst the broader sell-off.
Indices | Change (%) |
Nifty IT | 0.81 |
Nifty Media | -1.85 |
Nifty Realty | -2.14 |
Nifty Financial Services | -2.66 |
Nifty Bank | -2.68 |
Nifty Select Midcap | -3.36 |
Nifty Pharma | -3.51 |
Nifty Energy | -3.53 |
Nifty Auto | -3.74 |
Nifty FMCG | -4.42 |
Nifty PSU Bank | -5.15 |
Nifty Metal | -5.16 |
Broader indices, including midcap and smallcap stocks, were hit harder, losing over 4% each.
Weekly Top Gainers (Nifty 500) | Weekly Gain (%) |
Zomato | 8.41 |
Uno Minda | 6.35 |
KNR Construction | 4.89 |
Aegis Logistics | 4.72 |
Biocon | 4.51 |
Weekly Top Losers (Nifty 500) | Weekly Loss (%) |
Akums Drugs & Pharma | -26.89 |
BASF India | -20.87 |
Hitachi Energy India | -16.08 |
C.E. Infosystems | -15.37 |
Britannia Industries | -14.47 |
Inflation at a 14-Month High – Will RBI Hold Off on a Rate Cut?
India’s CPI inflation soared to 6.2% in October 2024, its highest in 14 months. With FY25 inflation now estimated at 4.8%-4.9%, expectations for a February 2025 rate cut are fading.
State-wise data showed inflation exceeding the national average in larger states, with Chhattisgarh, Bihar, and Odisha topping the charts at 8.8%, 7.9%, and 7.5%, respectively. A persistent gap between rural and urban inflation trends remained evident, with rural households paying 1.07% more due to higher food prices.
While vegetable prices are moderating, CPI inflation for November and December could still stay above 5%. Amid currency volatility, this elevated inflation might push RBI to delay signalling a rate easing cycle.
What to Expect Going Ahead?
The upcoming week will also be shortened by a holiday, and with the earning season largely concluded, the focus will shift towards FII flows, which have seen outflows of Rs. 1.4 lakh crore so far in the cash market. Additionally, traders will keep a close watch on global market trends.
India Equity – Institutional Funds Flow (Rs Crore)
Technical View
The Nifty broke below its key range of 24,000-24,500, testing the 200 DEMA and marking an 11% correction from its peak. Key indices like banking, midcap, and smallcap also tested their long-term support zones last week.
The banking and IT sectors will be crucial in determining the next move, with the Nifty potentially slipping to 22,700-23,100 if the banking index breaches 49,900. Resistance is expected around 23,900-24,200.
Weekly Takeaway
A “sell on rise” strategy continues to make sense, with cautious stock selection being key. Long-term investors may consider gradually accumulating fundamentally sound stocks with solid earnings potential.
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