Last week, the markets witnessed a 5 day losing streak. The significant pressure saw the Nifty 50 losing 5%, and wiping out gains from the past four weeks.
Adding to the subdued start, the Nifty and Sensex, continued to decline daily, closing near the week’s lows at 23,858 and 78,042, respectively.
Why So Bad?
The sharp fall was mainly attributed to:
Persistent selling by FIIs - Weakness in the Indian Rupee, along with a relatively stronger performance in the US markets have been driving continued FII outflows from the Indian markets
A hawkish tone of the US Federal Reserve - The US Fed did cut rates, but also said that cuts in 2025 would be much lesser. Its hawkish stance dampened market expectations of a quicker rate cut cycle, resulting in pressures
India Equity - Institutional Funds Flow (Rs. crore)
Date | FII | FII (Futures) | DII |
December 16, 2024 | -279 | -4,518 | -234 |
December 17, 2024 | -6,410 | -7,585 | 2,706 |
December 18, 2025 | -1,317 | -1,753 | 4,084 |
December 19, 2025 | -4,225 | -4,494 | 3,943 |
December 20, 2024 | -3,598 | -2,276 | 1,374 |
Total | -15,829 | -20,626 | 11,873 |
Where is the Pressure?
All key sectors except the pharmaceutical index ended lower, with metals, energy, and banking taking the hardest hits.
Energy and PSU Bank indices extended losses carried from the preceding week. Nifty Media witnessed significant losses in previous week and this week also.
The sharp sell-off in heavyweight sectors like banking and IT, which had previously supported the market, has shifted the bias back to bearish.
Indices | Change (%) |
Nifty Pharma | 1.47 |
Nifty FMCG | -2.23 |
Nifty Realty | -2.3 |
Nifty Select Midcap | -3.35 |
Nifty Media | -3.35 |
Nifty IT | -4.84 |
Nifty Auto | -5.02 |
Nifty Financial Services | -5.18 |
Nifty Bank | -5.27 |
Nifty Energy | -6.14 |
Nifty PSU Bank | -6.34 |
Nifty Metal | -6.63 |
Weekly Top Gainers (Nifty 500)
Company | Weekly Gain (%) |
Five-star Bus Fin | 18.26 |
GIC Re | 16.5 |
Kfin Technologies | 15.31 |
Newgen Software | 13.21 |
Techno Electric | 12.56 |
Weekly Top Losers (Nifty 500)
Company | Weekly Loss (%) |
Angel One | -14.97 |
Deepak Fertilisers & Petro | -13.91 |
Adani Green Energy | -13.69 |
L&T Mindtree | -13.26 |
Siemens | -12.88 |
What to do?
While pressures have been mounting, we feel the current scenario is good for investing, and that dips should be bought into. Several macro parameters have been suggestive of strength going ahead.
Stability in inflation, improving exports, declining crude prices and fiscal prudence clearly indicate that the inherent strength stays.
Along with this, while domestic institutional inflows have been staying steady, there is a strong possibility of a revival in FII inflows starting from January 2025.
We had earlier anticipated a revival in FII inflows from mid December 2024. However the US Fed’s hawkish stance is expected to lead to a marginal delay in positive flows.
Looking ahead, the coming week is shortened due to holidays, and participants will closely monitor FII flow trends and global market performance for direction.
Additionally, the scheduled expiry of December’s derivative contracts may amplify volatility.
Technical Market View
From a technical perspective, the Nifty has breached a critical long-term moving average support and is now nearing the November low of 23,263. A breach of this level could intensify the downward trend, potentially pushing the index to 22,700. In case of a rebound, the 24,000–24,400 zone would act as a strong resistance.
Among sectoral indices, pharma and healthcare appear resilient, while IT is approaching a critical support zone. Energy has entered an extremely oversold territory, which could trigger a short-term bounce. In the banking index, significant support lies at the long-term moving average around 50,400 and further at the November low of 49,787.
Conversely, auto, PSE, and metal sectors may continue to underperform in the near term. Traders are advised to adjust their positions accordingly, keeping a strong emphasis on risk management.
Comentarios