Market Pulse | 27th December, 2024

ECONOMIC HIGHLIGHTS

INDIA

?Rupee slumps to record low, logs worst day in nearly 7 months as dollar bids spike: The Indian rupee fell to an all-time low on Friday, as maturing non-deliverable forwards and currency futures boosted dollar demand, while the sharp fall led to panic dollar buying by importers. The rupee weakened to an all-time low of 85.8075 against the U.S. dollar, before intervention by the central bank helped it trim steep losses. The currency settled at 85.5325, down 0.3% on the day, its worst single-day fall since June 4, when the surprise outcome of India's general elections hit markets. The rupee fell nearly 0.3% on the week, its eight consecutive weekly fall. Concerns about India's slowing growth and widened trade deficit have hurt the rupee alongside broad-based dollar strength amid a hawkish shift in the Federal Reserve's policy outlook and expectations surrounding U.S. President-elect Donald Trump's policies.

?Current account deficit narrows marginally to 1.2% of GDP in Q2FY25: India’s current account deficit (CAD) moderated marginally to 1.2 percent of GDP at $11.2 billion in the second quarter of 2024-25 from 1.3 percent or $11.3 billion in the same period a year ago. The deficit stood at $9.7 billion or 1.1% of GDP in the preceding quarter. The moderation in CAD was largely assisted by an increase in net services receipts at $44.5 billion in the July-September quarter from $39.9 billion a year ago. Services exports have risen, on an annual basis, across major categories such as computer services, business services, travel services and transportation services, RBI said in the release.

?India sets six-month import cap on key steelmaking ingredient met coke: India will impose restrictions on the import of low-ash metallurgical coke, a key steelmaking ingredient, for six months starting January 1, 2025, a government order said on Thursday. The move aims to protect domestic producers from rising imports, which have surged by over 61% in the past four years.

?Indian economy to grow at around 6.5% in FY25, government says: India's economy is expected to grow at around 6.5% in fiscal year 2024/25, closer to the lower end of its 6.5%-7% projection, as global uncertainties pose a dampening threat, the government said on Thursday. The growth outlook for October to December appears bright, with rural demand remaining resilient and urban demand picking up in the first two months of the quarter, according to the finance ministry's monthly economic report for November. Growth slowed more than expected in July to September, hampered by weaker expansion in manufacturing and consumption.

GLOBAL HIGHLIGHTS

?New US jobless claims slip, but people are remaining unemployed for longer: The number of Americans filing new applications for jobless benefits dipped to the lowest in a month last week, consistent with a cooling but still-healthy U.S. labor market that is likely to keep Federal Reserve officials from cutting interest rates any further in the near term. Meanwhile, those who have lost work are finding it harder to find a new job and are remaining on benefits rolls for a longer stretch and pushing up the ranks of those collecting unemployment benefits for more than the first week.

In other news, The Santa Claus stock market rally got off to a sizzling start Tuesday with the S&P 500 delivering its biggest Christmas Eve rally in 50 years. Tesla, the automaker helmed by the world’s richest person Elon Musk, was the top percentage gainer on the index, tacking on 7.4%, while other notable stocks rising at least 2% included Netflix, Starbucks and Walmart.

?Inflation in Japan's capital accelerates, keeps rate hike prospects intact: Core inflation in Japan's capital accelerated in December while services inflation held steady, data showed on Friday, keeping alive market expectations for a near-term interest rate hike. The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.4% in December from a year earlier following a 2.2% year-on-year rise in November. Another index that strips away both fresh food and fuel costs, which is closely watched by the BOJ as a better gauge of demand-driven inflation, rose 1.8% in December from a year earlier after increasing 1.9% in November, the data showed.

In other news,? Japan’s Nikkei share average ended at a five-month closing high on Friday, as investors bet on corporate growth in the coming year, with recent automakers’ news lifting sentiment. The Nikkei jumped 1.8% to 40,821.16, its highest close since July 17. The index gained for a third session and rose 4% this week, the strongest weekly performance since September. The broader Topix rose 1.26% to 2,801.68. The market cheered on recent news about domestic firms, such as merger talks between Honda and Nissan. That drove expectations that Japanese firms will continue to improve investor returns. Of the more than 1,600 stocks trading on the Tokyo Stock Exchange's prime market, 82% rose and 15% fell, with 1% flat.

?China's November industrial profits narrow decline but 2024 likely worst year in decades: China's industrial profits fell at a slower clip in November but the annual decline in earnings this year is expected to be the worst in over two decades due to persistently soft domestic consumption. The world's second-largest economy has been struggling to mount a strong post-pandemic revival, as business and household appetites for spending and investment remain subdued amid a prolonged housing downturn and fresh trade risks from the incoming U.S. administration of President-elect Donald Trump. Industrial profits fell 7.3% in November from the same month last year, following a 10% drop in October.

MARKET HIGHLIGHTS

Auto and Pharma Lead a Merry Recovery in Indian Markets in the Final Week of 2024

?A spirited rally in auto and pharma stocks infused fresh energy into the lackluster market this week, keeping spirits buoyant as we approach the final two trading sessions of 2024.

?Both benchmarks Nifty 50 and Sensex gained about 1% each this week, after a 5% slide last week, the most in 30 months, as the U.S. Federal Reserve's projection of fewer rate cuts in 2025 tarnished the appeal for emerging markets.

?The smallcaps (Nifty Smallcap 100) and midcaps (Nifty Midcap 100) rose about 0.2% each this week.

?M&M, Trent, Adani Ports, Tata Motors, Dr Reddy, Eicher Motors and ITC were the top gainers of Nifty 50 this week rising more than 3% while Hero Motocorp, Powergrid, SBIN, Titan and Tata Steel fell the most.

?While Indian markets lacked major triggers in the holiday-shortened week, firming US bond yields fuelled selling in Indian equities by foreign portfolio investors. The Foreign institutional investors (FIIs) turned net sellers this week as they pulled out more than ?5,000 crore from Indian equities in the cash segment while Domestic Institutional Investors (DII)provided support to the Indian market as they bought equities worth Rs 10,927.73 crore.

?Looking ahead, all eyes will now turn to the third-quarter earnings, which follow two subdued quarters, and the Union Budget, which is poised to shape the markets' trajectory in the months to come.

?Sagility India shares jump 5% to record 8th day of non-stop buying: Sagility India shares jumped another 5% on Thursday to hit a fresh high of Rs 51.35, rallying for the 8th consecutive day. The stock is now up 61% in the last month, while the Sensex has lost nearly 2% of its value. The US-market focused healthcare solutions provider has gained more than 75% since its listing on November 12. The stock made a debut at ?31.06 apiece on the NSE against the issue price of ?30 apiece. JPMorgan recently initiated coverage with an "Overweight" rating and a target price of Rs 54, highlighting the company’s strong position in the healthcare services sector.

?Tata Motors share races 6% in 3 days as most brokerages upbeat on outlook: Automobile giant Tata Motors share was in demand for the third consecutive session on Friday, December 27, 2024, as the stock soared up to 3.50 per cent to hit an intraday high of Rs 766.75 apiece.? Notably, the Tata Motors share has jumped 6.12 per cent in the last three sessions. The northward move in the Tata Motors share today came after domestic brokerage DAM Capital upgraded Tata Motors to ‘Buy’ from ‘Neutral’. However, it kept the target price unchanged at Rs 870 apiece, which reflects 17.4 per cent upside from the previous close (December 26) of Rs 740.80.

?Cochin Shipyard shares hit 5% upper circuit as Adani Ports places Rs 450-crore order: Cochin Shipyard share price jumped 5% to hit its upper circuit limit of Rs 1,532 on BSE on Friday after the defence PSU player got Rs 450 crore order from Adani Ports. The Adani Group company said it has given Rs 450 crore order to Cochin Shipyard's subsidiary Udupi Cochin Shipyard to make eight state-of-the-art harbour tugs. With a total contract value estimated at Rs 450 crore, these tugs are expected to begin delivery in December 2026 and continue until May 2028. Adani Ports said this collaboration to procure from Cochin Shipyard signifies commitment to enhancing maritime infrastructure in India and demonstrates their confidence in Indian PSUs.

?Mamata Machinery IPO listing brings hefty gain; shares list at 147% premium: The shares of Mamata Machinery more than doubled investors' wealth on the listing, delivering a blockbuster debut — the third biggest debut return for any IPO this year — as 2024 draws to a close. The company manufactures and exports plastic bags and pouch-making machines, packaging machines, and extrusion equipment. It provides end-to-end manufacturing solutions for the packaging industry. On the National Stock Exchange (NSE), Mamata Machinery shares listed at Rs 600, reflecting a premium of 146.92 per cent per share over the issue price of Rs 243, outperforming the grey market expectations.

?Ola Electric Mobility shares jump 6% on launching 3,200 stores: Ola Electric shares jumped up to 6% to day's high of Rs 99.9 on Thursday after announcing that it has opened over 3,200 new stores co-located with service centres, making it India’s largest EV expansion at one go. Ola Electric stock is up about 30% in the last one month but down 8% in 3-month timeframe.

?Interglobe Aviation posts their best session in four months: ?The operator of airline IndiGo, rose 3.9% on Tuesday to post their best session in four months buoyed by the recent announcement of the Directorate General of Civil Aviation (DGCA). The country’s aviation regulator announced that November 2024 saw the highest-ever traffic in the history of Indian domestic aviation. Reports indicate that IndiGo achieved a historic milestone by becoming the first airline in India to carry over 10 million passengers in a month. The rally in IndiGo's share price followed a rating upgrade from domestic brokerage Elara Capital. The brokerage upgraded the stock to ‘buy’ from ‘sell’ and raised the target price to Rs 5,309 from Rs 3,847, indicating an upside of 21 per cent.

?Angel One shares sink 14% in 2 weeks: The shares of Angel One have faced a sharp correction, declining nearly 14% over the last two weeks and 8% in just the last week. The stock, which reached a recent high of Rs 3,500, failed to sustain its momentum and is now trading around the Rs 2,900 level.

ICEX formally exits bourse biz as Sebi notifies withdrawal of recognition: Market regulator Sebi has notified that the recognition granted to the Indian Commodity Exchange Ltd (ICEX) has been withdrawn, formally signifying its exit from the bourse business. This came after the regulator on December 11 allowed ICEX to exit the exchange space after its recognition was withdrawn over two years ago. Additionally, the regulator directed ICEX to comply with its tax obligations under the Income Tax Act, 1961; change its name and not to use the expression "stock exchange" and maintain a database of all transactions on its platform for the previous years among others.

SECTOR HIGHLIGHTS

?Auto stocks (Nifty Auto) rose 2.3% for the week, the most among all sectors with top gains contributed by Mahindra & Mahindra and Tata Motors. The rally followed DAM Capital's upgrades on several auto stocks, citing recovery prospects in the automotive sector by FY26, driven by favourable macroeconomic factors despite near-term headwinds. Tata Motors, Escorts Kubota, and Bajaj Auto were all upgraded to "buy," with Bajaj Auto's target set at Rs 9,750.

?Consumer stocks (NIFTY FMCG) added 1.5% this week, led by a 2.7% rise in ITC. The finance minister said there was no decision by the Goods and Services Tax (GST) council on changing rates for tobacco. ITC also continues to attract buyers ahead of the record date for the demerger of its hotel business. Under the scheme, ITC will retain 40% ownership of ITC Hotels, while the remaining 60% will be distributed to ITC shareholders in proportion to their holdings.

?Nifty Pharma also advanced 1.3 percent on Friday, led by heavyweights like Dr Reddy's, Sun Pharma, Cipla, and Lupin.

?Telecom stocks were in focus on December 24, a day after the Telecom Regulatory Authority of India (TRAI) released monthly data for October. All four telecom stocks — Bharti Airtel, Vodafone Idea, Reliance Industries and Mahanagar Telephone Nigam Limited (MTNL) — traded nearly a percent higher. In October 2024, the sector's active subscriber base jumped sharply by 6.8 million month-on-month.

?City gas distributors Mahanagar Gas and Indraprastha Gas gained about 2% each on Tuesday on media reports that the oil ministry has re-submitted a proposal to halve the excise duty on compressed natural gas.

?Despite being one of the worst performing sectoral indices this week, the metal index climbed on Monday on hopes of safeguard duty on steel imports; Hindalco, JSW Steel, Tata Steel gained 2-3.5%. The Directorate General of Trade and Remedies (DGTR) took notice of the steel industry's request seeking a 25 percent safeguard duty on imports and began its investigation on the matter.?

BUSINESS-INDUSTRY UPDATES

?UltraTech buys 8.69% stake from Star Cement promoter group for ?851 crore: UltraTech Cement Ltd., India's largest cement company by capacity, has announced the acquisition of 8.69% stake in Star Cement Ltd. from its promoter group for ?851 crore. Earlier this week, UltraTech also completed the acquisition of a 32.72% stake in India Cements, thereby triggering an open offer for the company, which will be carried out at a price of ?390 per share.

?Adani Defence & Aerospace to acquire 85.8% stake in Air Works for ?400 crore:? Adani Enterprises Ltd (AEL) on Monday (December 23) said its wholly owned subsidiary Adani Defence Systems & Technologies Ltd (ADSTL) has entered into a share purchase agreement (SPA) to acquire an 85.8% shareholding in Air Works India (Engineering) Private Ltd. The deal values Air Works, India’s largest private-sector Maintenance, Repair, and Overhaul (MRO) company, at an enterprise value of ?400 crore.

?Jubilant FoodWorks rises 2%, hits 52-wk high on inking pact with Coca-Cola: Domino’s operator Jubilant FoodWorks shares saw action on Friday, December 27, 2024, as the scrip moved up to 2.29 per cent to hit a fresh 52-week high of Rs 719.80 per share. The northward move in the Jubilant FoodWorks share came after the company said that it has signed a pact with Coca Cola India to purchase its portfolio of sparkling beverage products, a move which will allow the Indian firm to serve Coca Cola and other products of the US giant at the outlets of its franchise restaurant chains such as Domino’s Pizza, Dunkin Donuts.

?India's JSW Energy to buy Temasek-backed O2 Power's units for $1.47 bln: Indian billionaire Sajjan Jindal-led JSW Energy said on Friday its JSW Neo Energy unit will acquire renewable energy platform O2 Power's subsidiaries in a deal worth $1.47 billion. The acquisition aligns with JSW Energy's target of achieving 20 GW renewable-led capacity before fiscal 2030 amid a strong government push for higher clean energy capacity. JSW Energy will acquire a renewable portfolio of 4.7 GW from O2 Power, which is backed by Singapore state-owned Temasek and EQT Infrastructure.