Weekly Market Wrap-Up

1. Market Moves?

Indian market Summary – Biggest weekly fall in more than 2 years

The Indian equity markets suffered their steepest weekly decline in over two years, erasing gains accumulated over the previous month. Global equity, currency and bond markets got a jolt after the U.S. Federal Reserve adopted a cautious stance on future interest rate cuts. The benchmark indices closed in negative territory throughout the trading week, with the Nifty falling 4.8% and the Sensex dropping 5%.

Across sectors, Healthcare and Pharmaceuticals stood as the only bright spots in an otherwise bearish market. Metal stocks bore the brunt of the selling pressure, plunging 6.6%, while PSU Bank shares fell 6.3%. Banking and Financial Services declined 5.3%, and Oil & Gas shed 5%. Bucking the downward trend, pharmaceutical stocks advanced 1.6%, while Healthcare gained 0.9%.

Global market summary – US markets loose momentum?

Rising yields, potential EU tariffs, and looming government shutdown concerns weighed on sentiment of the US markets ahead of the holiday break. The week's volatility peaked Wednesday when major U.S. indexes dropped roughly 2% following the Federal Reserve's mixed signals. While the Fed delivered its anticipated quarter-point rate cut to 4.25%-4.5%, but its projection of only two cuts in 2024 fell short of market expectations for four.

The hawkish tone sparked a broad market reaction: The S&P 500 declined 1.65% to 5,953.02, the VIX briefly surged 85% to 28.32, and 10-year Treasury yields climbed to a seven-month high of 4.59% before settling at 4.53%. The dollar strengthened to a two-year peak, while Bitcoin retreated from its $108K record to $96,937.

Despite the turbulence, economic indicators remained robust, with Q3 GDP growth revised upward to 3.1% and core PCE inflation holding steady at 2.8% year-over-year in November.?

2. Economic Indicators?

India

• The HSBC India Manufacturing PMI rose to 57.4 in December 2024, accelerating from 56.5 in November, a preliminary data showed. The HSBC India Services PMI rose to 60.8 in December 2024, from 58.4 in the previous month.
• The merchandise trade deficit in India was at $37.8 billion in November of 2024, the highest on record, widening sharply from the $20.6 billion shortfall from the corresponding period of the previous year. Imports soared by 27% from the previous year to $69.95 billion, also a record high. In turn, exports dropped by 5.3% annually to $32.1 billion, the lowest in two years.

US

• U.S.? economy grew at a healthy 3.1 per cent annual clip from July through September, propelled by vigorous consumer spending and an uptick in exports.

• Retail Sales in the United States increased 3.8% year-on-year in November 2024, the biggest annual rise since December last year, and following an upwardly revised 2.9% gain in October.

• U.S. housing market has shown a significant surge in the number of existing residential buildings sold. The actual number of 4.15 million existing home sales has outperformed the forecasted figure of 4.09 million.

• Building permits in the United States soared by 6.1% to a seasonally adjusted annualized rate of 1.505 million in November of 2024, erasing the 0.4% decline from the previous month.

UK, Japan & China

• The S&P Global Flash UK Manufacturing PMI fell to 47.3 in December 2024 from 48 in November, compared to forecasts of 48.2, preliminary estimates showed. Services PMI rose to 51.4 in December 2024, up from November’s 13-month low of 50.8.
• Japan's core inflation accelerated in November as rising food and fuel costs hit households, core consumer price index (CPI), which includes oil products but excludes fresh food prices, rose 2.7% in November from a year earlier.
• China’s industrial production expanded by 5.4% yoy in November 2024, mildly exceeding market estimates and the growth rate in October of 5.3%, mainly supported by faster rises in manufacturing (6.0% vs 5.4% in October).
• China's job market remained generally stable in the first 11 months of 2024. The surveyed urban unemployment rate on average in China stood at 5.1% in the first 11 months of this year, down 0.1% points from the same period last year.

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3. In the limelight:? The dot-plot

The Federal Open Market Committee (FOMC) dot plot is a graphical representation of individual policymakers' projections for future interest rates. Each dot represents a committee member's forecast for the federal funds rate at the end of a specific year and in the longer term. It serves as a critical tool for understanding the Fed's monetary policy outlook, helping markets anticipate changes in interest rate policy.

Recently, Projections indicate fewer rate cuts than previously anticipated in 2025 and 2026, reflecting concerns over persistent inflation and resilient economic growth. This shift highlights the Fed's cautious approach to ensure inflation moves back to its 2% target.? Equity markets corrected severely, adjusting expectations for future borrowing costs.

4. Market Outlook – Nifty Consolidating between 23,200 and 24,000

Markets experienced a sharp correction this week, encountering resistance near last week’s high of 24,792. The Nifty ended in the red across all five trading sessions, breaking the near-term support at 24,180 and reversing the four-week pullback rally. By the week’s end, the Nifty recorded a 4.77% week-on-

week decline.

Short build-up in Nifty futures, a decline in the Put-Call Ratio driven by call writing at the 23,800–24,000 levels, and short positions by FIIs in the index futures segment suggest a cautious stance until the Nifty decisively closes above 24,000.

On the downside, immediate support lies around 23,500, where significant put writing has been observed. A close below this level could trigger further unwinding or short build-up, potentially dragging the Nifty toward the 23,200–23,300 range. Overall, the Nifty remains in a consolidation range between 23,200 and 24,000, with a breakout on either side likely to determine the next clear trend.