Weekly Market Wrap-Up

1. Market Moves?

Indian market Summary - Volatility Rules the Roost?

Indian indices finally managed to breakout of a narrow range on Sensex’s weekly expiry session’ Friday. ? After plunging 1200 points in early trade, Sensex recovered sharply 2000 points from the lows, helping the index record modest gains for the extreme volatile week.?

Buoyed by consumer stocks on easing domestic retail inflation, benchmark indices logged their fourth straight weekly gain - the longest such streak since July end.

India’s Inflation data released this week for the period ended November 30, 2024 came in at 5.48%, broadly in line with market expectations. The Index of Industrial Production (IIP) for October 2024 came in at 3.5%, higher than the September reading.

FIIs remained net sellers of Rs 227 crore in the equity markets during the week, while DIIs continued to put their cash balances to work and were net buyers of Rs 2880 crore.

Markets seems to have got back its bullish momentum and Nifty is likely to head towards the next target of 25000. Support for the index is seen at 24500.

Global market summary - Nasdaq surpassed 20000 Mark.?

Major US stock indexes ended the week lower, although the technology-heavy Nasdaq Composite advanced modestly and cleared the 20,000 mark for the first time.?

For the second month in a row, the Consumer Price Index came in slightly above the previous month’s reading, with November’s annual rate of 2.7%. With inflation concerns lingering, yields of U.S. government bonds rose sharply, reversing course after a couple weeks of declines.

US crude oil futures surged on Friday driven by tightening global supplies and rising fuel demand. This rally was fuelled by expectations of sanctions on Russia and Iran, lower interest rate forecasts in the U.S. and Europe, and supportive measures from China’s economy.

Chinese equities lost ground as recent policy announcements underwhelmed investors.? China pledged to implement a more proactive fiscal policy and increase the budget deficit in 2025 at the annual Central Economic Work Conference.? The two-day conference did not provide sufficient details, which dampened investor sentiment.

2. Economic Indicators?

India

• The annual inflation rate in India eased to 5.48% in November of 2024 from 6.21% in the previous month. From the previous month, consumer prices edged down by 0.15%. Industrial production in India increased 3.5% year-on-year in October 2024, following a 3.1% rise in the previous month. This marked the second consecutive month of growth, driven by increases across all sectors. Considering the April-October period, industrial output went up 4%.

US

• The annual inflation rate in the US rose for a 2nd consecutive month to 2.7% in November 2024 from 2.6% in October. On a monthly basis, the CPI rose by 0.3%, the most since April.
• Factory gate prices in the US rose 0.4% month-over-month in November 2024, higher than an upwardly revised 0.3% in October. On an annual basis, producer price inflation accelerated for a second straight month to 3% from an upwardly revised 2.6%.

UK

• The GDP in the UK expanded 0.1% on quarter in Q3 2024, the smallest growth rate in three quarters, below 0.5% in Q2. Year-on-year, the British economy increased 1%, above 0.7% in Q2.

Japan & China

• Japan's GDP expanded by 0.3% qoq in Q3 2024, above flash data and market forecasts of 0.2%. The latest result followed a downwardly revised 0.5% increase in Q2, marking the second consecutive period of quarterly growth. The GDP advanced by 0.3% year-on-year in the third quarter of 2024, following a 1.1% decline in the previous period.

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3. In the limelight:? Interest Rates - Direction is clear; Speed and depth of cuts up for debate?

The direction of travel for interest rates is lower, but the speed and depth of rate cuts is more uncertain.??

The European Central Bank on Thursday cut its benchmark lending rate for the fourth time this year, approving a quarter-point cut after the Swiss National Bank adopted a bigger-than-expected half-point reduction.

At its two-day meeting concluding Wednesday, the U.S. Federal Reserve is widely expected to approve another interest-rate cut of a quarter percentage point.? In mid-September, the Fed approved a half-point reduction, and it followed up in early November with a quarter-point cut.

Only divergent moves may come from the Bank of Japan (BOJ). It has indicated that it is prepared to?raise interest rates to be around 1%, by the end of next year or early 2026. The BOJ's policy rate was increased from negative territory to between 0 and 0.1% in March 2024, and then to around 0.25% in July 2024.

4. Market Outlook - 25000 In Sight

Nifty finally broke out from the consolidation of the last 5 trading sessions. It bounced back strongly on Friday after finding support near the 20-day SMA and also clearing the nearby resistances. India’s recent Inflation and the Index of Industrial Production (IIP) data is also supporting the case for bulls.?

We expect US FOMC to cut interest rates on Wednesday and that should help improve bullish sentiments on the street. Cut in US interest rates is also likely to support the local currency and halt its recent gradual depreciation spree.?

Nifty seems to have got back its bullish momentum and is likely to head towards the next target of 25000. Support for the index is seen at 24500.