Sensex, Nifty Weekly Outlook: RBI Policy, Assembly Elections, Macro Data, Global Trends To Drive Markets Mood

A host of factors will drive the Indian market in the trading week from December 4th to 8th. These would be assembly elections results, RBI rates decisions, macroeconomic data like services PMI, and global trends. Last week, Sensex gained by 1,499.13 points or 2.27%, while Nifty 50 surged by 437.50 points or 2.21%. The 50-scrip benchmark also touched a new all-time high of 20,291.55, while the BSE market cap crossed Rs 4 trillion.

On December 1st, Sensex soared by 492.75 points or 0.74% to end at 67,481.19, while Nifty 50 jumped by 134.75 points or 0.67%. Meanwhile, BSE-listed firms' market cap stood at more than Rs 337.67 lakh crore.

On the very first trading day of December, foreign portfolio investments (FPIs) pumped in Rs 9,744 crore in Indian equities.

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services said, "Nifty hits a record high on the back of a strong November, being the best month of 2023. Global and domestic Investors' participation, exit polls and Q2FY24 GDP data have helped the market reach to record highs. Benchmark indices for the fifth consecutive week. This week all sectoral indices ended with gains."

Further, Nanda said, FPI in Nov turned net buyer with purchases of over $620mn after selling more than $5bn in two months, amid easing global bond yields and softening US dollar index. Apart from equities, FPIs invested in the debt market also in Nov, hitting a 2-yr high due to attractive yields on debt. Indian debt yield is comparatively more attractive than other emerging markets. Although FIIs are selling in the Indian markets due to high global bond yield and surge in dollar index DIIs supported the market by buying offsetting selling from foreign investors.

In terms of economic data, Nanda said, India's S&P global manufacturing PMI in Nov climbed to 56 amid reduced price pressure and rising demand. India's Q2FY24 GDP grew 7.6%, being the fastest-growing major economy. It is expected that the momentum will continue and lead to a rise in estimates for FY24 & CY23. Eight core industries increased by 12.1% in oct mainly due to the cement and electricity sectors. Gold prices touched 6 month high due to a weaker US dollar and a pause in the hike in interest rates by Fed reserve.

Markets Weekly Outlook:

According to Nanda, The market will react to the domestic and global macroeconomic data, global bond yield, crude oil inventories, movement of the dollar index, and FII and DII investment activities. Upcoming events for the next week will impact the market such as S&P services PMI for major economies like India, the USA and the UK, US ISM Non-manufacturing Prices, US trade balance, Initial jobless claims, employment rate, Nonfarm payrolls, India's Interest rate decision and forex reserve should be watched.

Also, Vinod Nair, Head of Research at Geojit Financial Services said, in the upcoming week, investors' attention will mostly be directed towards the release of service PMI data from the U.S., India, and China. RBI policy meeting next week; anticipate the status quo; however, the growth outlook might be positively tweaked. The gradual return of FIIs in November signals positive momentum to continue.

In regards to FPIs, Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, FPI response will be crucially determined by the market trend, which, in turn, will be influenced by the state election results. If the state election results turn out to be favourable for the ruling dispensation, the market will stage a rally. FPIs are unlikely to miss that rally by big selling. They might buy into financials where the valuations are fair.

However, Vijayakumar added, that since overall market valuations have reached high levels, FPIs may turn sellers at higher market levels.

On Nifty 50, Nanda said that as long as the index holds 20,000 (psychological mark-19,800 low of the week), marching towards 20,500 looks likely in the coming days despite intermittent consolidation. With the hurdles placed at 20350-20400, where 20000 will act as an immediate support.

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