The Indian stock markets turned nearly flat by noon on Thursday, with Sensex and Nifty giving up early gains due to lack of significant triggers and subdued activity in the year-end holiday season. Thin trading volumes and pressures from the final monthly F&O expiry of 2024 further contributed to the cautious sentiment as investors wrapped up their books for the year.
The benchmark indices started the day with modest gains but soon turned volatile. By mid session, BSE Sensex was down 24 points or 0.03 percent at 78,449, and NSE Nifty was up 8 points or 0.03 percent at 23,736, finding it difficult to maintain momentum. However, volatility rose, with India Vix jumping more than 6 percent to climb above 14.
Experts sound caution on market expectations
Market participants remained cautious, citing broader challenges for 2025. Anand Shah, Head of PMS and AIF Investments at ICICI Prudential AMC, said to CNBC TV18 that investors must temper expectations, warning that the markets may face a potential economic slowdown and weaker earnings growth in the new year.
Similarly, Arvind Sanger, Managing Partner of Geosphere Capital Management, said that the Indian equities might go through a time valuation correction. He said that he expects a 10 percent correction in the Nifty, and slightly bigger correction in midcap stocks. However, he maintained optimism about India's long-term growth story.
The cautious mood follows a volatile session on December 24, when benchmark indices ended with marginal losses despite buying in auto, oil & gas, and FMCG stocks. Profit booking in select heavyweight sectors erased the gains, keeping the Nifty above 23,700.
Technical indicators show resistance shifting lower…
From a technical perspective, analysts observed a lack of upward momentum, with key levels acting as resistance. Anand James of Geojit Financial Services said that the bias for the Nifty is shifting lower, with resistance at 23,760 and immediate downside markers at 23,600. He added that a push above 23,760 is crucial to resume an upward trajectory towards 24,165.
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Ruchit Jain, Vice President of Technical Research at Motilal Oswal, said that the broader market trend remains positive despite the current correction. He called it a healthy consolidation within an uptrend but added that rising bond yields and a strong dollar index could weigh on sentiment. Emerging markets, including India, typically exhibit an inverse correlation with a strengthening dollar, which may cap gains in the near term.
… But markets may shoot for a ‘Santa Claus Rally’
Despite the subdued mood, there remains some hope for a late-year rally. Ajay Bagga, a banking and market expert, said that there is a potential for a “Santa Claus Rally,” which historically sees stocks rise during the final trading days of the year and the first few of the new one. He added that some “window dressing” by institutional investors could emerge in the remaining sessions of 2024.
With trading volumes expected to remain thin and no major triggers on the horizon, markets are likely to consolidate in a narrow range. Investors will closely monitor earnings revival, seen as the next significant catalyst for driving a decisive move in the markets.
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