The benchmark Sensex and Nifty indices are likely to open marginally lower on January 5 as trends in the GIFT Nifty indicate a negative start for the broader index with a loss of 14 points.
On January 4, the BSE Sensex jumped 491 points to 71,848, while the Nifty 50 climbed 141 points to 21,659, and formed a small bullish candlestick pattern on the daily timeframe.
"A small positive candle was formed on the daily chart, which is placed within a high-low range of Wednesday's bear candle. Technically, this could be considered a bullish Inside Day-type candle pattern. Hence, more upside in the next session is likely to confirm this bullish pattern," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
He feels the short-term trend of Nifty seems to have reversed on the upside after two sessions of minor weakness. "Nifty sustaining above 21,550-21,600 levels could open the next upside towards 21,850-21,900 levels and higher in the near term. Immediate support is at 21,550," he said.
Considering the overall chart structure, Vidnyan Sawant, HOD - Research at GEPL Capital also maintains a bullish stance with specific targets set at 21,834 (the record high between 21,800-21,850) and 22,000 for the short to medium term. This analysis suggests a positive trajectory for the index, indicating a likelihood of sustained gains in the near term, he said.
The Nifty Midcap 100 and Smallcap 100 indices performed better than benchmarks after consolidation, rising 1.7 percent and 1 percent, respectively on positive breadth, while the declining volatility also supported bulls as the fear index India VIX fell 5.44 percent to 13.33 levels.
The pivot point calculator indicates that the Nifty is likely to see immediate resistance at 21,670 followed by 21,711 and 21,757 levels, while on the lower side, it can take support at 21,590 followed by 21,561 and 21,515 levels.
Stay tuned to Moneycontrol to find out what happens in the currency and equity markets today. We have collated a list of important headlines across news platforms, which could impact Indian as well as international markets.
GIFT Nifty
The GIFT Nifty indicates a marginally negative start for the broader index with a loss of 14 points. GIFT Nifty futures stood at 21,775 points after making a high of 21,816 points.
Trade setup for Friday: Top 15 things to know before the opening bell
US Markets
Stock futures rose modestly on Thursday evening ahead of a key jobs report with Wall Street trying to shake off a sluggish start in January. Futures tied to the Dow Jones Industrial Average ticked up 46 points, or about 0.1 percent. S&P 500 futures and Nasdaq 100 futures added about 0.1 percent.
The moves come after the S&P 500 and Nasdaq Composite declined for their fourth and fifth straight negative session, respectively, on Thursday. The Dow closed marginally higher on the day but is still down for the week.
The three major averages are all on track to break nine-week winning streaks, with the Nasdaq Composite suffering the biggest loss for the week at 3.3 percent.
One factor weighing on the market is the cooling off of large cap tech stocks like Apple, which has been downgraded by two research shops this week. Amy Kong, partner at wealth management company Corient, said her firm is taking a breather from buying the large tech names, several of which make up its top holdings.
“We are pausing on any new dollars going into this group of stocks. In general, the market after this great burst of optimism last quarter, is now sitting at a price to earnings ratio of 20-times this year’s earnings,” Kong said on “Closing Bell.” “It is a little bit high from an absolute standpoint, a little bit high from a historical standpoint, and so we need to see earnings grow into this multiple.”
European Markets
European stocks closed higher Thursday following two downbeat sessions amid uncertainty over the trajectory for central bank rate cuts. The Stoxx 600 index closed up 0.7 percent, coming off the back of a nearly 1 percent decline over the first two sessions of the year. In sector moves, banking stocks climbed 1.8 percent while technology fell 0.4 percent.
Retail stocks fell 0.8 percent as trading updates painted a mixed picture. Clothing store Next rose to a record high after lifting its full-year profit outlook for a fifth time, despite flagging potential 2024 risks including stock delays from trade disruption. Shares of the London-listed stock closed up 5.8 percent.
However, Britain’s JD Sports plunged 23 percent as it said late-year sales were slightly below its forecast. Its gross margin rate for the period was also below expectations, which it attributed to an “elevated level of promotional activity” during the peak trading season, and cautious consumer spending.
Asian Markets
Asia-Pacific markets struggled to make headway in the early hours of Friday, after mostly falling for the first two trading days of the new year.
Investors will be watching Southeast Asia’s economic data due later in the day, including inflation numbers from Thailand and the Philippines, as well as retail sales data from Singapore.
In Australia, the S&P/ASX 200 started the day on an upbeat note but pared gains to trade around 0.05 percent higher, after suffering two straight days of losses.
Japan’s Nikkei 225 inched 0.11 percent higher at open, while the broader Topix added 0.32 percent. South Korea’s Kospi dipped 0.08 percent at open, while the smaller-cap Kosdaq was flat. In contrast, futures for Hong Kong’s Hang Seng index stood at 16,590, pointing to a weaker open compared with the HSI’s close of 16,645.98.
Brace for correction in 2024; avoid stocks with questionable fundamentals, bet on these themes
After a stellar 2023, wherein both the Nifty and Sensex gained 20 percent, Indian equity markets have begun 2024 on a tepid note amid increased volatility. The volatility index VIX surged to 14.5 on January 1, indicating high volatility is around the corner.
Analysts believe that at higher VIX levels, there can be bouts of big selling. However, in the long term, India’s outperformance is forecast to continue due to a healthy domestic economic and political structure, said Vinod Nair, Head of Research at Geojit Financial Services.
Several market experts Moneycontrol spoke to outlined key risks that investors need to watch for in 2024. India’s pre-election rally, they noted, might be impacted by an overheated market and potential food inflation due to El Nino's effects.
Investors must also brace for some consolidation. “We are in the midst of price-wise correction, with many stock adjustments after the recent rally, and hence, it is advisable to have a pragmatic view with a one-step approach,” said Osho Krishan, Senior Analyst, Technical & Derivative Research, AngelOne.
Apple suffers second rating downgrade in tough start to 2024
Apple fell further on Thursday, losing about $176 billion since the start of the year, after Piper Sandler became the second brokerage this week to downgrade the stock on worries of tepid demand for its products, including the iPhone.
The company's shares dropped 1.7 percent to an eight-week low of $181.20 on Thursday. If the losses hold, Apple stands to lose $47.4 billion of its value for the day.
"We are concerned about handset inventories entering into 1H24 and also feel that growth rates have peaked for unit sales … deteriorating macro environment in China could also weigh on handset business," Piper Sandler lead analyst Harsh Kumar wrote in a note to clients.
Vodafone Idea receives Rs 10.76 crore penalty order under GST Act, seeks rectification
Vodafone Idea Limited (VIL) announced on January 4 that it has been served with an order under the Central Goods and Services Tax Act, 2017, imposing a penalty of Rs 10.76 crore. The telecom company expressed its disagreement with the order and stated its intention to seek rectification and reversal.
"Pursuant to Regulation 30 read with Clause 20 of Para A of Part A of Schedule III of SEBI Listing Regulations, we submit the details of Order received by the Company under the Central Goods and Services Tax Act, 2017. The Company does not agree with the Order and will take appropriate action(s) for rectification/ reversal of the same," Vodafone Idea said in its exchange filing.
According to VIL, the penalty amount of Rs 10,76,56,733 was specified in the order received on January 3, 2024. The telecom company said the contravention is over "Alleged improper transfer of CENVAT credit to the GST regime."
Adani's power transmission biz to be "biggest beneficiary" of 2024's game-changing reform: Jefferies
Adani Transmission (now Adani Energy Solutions) will be the biggest beneficiary of "game-changing" power distribution reform, said Jefferies.
The brokerage, in its latest report on the 2024 outlook for the sector, said that reform to promote privatisation in power distribution will be back on the table after the May 2024 reform. The report added that it will improve private participation in distribution and the financial health of distribution companies.
The analysts wrote, "The Electricity Distribution Act, to promote privatisation, is currently with the Parliamentary Standing Committee. The idea is for State Electricity Boards (SEBs) to be pushed to eventually raise tariffs for the heavily subsidised agriculture sector and reduce losses, as private distribution companies can provide power lower than the rates SEBs are providing to industrial consumers. This reform will see private sector participation in distribution rising and also strengthen the weak financials of distribution in the long run."
They added, "Adani Transmission is the biggest beneficiary of the same." In July 2023, Adani Transmission was renamed Adani Energy Solutions.
Rights issue: Grasim to issue about 2.2 crore shares at Rs 1,812 per share
Aditya Birla Group's flagship Grasim Industries set the price for the rights issue, approved in October, at Rs 1,812 per rights equity share as the cement maker plans to raise funds not exceeding Rs 4,000 crore to fund the ongoing capital expenditure plan and repay existing borrowings.
The company will issue a total number of 2,20,73,935 rights equity (RE) shares. On a fully paid basis, it will cost investors Rs 1,812, a discount of 12.40 percent from the last closing price. A rights issue is the issuance of shares or convertible securities by a company to its shareholders. Companies often take this route to raise funds for various purposes.
The rights entitlement has been fixed in the ratio of six shares for every 179 fully paid-up equity shares of the company held by the eligible equity shareholders as of the record date.
Domestic carriers inducted 133 planes in 2023, says DGCA
Domestic airlines inducted a total of 133 planes in 2023, which is 51 per cent higher on an annual basis, as they continued to expand their networks to meet rising passenger demand. Of the 133 aircraft, 21 were taken by the carriers on wet lease.
In a release on January 4, the Directorate General of Civil Aviation (DGCA) said that in line with the anticipated increase in aircraft inductions in 2024, it is "suitably enhancing its regulatory capacity to further speed up the regulatory approvals related to the induction of aircraft". Specific details about the measures to increase the regulatory capacity could not be immediately ascertained.
"During the year 2023, the scheduled operators have inducted a total of 112 aircraft in their fleet against 81 aircraft inducted in 2022, which is an increase of 38 per cent. "Taking into account the 21 wet/damp lease aircraft, the total induction of aircraft stands at 133 as against the corresponding figure of 88 in the previous year 2022, which represents a significant increase of 51 per cent over the previous year, thereby augmenting capacity in a growing aviation market," the release said.
According to the aviation watchdog, the increased induction of planes has helped in achieving the twin outcomes of enhanced network coverage, giving a boost to connectivity and comparatively lower fares during the festive season to the overall benefit of passengers.
Oil Prices
Oil prices fell 2 percent on Thursday, largely unwinding an earlier rally, as massive weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw. Brent crude fell by $1.57, or 2 percent, to $79.01 a barrel by 11:23 a.m. EDT, after earlier rising over $1. US West Texas Intermediate crude futures fell $1.47, or 2 percent, to $73.57.
Low fuel demand and large inventory increases in data from the US Energy Information Administration weighed on prices. Gasoline stocks rose by 10.9 million barrels to 237 million barrels, their highest week-on-week rise in more than 30 years.
Distillate stocks rose last week by 10.1 million barrels to 125.9 million barrels. Distillate product supplied, a proxy for demand, fell to its lowest level since 1999, EIA data showed.
While crude inventories drew by 5.5 million barrels in the week, EIA data showed, much of that reflects shipping disruptions in the Red Sea, said Bob Yawger, director of energy futures at Mizuho.
“The situation in the Red Sea has forced a lot of refiners and buyers of crude oil to go to the United States rather than sail their boat around the Horn of Africa,” Yawger said.
Dollar Index
The Dollar index traded 0.08 percent lower in futures at 102.42, whereas the value of one dollar hovered near Rs 83.26.
Gold Prices
Gold prices rebounded from a two-week low on Thursday, as a pullback in the dollar lifted demand among investors who are looking at fresh better-than-expected payrolls data.
Spot gold was up less than 0.1 percent at $2,041.59 per ounce after hitting its lowest since December 21 on Wednesday. US gold futures rose about 0.3 percent to $2,049.3 per ounce. Data released earlier Thursday showed that hiring in the private sector rose at a faster-than-expected pace in December, ADP reported. Private payrolls increased by 164,000 for the month. Initial jobless claims also fell for the last full week of 2023, indicating that the labor market remains resilient.
“A weaker dollar and slightly lower U.S. rates are lifting gold. It seems like the market participants took the Fed minutes as slightly more dovish,” said Giovanni Staunovo, analyst at UBS. “We expect with the Fed implementing several rates cuts this year, this should bring back financial investors via ETF and bar demand and lift the price of gold to $2,250 per ounce by the end of the year,” Staunovo added.
Stock under F&O ban on NSE
The NSE has added Chambal Fertilisers & Chemicals, Escorts Kubota, GNFC (Gujarat Narmada Valley Fertilisers & Chemicals) and India Cements to its F&O ban list for January 5, while retaining Balrampur Chini Mills, Delta Corp, Hindustan Copper, Indian Energy Exchange, National Aluminium Company, SAIL and Zee Entertainment Enterprises to the said list. Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.
FIIs and DIIs
Foreign institutional investors (FIIs) bought shares worth Rs 1,513.41 crore, while domestic institutional investors (DIIs) sold Rs 1,387.36 crore worth of stocks on January 4, provisional data from the NSE showed.
(With inputs from Reuters and other agencies.)
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