Nifty, Sensex end the week flat ahead of Q3 results and amid Red Sea worries

BSE MidCap and Smallcap indices outperformed benchmark Sensex to end the week 2.3 percent and 2.7 percent higher respectively

The Indian equity market ended the first week of 2024 on a slightly negative note, as the Sensex and Nifty swing between losses and gains ahead of the Q3 earnings and worsening situation in West Asia.

The Sensex closed 0.3 percent and the Nifty 0.2 percent lower from the previous week.

The broader market, however, did better. BSE midcap and smallcap indices gained 2.3 percent and 2.7 percent.

The exuberance would likely be tested if the December quarter earnings do not justify the valuation, Vinod Nair, Head of Research, Geojit Financial Services, said.

A happy new year for realty stocks

Realty stocks gained sharply during the week, with third quarter earnings expected to get the festival season boost.

The Nifty realty index gained more than 7 percent as investors lapped up realty stocks after several firms shared their Q3 business updates. Sobha, Macrotech Developers and Oberoi Realty gained up to 27 percent during the week.

Also Read | Technical View: Nifty ends higher amid volatility; likely to trade between 21,500-21,850

IT stocks gained on January 5 on optimism over the end of the interest-rate hike cycle despite near-term concerns over the December quarter results.

Despite the day’s gains, the Nifty IT index was the top sectoral loser of the week, falling nearly 2 percent ahead of the earnings season that begins with Infosys and TCS results on January 11.

Analysts expect the IT industry to report muted sequential growth in the December quarter due to prolonged higher inflation, delay in discretionary projects and sluggish growth.

The October-December period is typically a slow quarter due to the holiday season in the US and European countries, which are the biggest markets for the Indian IT firms.

Nifty Metal, auto and bank indices also ended the week in the red. Banking stocks saw negative movement as they shared Q3 business updates during the week.

Nifty media, healthcare, CPSE and energy were among the sectoral gainers, rising up to 3 percent.

Global cues

The turmoil in the Red Sea region weighed on sentiment. The Iran-backed Houthi rebels, who control much of Yemen, launched exploding drones and missiles on commercial vessels, trying to inflict costs for what they say is a protest against Israel's military operations in Gaza.

In the US, all three major averages - Dow Jones, S&P 500 and Nasdaq 100 - are on track to break a nine-week winning streak.

Hong Kong led losses in Asia-Pacific, falling up to 3 percent during the week, followed by China, South Korea and Japan.

Also Read | Taking Stock: Market gains for the second day, IT stocks on the up

Where are Nifty, Bank Nifty headed?

The Nifty is likely to trade in the 21,500–21,850 range over the next few sessions.

"A decisive break of this range on either side shall set the trend going ahead. Overall structure is still in favour of the bulls, however, a consolidation is likely over the next few trading sessions," Jatin Gedia, a technical research analyst at Sharekhan by BNP Paribas, said.

Bank Nifty held on to the support of 47,800. Once this range-bound action is complete, the next leg of upmove is expected to resume. "On the upside, we expect 49,500 from a short-term perspective," Gedia said.

Traders should focus on stock selection and risk management. In the absence of a major event, the performance of the global indices, especially in the US, would be the focus for cues, Ajit Mishra, SVP - Technical Research, Religare Broking Ltd, said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before making any investment decisions.