The Indian stock markets ended the last trading session of the week on shaky ground, with the benchmark equity indices closing lower. The BSE Sensex finished Friday down by 784 points, or 0.9%, to settle at 79,223.11, reflecting growing investor caution as profit booking set in. Similarly, the NSE Nifty50 slipped by 199 points, closing at 24,004.75, or down 0.8%. Despite the downturn, some stocks like ONGC, Hindustan Unilever, and Titan managed to shine, showcasing gains even amid overall market weakness.
The market had initially shown signs of recovery as sectors like oil and gas and Fast-Moving Consumer Goods (FMCG) attracted buying interest. Conversely, banking, finance, and IT stocks faced selling pressure, which reflected broader economic sentiments. According to Richa Agarwal, research analyst, following the pandemic recovery, India’s economic growth has been slowing, marked by real GDP growth of only 5.4% this past quarter, which fell short of expectations. Agarwal noted, “India Inc.'s quarterly earnings are also showing signs of fatigue, indicating a potential slowdown.”
Meanwhile, across the markets, several stocks caught the attention of investors due to significant news and performances. Notably, shares of Shiva Texyarn surged following news of a substantial order win from the Indian Air Force, increasing by 11.9%. Similarly, Afcons Infra's stock climbed by 7% after it secured over Rs 10 billion worth of contracts from the Defence Research and Development Organisation (DRDO).
On the commodities front, bullish sentiment around oil prices was evident, driven by hopes of improving economic conditions, particularly from China. Brent crude futures reached above $76 per barrel, enhancing the performance of oil-related stocks. ONGC and Oil India shares climbed by about 4%, reflecting this uptick. Market analysts pointed to the potential of increased demand as governments globally initiate support measures to stimulate economic growth.
Looking forward, the Indian stock market is set to open higher on Monday, buoyed by positive cues from Asian markets, which have largely traded up. The optimism is underscored by last week’s rally on Wall Street, particularly among technology stocks. Investors are now shifting their focus to forthcoming quarterly earnings and macroeconomic indicators both domestically and internationally.
According to analysts, key factors shaping market direction include upcoming earnings reports, fluctuations in foreign fund flows, crude oil price movements, and the U.S. Federal Reserve's meeting outcomes. Prashanth Tapse, Senior VP at Mehta Equities, highlighted the need for investors to remain cautious, noting, “Despite recent recoveries, the Indian market continues to face challenges stemming from higher valuations and foreign fund outflows.”
Global indices also provided mixed signals. Asian markets showed gains, with MSCI’s index for Asia-Pacific shares rising slightly. The Japanese Nikkei saw minor declines, contrary to South Korea’s Kospi which rose by 0.23%. Investors will undoubtedly keep tabs on market developments as earnings season progresses.
Crucially, the dollar's strength is another element investors are monitoring closely. The U.S. dollar index hovered near its two-year peak, trading at around 109.06. This has wide-ranging impacts, especially considering the currency's influence on global commodities and investment flows. The fluctuators of exchange rates against major currencies like the euro and yen may affect Return on Investment (ROI) for investors looking out of India for opportunities.
The upcoming initial public offerings (IPOs) are another focal point for market participants. Standard Glass Lining Technology Ltd plans to open its IPO subscription this week from January 6 to January 8, aiming to raise approximately Rs 4.1 billion. Simultaneously, Quadrant Future Tek Limited’s IPO is set to open from January 7 to January 9, expected to raise Rs 2.9 billion, which continues to bring fresh excitement to the capital markets.
Investors are advised to remain vigilant of changes in the stock market. The potential impacts of crude oil prices, fluctuations in foreign portfolio investments, and local economic indicators will be pivotal as trading resumes. Whether these factors can inspire confidence and drive market recovery remains to be seen.
Overall, with the Indian equity market experiencing substantial volatility at the end of last week and uncertain sentiment heading forward, traders will keep their eyes peeled for any immediate indicators of trends as markets reopen this Monday.