Week Ahead: Auto sales, Q3 updates, FII flow, global cues among key market triggers for Nifty in new-year week | Stock Market News

The Indian stock market is on track to conclude 2024 on a positive note even as it waded through several challenges led by domestic and global factors. The last week was marked by consolidation with bouts of intraday volatility on subdued trading sentiment due to persistent foreign outflows and muted global cues amid the onset of the year-end festive season, which limited recovery.

As the stock market prepares to close 2024 and begin the new calendar year (2025) with the new month, investors will closely monitor key market triggers, including the first set of December quarter estimates/updates for the current fiscal 2024-25 (Q3FY25), auto sales figures, domestic and global macroeconomic data, foreign fund outflows, and other global cues.

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Domestic equity benchmarks Nifty and Sensex found some relief last week, supported by short covering ahead of Christmas and year-end holidays. The Nifty 50 rose nearly one per cent, closing at 23,813, while the BSE Sensex gained 0.84 per cent, settling at 78,699 in the previous session.

The frontline indices recovered in the holiday-thinned week, led by auto stocks after the earlier sharp drop made valuations relatively attractive. Both benchmarks gained about one per cent last week, after a five per cent slide in the week before that, the most in 30 months, after the US Federal Reserve projected fewer rate cuts in 2025 and tarnished the appeal for emerging markets.

Sectoral performance was mixed, with pharma, auto, and FMCG sectors showing resilience, while metals lagged behind. Broader indices, including midcap and smallcap segments, ended almost unchanged, reflecting cautious participation. The India VIX, a key indicator of market fear and volatility, declined sharply by 12 per cent, signaling improved investor sentiment.

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“The recovery in benchmark indices was driven primarily by strength in banking heavyweights, as oversold stocks attracted significant interest from large institutional investors seeking bargain opportunities,” said Puneet Singhania, Director at Master Trust Group.

Around 180 million shares, on average, were traded on the Nifty 50 in each of the last four sessions, well below the 300-million-share daily average this year. Analysts expect the market to drift until the quarterly earnings season starts in the second week of January.

“Persistent concerns over foreign outflows, the depreciating rupee, potential adverse tariffs and reduced expectations for rate cuts in 2025 contributed to the muted market trend. Significant market attention is expected for the upcoming Q3 results, which will be crucial in shaping the market trajectory,” said Vinod Nair, Head of Research, Geojit Financial Services.

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“Investors are likely to align their portfolios based on the pre-budget expectations. The auto sector will likely be in the limelight, aided by an expectation of a pickup in volumes in December and comfort in valuation,” added Nair.

This week, the primary market will witness action as some new initial public offerings (IPO) and important listings are slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track domestic and global economic data, along with corporate developments.

Here are the key triggers for stock markets in the coming week:

Q3 Updates, Auto Sales

Investors will be busy analyzing corporate earning estimates/updates announced by several companies in the coming week as the first batch of Q3FY24 results are expected to be released from the second or third week of January.

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“Monthly auto sales data will also be closely watched. The auto sector has recently been under a cloud of pessimism, and any positive surprise could bolster market sentiment. As the Q3 earnings season approaches, corporate quarterly updates will trickle in, setting the stage for market expectations,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

4 new IPOs, 6 listings to hit D-Street

Indo Farm Equipment IPO will open for subscription in the mainboard segment on December 31. Between December 30, 2024, and January 3, 2025, three new issues will open for bidding in the SME segment.

Among listings, shares of Ventive Hospitality, Senores Pharmaceuticals, and Carraro India will debut on stock exchanges BSE, NSE on December 30, and shares of Unimech Aerospace and Manufacturing will debut on December 31. In the SME segment, shares of two SMEs will debut on either BSE SME or NSE SME. 

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FII Activity

In the domestic market, foreign institutional investors (FIIs) remained net sellers, offloading ₹6,322 crore in the cash market. In contrast, domestic institutional investors (DIIs) stepped in with robust support, recording a net investment of ₹10,927 crore. This month, foreign portfolio investors (FPIs) invested ₹16,675 crore in Indian equities till December 27.

“FIIs exhibited thin volumes due to the Christmas and New Year holidays, continuing as net sellers. FIIs’ participation will likely remain muted this week, but their behaviour after the holiday period will be critical. Persistent FII selling has been a source of pressure on Indian markets, and their stance in the new year could shape near-term trends,” said Santosh Meena of Swastika Investmart.

In early 2025, FIIs may again turn sellers into equity since the dollar has been appreciating (dollar index is above 108) and the US 10-year bond yields are attractive at around 4.4 per cent. According to Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, FIIs will turn buyers in India when there are indications of growth and earnings recovery.

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Global Cues

On the global front, the US 10-year bond yield and the dollar index (DXY) rose last week, with bond yields increasing by 1.35 per cent and the DXY edging up 0.15 per cent. Key economic indicators like Manufacturing PMI data from China and US and US jobless claims will play a crucial role on the global front. However, the dollar index and US bond yields remain the most critical factors influencing the direction of global markets. 

Hence, the market outlook will be guided by major global economic data, such as US Pending Home Sales (Nov), UK S&P Global Manufacturing PMI, US Fed Balance Sheet, US Initial Jobless Claims, and US ISM Manufacturing PMI.  

“Uncertainty surrounding Trump’s economic policies and high valuations may impact the stock market in the short term, particularly in emerging markets. The rising USD and US bond yields are prompting FII outflows, although the easing quantum of these outflows offers some relief,” said Vinod Nair of Geojit Financial Services.

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Oil Prices

International crude oil prices settled more than one per cent higher in the previous session, logging a weekly gain in low trading volume ahead of year-end. This was buoyed by a larger-than-expected drawdown from US crude inventories last week. Optimism over Chinese economic growth has also sparked hopes of higher demand next year from the top oil-importing nation.

Brent crude futures rose 91 cents, or 1.2 per cent, to settle at $74.17 per barrel. US West Texas Intermediate crude futures rose 98 cents, or 1.4 per cent, to $70.60 per barrel. On a weekly basis, both Brent and WTI crude gained about 1.4 per cent. Back home, crude oil futures settled 0.17 per cent higher at ₹6,045 per barrel on the multi-commodity exchange (MCX).

Corporate Action

Shares of several companies will trade ex-dividend, ex-bonus, and ex-split in the coming week, starting from Monday, December 30. Shares of Redtape will trade ex-dividend, while KPI Energy will trade ex-bonus. Check full list here

Technical View

On the technical front, Nifty strives to hold its critical long-term moving average (200 DEMA), but pressure from heavyweight stocks caresses any meaningful recovery. According to Ajit Mishra – SVP, Research, Religare Broking Ltd, a decisive breach below the recent swing low of 23,500 could intensify selling pressure, with the next major support level near November’s low of 23,263.15. 

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On the upside, the 24,100–24,400 zone remains a key resistance area, requiring strong momentum to overcome. Amid mixed signals from the indices, some sectors continue to offer opportunities. According to Mishra, pharma and healthcare remain outperformers, while selective recoveries in FMCG, banking, and realty stocks provide potential buying opportunities. 

However, PSU and metal sectors appear vulnerable to further downside, warranting cautious handling. In light of this, Mishra advises traders to adopt a balanced approach, aligning their strategies with market conditions. 

“Focusing on fundamentally strong stocks is crucial, particularly in the volatile mid-cap and small-cap spaces. Diversifying across outperforming sectors while avoiding vulnerable areas can help manage risks and optimize returns in this consolidating market phase,” said Mishra.

According to Santosh Meena of Swastika Investmart, the Nifty is hovering around its 200-day moving average (200-DMA). Sustaining above this level is essential for the index to gain strength. Puneet Singhania of Master Trust Group said, “Nifty has consistently taken support near the 23,650 level on the daily chart and ended the week with an inside candle on the weekly chart, following heavy selling the previous week.”

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“The support is further reinforced by an ascending trendline on the weekly chart. On the upside, sustaining above 23,950 could trigger fresh buying towards 24,200. Overall, the market trend appears cautious, and a “sell on rise” strategy is recommended near resistance levels,” added Singhania.

Bank Nifty formed an inside candle on the weekly chart, trading within a range this week. The index has faced continuous resistance near the 51,800 level, and a close above this level could push it toward 52,500. According to Singhania, on the downside, breaching last week’s low of around 50,900 may trigger fresh selling, potentially driving the index down to 50,200. 

“Overall, the market remains cautious, and a “sell on rise” approach, focusing on resistance levels for potential shorting opportunities, is recommended,” he said. Meena said that the index has consistently taken support at its 200-DMA over the past year for Bank Nifty, with six such instances. As long as it holds above its 200-DMA at 50,500, there is potential for a bounce. 

“However, slipping below this level could signal a risk of significant correction. On the upside, the 51,800-52,000 zone acts as a critical resistance level, above which we could see robust short-covering,” added Meena.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.