Sensex, Nifty this week: From F&O monthly expiry to India’s fiscal deficit, factors that may drive Dalal Street

This week investors will be eyeing key events such as the F&O December series expiry, India’s fiscal deficit, current account deficit, deposit growth, and bank loan growth, along with goods trade balance, and initial jobless claims in the US that will keep the markets buzzing.

Economic data: The coming week will be the final week of the calendar year 2023. Domestic traders may witness volatility due to the F&O December series expiry slated during the week. In economic releases, investors will be watching India’s infrastructure output or eight core sector data to be out on December 29. Infrastructure output in India rose by 12.1 per cent year-on-year in October 2023, accelerating from an upwardly revised 9.2 per cent growth in the previous month. Also, India’s fiscal deficit, current account deficit, deposit growth, bank loan growth, foreign exchange reserves, and external debt data will be released on the same day.

US market data: On the global front, the coming week will be holiday-shortened as the US markets will remain close on December 25 on account of Christmas. On the economic data front, investors will be eyeing the Chicago Fed National Activity Index, Redbook, on December 26; Richmond Fed Services, Dallas Fed Services on December 27; Goods Trade Balance, Initial Jobless Claims, and Continuing Jobless Claims on December 28; Chicago PMI and Baker Hughes Oil Rig Count on December 29.

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Market Outlook: Deepak Jasani, Head of Retail Research at HDFC Securities, said that Nifty ended higher for the second straight session on December 22. At close, Nifty was up 0.44 per cent or 94.34 points at 21349.4. Global stocks remained muted on Friday as investors awaited the release of the Fed’s preferred inflation gauge, which could offer a signal into when U.S. rate cuts can be expected in 2024. Revised official data showed the UK could be falling into a recession. Chinese internet stocks slumped on regulatory news on Friday as China issued draft rules that would impose spending limits on gamers.

He added that despite ending higher on the second consecutive day on Friday, Nifty ended this week lower after a seven-week rally. “On a weekly basis, Nifty closed 0.5 per cent lower after making a large high-low candle. Nifty could face resistance early next week from the 21492-21553 band while 21150 could offer support. Nifty could keep witnessing sell on rise pattern for the next few days,” Jasani said.

Bank Nifty: Kunal Shah, Senior Technical & Derivative analyst at LKP Securities, said: “The Bank Nifty index faced selling pressure on the last day but managed to hold the key support level of 47400. If the index fails to sustain above this support, it could witness further decline toward the 47,100 level. On the upside, the immediate resistance is at 47,700, and a breakout above this level may trigger short-covering, pushing the index higher toward 48,000/482,00 levels “.

Foreign Investment trend: Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “FPI inflows which were negative in the previous 3 months have sharply turned positive in December”. Total FPI inflows so far in December is Rs 57,313 crore including the buying through stock exchanges and primary market.

“The steady decline in US bond yields has caused this sudden change in the strategy of FPIs. FPIs were big buyers in financial services. This explains the resilience of this segment in recent days. FPIs also bought in sectors like autos, capital goods, and telecom.”

Vijayakumar further said that since 2024 is expected to witness further declines in US interest rates, FPIs are likely to increase their purchases in 2024 too.

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