Week Ahead: Domestic cues, F&O expiry, FII action among key market triggers in last week of 2023

Investors will eye several stock market triggers in the last week of the year including the domestic cues, macroeconomic indicators, primary market action, foreign capital inflow, crude oil prices, and stock-specific action.

Domestic equity benchmarks Nifty 50 index and BSE Sensex snapped its longest weekly winning streak in six years, over profit booking at record high levels earlier in the week. 

On the weekly front, the BSE benchmark declined 376.79 points or 0.52 per cent and the Nifty dipped 107.25 points or 0.49 per cent - dragged by the fall in recent outperformers like financials and auto stocks. The BSE Midcap index lost almost a per cent, while the BSE Smallcap index declined by about 0.2 per cent this week.

Also Read: Over 50 smallcap stocks log double-digit growth even as Sensex snaps longest weekly winning run in 6 years

The blue-chip indexes had gained 12.65 per cent and 12.07 per cent over the last seven weeks, aided by strong domestic macroeconomic data, a return of foreign inflows due to improving US rate outlook and moderation in oil prices. 

On Friday, the frontline indices closed in the positive territory for the second consecutive session on gains led by IT heavyweights, including Infosys, HCL Tech and Wipro, amid mixed global cues. Sensex closed with a gain of 242 points, or 0.34 per cent, at 71,106.96 while the Nifty 50 ended the day 94 points, or 0.44 per cent, higher at 21,349.40 on Friday. 

This month, the surge in domestic equities closely follows Fed Chair Jerome Powell's acknowledgment of the risks of delaying rate cuts, bolstering expectations of a 25 basis points (bps) rate cut by March and fueling a rally across global stock markets.

Going forward, a busy week awaits the primary market as a string of new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The upcoming week will be crucial from the domestic and technical point of view as investors will closely eye corporate announcements and macroeconomic cues.

Also Read: Ola Electric IPO: Issue details, objectives, risk factors & more; Check 10 key things to know from DRHP

Overall, analysts expect volatility to remain high due to the scheduled expiry of December month derivatives contracts, but expect the benchmark Nifty 50 to test the 22,150-mark if it moves above 21,500 in the upcoming holiday-shortened week. Heading into the festive season and year-end holiday mood, market experts anticipate a range-bound trade scenario with stock specific action and limited data points.
 

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

Six new IPOs, 14 listings to hit D-Street:

In the SME segment, six new IPOs are opening for subscription in the coming week. AIK Pipes And Polymers IPO will open on December 26. Balaji Valve Components IPO, MCPL IPO, HRH Next Services IPO, and Akanksha Power and Infrastructure IPO will open on December 27. Also, Kay Cee Energy & Infra IPO will open on December 28.

The following stocks will debut on the bourses in the coming week-

December 26: Shares of Muthoot Microfin, Motisons Jewellers, Suraj Estate Developers will get listed on stock exchanges BSE and NSE. Shares of Sahara Maritime will get listed on BSE SME.

December 27: Shares of Happy Forgings, RBZ Jewellers, Credo Brands Marketing Limited will get listed on stock exchanges BSE and NSE. Shares of Shanti Spintex will get listed on BSE SME and Electro Force India will get listed on NSE SME. 

December 28: Shares of Azad Engineering will get listed on stock exchanges BSE and NSE.

December 29: Shares of Innova Captab will get listed on stock exchanges BSE and NSE. Shares of Indifra, Supreme Power Equipment, and Trident Techlabs will get listed on NSE SME. 

‘’As the year 2023 comes to an end, Indian markets attracted not only retail investors to equities but also promoters of many companies rush to go public. In 2023, the mainboard IPOs number was the second highest in over 10 years with around 57 companies raising around ₹49,000 crore. This rally is expected to continue in 2024, with around ₹60,000 crore of sales shares lined up,'' said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
 

FII Activity:

Foreign institutional investors (FIIs) were net sellers for all five days last week, divesting over ₹6,000 crore, but domestic investors pumped over ₹9,000 crore in Indian equities. Foreign portfolio investors (FPIs) have turned sharply positive in December and finally having reversed their selling streak in November, emerging net buyers in the Indian stock market. 

FPIs have bought ₹57,313 crore worth of Indian equities and the total inflow stands at ₹77,388 crore as of December 22, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. Going forward, FPI buying is likely to sustain, according to analysts.

‘’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. Since 2024 is expected to witness further declines in US interest rates, FPIs are likely to increase their purchases in 2024 too,'' said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
 

Global Cues:

The last week concluded with marginal declines following seven consecutive weeks of gains, marked by heightened activity in the IPO space and increased volatility amidst a dearth of global signals. This week, as global cues remain sparse due to the Christmas holiday and year-end festive cheer.

‘’We expect muted action from the global indices. The Dow Jones Industrial Average (DJIA) is also seeing some profit taking around its record high but expected to maintain the positive tone. We reiterate our positional target of 39,000 for the index and the 36,300-36,600 zone would act as a buying zone in case of any dip,'' said Ajit Mishra, SVP - Technical Research, Religare Broking Ltd.
 

Oil Prices:

Crude oil posted the biggest weekly gain since October as attacks in the Red Sea forced hundreds of ships to take safer but longer routes, delaying the delivery of oil cargoes. Oil prices also eased expectations Angola could increase oil output after leaving the Organisation of Petroleum Exporting Countries (OPEC) cartel, but rose for the week on positive US economic news and worries Houthi ship attacks would boost supply costs.

Brent futures fell 32 cents, or 0.4 per cent, to settle at $79.07 a barrel, while US West Texas Intermediate (WTI) crude fell 33 cents, or 0.5 per cent, to settle at $73.56, according to news agency Reuters. This left both benchmarks up about three per cent for the week after gaining less than one per cent last week.
 

Corporate Action:

Shares of some companies, including Vedanta Limited and few others will trade ex-dividend in the coming week, starting from Monday, December 25. Some other companies will also trade ex-ex-bonus, while some have announced a buy back of shares next week. Check full list here
 

Technical View:

From a technical standpoint, Nifty experienced profit-taking around the 21,500 mark, subsequently filling the gap created post the US Fed policy announcement near the 21,000 level. 

‘’Despite a robust recovery from the 21,000 level, a breach of the 21,500–21,600 supply zone is imperative for a resumption of bullish momentum. Presently, the 20,900–21,600 range defines the market landscape,'' said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Analysts at Religare Broking are eyeing further consolidation in the Nifty index amid mixed signals and the range could be broader now citing recent swings. 

‘’A decisive close above 21,500 would pave the way for the 22,150 level and expect the 20700-21000 zone to offer a cushion in case the profit taking resumes. Participants should prefer index majors over the midcap and smallcap counters and focus more on FMCG, pharma and IT basket for long trades,'' said Religare's Ajit Mishra.

Shifting focus to Bank Nifty, the index faced selling pressure on the last day but managed to hold the key support level of 47,400. 

‘’If the index fails to sustain above this support, it could witness further decline toward the 47,100 levels. 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 48,000/48,200 levels,'' said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.