BSE IT index gained post TCS results; BSE Capital Goods, BSE Power and BSE Reality indices witnessed weekly loss in excess of 5%
Shrikant Chouhan,
Head Equity Research,
Kotak Securities
Mumbai, January 10, 2025: The Indian equity markets underperformed most of the global markets. Sensex and Nifty index declined by ~2% this week. The correction was more severe in the midcap and the small cap stocks. BSE Midcap index and Smallcap index declined by 5% during the week. Almost all major sectors saw decline in this week with BSE Capital Goods, BSE Power and BSE Reality indices witnessing weekly loss in excess of 5%.
On the contrary, BSE IT index gained post TCS results. TCS reported flat revenues and 40 bps increase in EBIT margin, broadly in line with our estimates. Deal TCV grew sharply qoq and yoy for TCS. Crude oil price continued its uptrend during the week and any significant further increase can pose some challenge to the economy. Upcoming inflation data would be an important macro data to watch out. Stock specific action is expected over the next few weeks as the companies declare their Q3FY25 results.
FPI-FII details
Q) The amount/reason for outflow/inflow (1st Jan to 9th Jan 2025).
FIIs continued to be net cash seller to the tune of Rs. 19,103 crores, to date in Jan’25.
Q) How is the future FPI flow expected to be?
Nifty has been under pressure and underperformed most global markets. The correction was more severe in SMIDs. On the economy front, the NSO estimated FY25 real GDP growth at 6.4%, implying 6.7% growth in H2FY25 (6% in H1FY25). FPI flows are expected to remain volatile.
Q) How are other emerging markets performing?
FPI flows to date in Jan’25 were negative for all key emerging markets (except S.korea). India, Brazil, Indonesia, Malaysia, Philippines, Taiwan, Thailand, and Vietnam, witnessed outflows of US$1144 mn, US$426 mn, US$169 mn, US$119 mn, US$24 mn, US$92 mn, US$31 mn, and US$69 mn, respectively. S.korea witnessed inflows of US$851 mn.
Amol Athawale, VP-Technical Research, Kotak Securities, adds: In the last week, the benchmark indices witnessed profit booking at higher levels. The Nifty ended 2.4 percent lower, while the Sensex was down by 1848 points. Among sectors, the IT index outperformed, gaining over 1.9 percent, whereas the PSU Banks and Realty indices lost the most, shedding over 6 percent. During this week, the market breached the 200-day SMA (Simple Moving Average) support zone, and post-breakdown, selling pressure intensified.
Technically, it has formed a long bearish candle on the weekly charts and is holding a lower top formation on the intraday charts, which is largely negative. We are of the view that the current market texture is weak but oversold; hence, a strong possibility of a pullback rally from the current levels is not ruled out.
For short-term traders, 23600/77800 would be the key level to watch. Above this level, the pullback move could continue till 23800/78500. Further upside may also persist, potentially pushing the market up to the 200-day SMA or 24000/78800. On the flip side, if the market falls below 23350/77100, selling pressure is likely to accelerate. Below which, the market could slip to the 23250-23100/76800-76500 range.
For the Bank Nifty, the short-term formation is weak, and a pullback rally is possible only after a decisive break above 49500. If this level is surpassed, it could bounce back to the 50000-50200 range. Conversely, as long as it trades below 49600, weak sentiment is likely to continue. On the downside, 48300 and 48000 are key support zones for traders.
