Overall, the benchmark BSE Sensex advanced nearly 862 points, or 1.87 per cent, to 46,960 for the week ended December 18. Likewise, the NSE Nifty index surged nearly 247 points, or 1.83 per cent, to 13,760.
Vinod Nair, Head of Research, Geojit Financial Services, said, “During the week, the domestic indices have been following the global peers on expectations of US stimulus measures and developments in Brexit talks. The market was inching to fresh highs, each day, supported by improvement in Indian industrial data and US Federal Open Market Committee’s reaffirmation to continue its support through stimulus measures until the economy reaches maximum employment and the inflation target.”
The domestic equity market will remain shut on December 25 on account of ‘Christmas’. Going by the buzz on Dalal Street, here are key factors which are likely to chart the market direction this week:
FII inflows
Overseas investors have poured more than Rs 1.09 lakh crore in the domestic equity market since November amidst better than expected economic recovery around the world and positive sentiment on the back of various vaccine results. Any further inflows by foreign portfolio investors will take the market to new record highs. “Fed’s decision to keep rates unchanged will help FIIs to maintain a positive view on emerging markets like India,” said Nair.
Rupee and dollar movement
Market participants will also watch the movement of rupee against the greenback. The dollar index breached the key support threshold of 90 last week for the first time since April 2018, auguring well for emerging markets. “We believe, continued weakness in dollar index will remain the key monitorable for extension of the ongoing rally as that would provide the impetus for the Nifty to resolve higher and head towards 14,200 in coming weeks,” said Dharmesh Shah, Head-Technical, ICICI direct.
US Stimulus talks and Brexit deal
Expectations of further US stimulus are also keeping the US dollar under pressure. Nair of Geojit Financial Services said, “In the coming week, the market will be maintaining its focus on global events, as a decision on the US stimulus package and Brexit deal can be expected in the coming days.”
Foreign exchange data
Traders will be eyeing foreign exchange reserves data which is scheduled to be announced on December 25. Foreign exchange reserves in India increased to a new record of $579,346 million on December 4 from $5,74,820 million in the previous week.
Global cues
On the global front from the US, in a holiday truncated week, traders will first be eyeing the Chicago Fed National Activity Index on December 21 followed by GDP Price Index, Redbook on December 22, Personal Income, Michigan Consumer Expectations Final, Baker Hughes Oil Rig Count on December 23 and finally Initial Jobless Claims on December 24.
Antony Waste Handling Cell IPO
The Rs 300-crore initial public offering (IPO) of Antony Waste Handling Cell will open for subscription on December 21. The price band has been fixed at Rs 313-315 per share for its initial public offer (IPO), the company said in a statement.
The IPO comprises fresh issuance of shares worth Rs 85 crore and an offer for sale of 68,24,993 equity shares by existing shareholders. Tonbridge (Mauritius) Ltd, Leeds (Mauritius) Ltd, Cambridge (Mauritius) Ltd, and Guildford (Mauritius) Ltd will be offering shares through the offer for sale.
Technical outlook
Risk-on sentiment prevailed across global equities as dollar weakness extended. The weekly price action formed a sizable bull candle with a small lower shadow carrying higher high-low over seventh consecutive week, indicating the continuance of positive bias as Nifty formed a higher base and eventually resolved above the hurdle of 13,600, signifying inherent strength.
The market breadth has also improved as all Nifty components are trading above their long term 200-day moving average, signifying durability of the current up move.
“The acceleration of upward momentum backed by the strengthening of market breadth and revolving sectoral participation makes us confident to revise our target to 14200 by January 2021,” said Shah of ICICI direct.
