Weekly Trend Report
- 04th January 2025
Week Gone By
The market saw moderate gains during the New Year week, despite weaker domestic economic indicators. Indices ended lower on three out of five trading days, although broader markets outperformed the frontline indices. Meanwhile, the country’s gold reserves declined by $2.33 billion to $65.726 billion during the week. India’s fiscal deficit reached ₹8.5 lakh crore in the first eight months of the fiscal year (April-November), accounting for 52.5% of the budgeted target. On the global front, China’s manufacturing PMI and Caixin/S&P Global manufacturing PMI both fell in December. Japan’s factory activity contracted, whereas the Au Jibun Bank Japan Manufacturing PMI saw a slight rise.
Week Ahead
The stock market is expected to remain volatile next week as investors await the release of Q3 earnings results. This uncertainty has led some investors to pull back on their purchases, creating a cautious market sentiment. After the earnings season, attention is likely to shift toward the upcoming Union Budget and the policy decisions under the Trump 2.0 administration. On the domestic front, India’s HSBC Composite and Services PMI will be released on January 6, the preliminary Fiscal Year GDP Growth data for 2025 on January 7, and November industrial production data on January 10. Globally, the US ISM Services PMI and Job Openings and Labor Turnover Survey will be released on January 7, while non-farm payrolls and unemployment rate data are set for release on January 10.
Technical Overview
- The benchmark index concluded the calendar year on a slightly lower trajectory; however, it commenced the new calendar year of 2025 with a robust performance, resulting in a weekly increase of 191 points on relatively elevated trading volume. The VIX experienced a 2.3% rise, reaching levels of 13.54 during the week.
- The week concluded with most broader and sectoral indices demonstrating an improvement in their price trends, while negative momentum continued to improve for the second consecutive week, with the exception of the real estate sector—representing an additional positive development.
- In terms of market breadth, there was notable enhancement observed throughout the week, particularly within the intermediate trends. The percentage of stocks trading above 10 and 20 DMA has surpassed the median threshold, coupled with a positive crossover between the two average lines, suggestive of a short-term bullish swing.
- The percentage of stocks trading above 200 DMA has also managed to exceed the median mark; however, the proportion of stocks trading above 50 DMA remains below the median level for the third consecutive occasion, indicating that the prevailing downtrend is not yet over on a higher timeframe.
- On the momentum market breadth front, significant recovery has been observed since midweek; nevertheless, the markets did not provide the anticipated follow-through afterwards. Therefore, it is imperative for bullish participants to establish their presence in the forthcoming days with a pronounced upward movement; failure to achieve this could lead to a potential weakening of the ongoing rally.
- From a technical perspective, the index is currently situated at a critical juncture. The level at 50DMA, in conjunction with the prior gap area and the weekly shorter-term moving average, indicates that the region between 24350-24220 is projected to serve as an immediate resistance zone. A decisive reclamation of this zone would enable the index to gather additional bullish momentum. Conversely, with the 50 Weekly Moving Average positioned near 23600, the range between 23900 and 23600 constitutes a vital support zone; a violation of the lower boundary on a closing basis would invite further selling pressure.
- We remain in a hard-money market environment, with the swing confidence of the overall market currently at zero; however, it is anticipated that this may improve, contingent upon a strong follow-through. Consequently, it is advisable to adopt a prudent approach to swing trading, and to implement a strict risk management strategy, which should not be overlooked.
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