Weekly Report: 14th December 2024

Weekly Trend Report

Week Gone By

The equity indices showed a mixed trend throughout the week but ended with modest gains, supported by a strong rally on Friday. The BSE Sensex rose by 424 points to 82,133.12, while the Nifty 50 gained 90.50 points, reaching 24,768.30. In India, CPI inflation eased to 5.48% in November, down from 6.21% in October, with retail inflation also falling within the RBI’s target range of 2-6%. The Index of Industrial Production saw a 3.5% growth in October, up from 3.1% in September. Globally, China’s consumer prices rose 0.2%, with exports growing 6.7%, indicating global demand concerns. The S&P 500 and NASDAQ reached record highs, while the Dow Jones lagged. In the US, nonfarm payrolls rose by 227,000 jobs, CPI increased by 2.7%, and core CPI climbed 3.3% YoY.

Week Ahead

Next week, investor sentiment will be influenced by a mix of domestic and global factors, including key economic data releases. In India, the HSBC Composite, Manufacturing, and Services PMI for December will be announced on December 16, along with WPI inflation and balance of trade data. Globally, the US Federal Reserve will meet on December 19 to decide on interest rates, while Q3 GDP data will also be released. Key data from China, including industrial production and retail sales, will be available on December 16. Additionally, US retail sales data for November will be released on December 17.

Technical Overview

The Nifty50 index commenced the trading week on a subdued note and remained relatively lackluster for the majority of the week.
Nevertheless, it concluded the week with an increase in volatility, managing to close in the upper quartile of its trading range, surpassing the 50-day moving average. This accomplishment marks the fourth consecutive week of higher closing values.
The Volatility Index (VIX) decreased by 7.7% during the week, reaching a value of 13.05, which signifies a reduction in market fears, a positive indicator.
The week ended with most broader indices exhibiting confirmed uptrend status, although their positive momentum appears to be diminishing. From a sectoral perspective, sectors such as IT, Consumer Durables, and Finance are demonstrating relatively higher positive momentum, which is further improving.
In terms of market breadth, the percentage of stocks trading above the 50-day and 200-day moving averages has shown significant recovery and is now operating above the median threshold, indicating increasing bullish strength.
In contrast, the percentage of stocks trading above 10 DMA is lower than those trading above 20 DMA. This negative crossover reflects comparatively weaker momentum within the intermediate trend.
On the momentum market breadth front, the numbers exhibited a negative trajectory for the week, and this weakness further persisted by the end of the week. However, over a broader timeframe, the numbers continue to appear healthy, which is encouraging.
The zone of 24780-25000 serves as a critical resistance level, representing the neckline of the inverted head and shoulders pattern, beneath which the Nifty experienced a pronounced correction that began in late October.
The index is expected to attract additional bullish momentum upon decisively reclaiming this zone on a closing basis. Conversely, the support levels have been adjusted higher, with the zone of 24350-24130 anticipated to provide immediate support.
In light of the prevailing hard-money market conditions characterized by persistent volatility, it is advisable for swing portfolios to maintain their positions and await a reduction in volatility prior to initiating new positions, given that the swing confidence of the general market stands at 50. This implies that portfolios should undertake half of the maximum permissible open risk.

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