Weekly Trend Report
- 21st December 2024
Week Gone By
The Indian market experienced sharp decline during the week, largely led by the selloff triggred by the Federal Reserve’s hawkish outlook on the 2025 rate cut rally. The declines were further supported by the INR depreciation and FII selloff. Additionally, domestic trade deficit and foreign reserve data further added to market concerns. India’s wholesale price inflation (WPI) eased to 1.89% in November as prices of vegetables witnessed correction. On the global front, PBOC, BoE and BoJ kept their rates steady in the final meet of the year, while Fed slashed its rates with a 25 bps cut. US retails rose only 3% YoY, weakest growth in three months and lower than October’s 4.8% increase.
Week Ahead
As the year end approaches, the markets is poised to take cues from the upcoming global market data, as there are no significant events scheduled. FII/DII flows, rupee movement and crude oil prices are likely to be the key area of focus for participants. Following are the data scheduled: 1) US durable goods order data and New homes sales data are set to release on Tuesday, 2) BoJ’s monetary policy meeting minutes will also release on Tuesday, 3) US initial jobless claim data will release on Thursday while Japan will release its unemployment data on Friday.
Technical Overview
- The Nifty50 index began the trading week on a subdued note, following the high volatility observed at the close of the previous week. Despite encountering significant resistance near 24840, the neckline of the inverted head and shoulders pattern, the index succumbed to selling pressure and trended lower throughout the week.
- This intensified selling ultimately led to a decline of 1,180 points, closing below the 200 DMA and a multi-month support line, along with a notable 15.5% increase in the VIX to 15.07 on a weekly basis.
- By the end of the week, all broader indices, except for Microcaps, closed below their 50 DMA, placing their uptrends under pressure.
- On the sectoral front, most indices are experiencing downswings; with the exception of Pharma, all sectoral indices are exhibiting negative and deteriorating momentum—a concerning development.
- In terms of market breadth, stocks trading above 10 and 20 DMA are significantly below median levels, reflecting a negative crossover that indicates a considerable lack of momentum and strength in the intermediate trend.
- The number of stocks trading above 50 DMA has once again dropped below the median threshold, while those trading above 200 DMA are only marginally above median levels, calling for a cautious approach.
- This trend is further demonstrated by the momentum market breadth, which indicates weaker stock participation and suggests prudence moving forward. Technically, the index has struggled to maintain crucial support levels, forcing the resistance level down to 24200.
- Conversely, 23500 and 23250 serve as important support levels, and a breach below this zone may trigger additional selling pressure.
- The index is expected to continue experiencing volatile bearish trends in the coming week, which could lead to a hard money market transitioning into a no-money market.
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