Sensex Gain 226 Points, Nifty at 23,813; Nifty Prediction for Monday

Nifty Prediction for Monday

Indian Stock Market Prediction: A Strong Close and What to Expect on December 30

The Indian stock market closed on a positive note on December 27, 2024, as both the benchmark indices—Sensex and Nifty—posted gains.

Despite a volatile week marked by sharp declines whenever the Nifty approached the 23,700 mark, the market displayed resilience, driven by a combination of bullish technical patterns and strong sectoral performances.

Investors are now focusing on the market’s potential direction as we approach the final trading days of the year, with the crucial December 30 session offering a key insight into how the market might trend into the New Year.

Market Overview: Sensex and Nifty End the Day in the Green

At the close of trading on December 27, the Sensex gained 226.59 points, or 0.29%, finishing at 78,699.07. The Nifty also saw an uptick, rising by 63.20 points, or 0.27%, to close at 23,813.40.

Despite the fluctuations observed throughout the day, the market managed to sustain its upward movement, ending on a positive note.

In terms of market breadth, the session reflected a mixed sentiment. A total of 1,866 stocks advanced, while 1,946 stocks saw declines, and 113 remained unchanged.

Among the top gainers in the Nifty were Dr. Reddy’s Labs, M&M, IndusInd Bank, Eicher Motors, and Bajaj Finance.

These stocks outperformed the broader market, showcasing strong individual sectoral growth. On the flip side, the laggards included Hindalco Industries, SBI, ONGC, Coal India, and Bharat Electronics, with these sectors being hit by negative sentiment.

The BSE Midcap index closed flat, signaling that the mid-tier stocks were relatively neutral on the day. The Smallcap index, on the other hand, posted a modest gain of 0.3%, reflecting investor interest in smaller stocks with higher growth potential.

Sectoral Performance: Pharma, Auto, and Media Lead the Rally

Sector-wise, the market saw a clear divide between those sectors that performed well and those that lagged.

The auto, pharma, and media sectors were among the strongest performers, closing with gains between 0.4% and 1%.

The auto sector saw a boost, driven by strong earnings reports from major players like M&M, while the pharma sector benefited from positive investor sentiment surrounding stocks like Dr. Reddy’s Labs.

The media sector also saw some recovery, with optimism regarding future content consumption trends and ad spends.

On the other hand, the realty, PSU banks, oil and gas, and metal indices closed between 0.5% and 1% down.

These sectors were weighed down by various factors, including rising commodity prices, concerns over regulatory actions, and weaker-than-expected earnings in some cases.

Notably, the metal and PSU banking stocks have been more volatile due to global factors like fluctuating commodity prices and interest rate hikes by central banks.

Technical Indicators: Hammer Candlestick Suggests Bullish Momentum

One of the key technical patterns observed this week was the formation of a hammer candlestick, particularly as the Nifty approached the critical 23,700 level.

A hammer candlestick is typically seen as a bullish signal, indicating a potential reversal in trend. Despite sharp declines when the Nifty touched the 23,700 mark earlier in the week, the hammer pattern suggests that the market is experiencing underlying buying pressure, which could indicate that bulls are gearing up for a potential rally.

The hammer candlestick is characterized by a long lower shadow, signaling that sellers tried to push the market lower, but buyers stepped in, preventing further declines.

This suggests that the market sentiment may be shifting in favor of the bulls, and if this trend holds, a rally towards higher levels could be expected in the short term.

Market Prediction: Cautious Optimism for the Rest of 2024

Looking at the market outlook for the remainder of the year, experts remain cautiously optimistic but also stressed the need for moderation in expectations.

Aishwarya Dadhich, the founder and CIO of Fident Asset Management, stated that the returns over the past three years have been strong, with an approximately 8-9% return so far this calendar year.

While this represents solid performance, he believes that the outlook for the remainder of 2024 will be more moderate, largely driven by the pace of earnings growth and external economic factors.

Dadhich forecasts earnings growth of around 4-5% for FY 2025, with a stronger recovery projected for FY 2026, where earnings are expected to grow by 14-15%.

This indicates that while 2024 may be a year of consolidation, 2025 and beyond could bring more robust growth, especially if global and domestic economic conditions improve.

One of the key factors that will influence market performance in the short term is the third-quarter earnings season.

Dadhich highlighted that January 2025 could see a strong start, provided the earnings reports for the third quarter of FY 2024 are in line with expectations.

While companies like Godrej Consumer have already issued some warnings, Dadhich noted that the IT sector, in particular, is expected to perform well, which could help the market sustain its upward momentum.

Additionally, the banking, financial services, and consumption sectors are likely to play a crucial role in supporting the market.

If these sectors deliver solid results, the broader market could see positive growth in the coming months.

However, any negative earnings surprises could lead to increased volatility, which would require investors to tread carefully.

Risks to Monitor: Inflation and Currency Depreciation

While the outlook is relatively positive, several risks could derail the market’s performance in the near term.

Inflation remains a concern, particularly in the agricultural sector, where rising prices could put pressure on consumer spending and corporate margins.

Another key risk is the weakening of the Indian rupee against the US dollar, which could lead to increased import costs and affect corporate earnings, particularly for companies that rely on imports.

Foreign Institutional Investors (FIIs) could also play a pivotal role in shaping market sentiment. If inflation and currency depreciation lead to heightened global risk aversion, FIIs may increase their selling activity, which could add downward pressure on the market.

Investors will need to monitor these factors closely, as any negative surprises could result in short-term volatility.

Technical Support and Resistance Levels

From a technical perspective, the Nifty index currently finds support around the 23,600 level. If the Nifty breaks below this level, it could indicate a deeper pullback, with further downside potential.

However, if the Nifty manages to stay above this support and breaks the 23,900 resistance level, it could trigger a rally, with a target of around 24,165 in the near term.

Anand James of Geojit Financial Services emphasized that the next few days could be critical in determining the direction of the market.

A breakout above 23,900 would signal further upward momentum, while a failure to hold above 23,600 could trigger caution among investors.

Final Remarks: A Balanced Approach Going Into 2025

As 2024 comes to a close, the Indian stock market is showing signs of resilience, supported by positive technical patterns and solid earnings growth expectations.

While the outlook for the remainder of 2024 remains moderate, the market could continue to see gains, especially if key sectors such as IT and BFSI provide support.

Investors should approach the market with caution, staying mindful of the potential risks, including inflation and currency depreciation, which could lead to increased volatility.

However, with solid technical support levels in place and a positive longer-term earnings growth outlook, there is a reasonable case for optimism in the coming months, especially as we move into 2025.