The Indian stock market snapped its two-week losing streak on a high note, offering relief after weeks of correction. Yet, this came after navigating a highly volatile week marked by geopolitical tensions and renewed concerns surrounding the latest bribery and fraud charges against the Adani group.
In the last week of November, investors will closely monitor key market triggers, including Assembly election results, foreign fund outflows, Russia-Ukraine geopolitical tensions, US bond yields, the US dollar, crude oil prices, global cues, and domestic and global macroeconomic data.
Domestic equity benchmarks Sensex and Nifty 50 posted their best session since early June in the previous session over easing worries about credit risks from exposure to Adani Group stocks lifted heavyweight financials.
The Nifty 50 rose 2.39 per cent to 23,907.25, while the BSE Sensex gained 2.54 per cent to 79,117.11. The rise pushed Nifty and Sensex to weekly gains of 1.6 per cent and two per cent after two weeks of losses. Sensex reclaimed 79,000, driven by an across-the-board rally and lower-level value buying.
Traders said that strong buying by domestic institutional investors and a firm trend in the US markets also supported the sentiment. Analysts noted that despite a negative bias for most of the week due to persistent foreign capital outflow, Friday’s sharp recovery, led by bargain hunting in index heavyweights, helped indices close near their highs.
In recent sessions, shares have slipped into correction territory on lacklustre corporate earnings and sustained foreign selling. The blue chips hit their lowest since early June on Thursday after the US indicted billionaire industrialist Gautam Adani and seven others on alleged bribery charges.
"Historically, downtrends often culminate in panic days, and the Adani-triggered sell-off appears to have marked such a turning point. With markets oversold for nearly two series, a short-covering rally has emerged ahead of the November expiry," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Most sectors, except energy, contributed to the rebound, with realty, auto, and FMCG leading the pack. IT and banking played a pivotal role in capping losses and driving the recovery in the benchmark. Broader indices also edged higher, with gains ranging between 0.9 per cent and 1.8 per cent.
“The market recouped the current week’s losses on Friday with a strong bounce back as investors used the bargain opportunity to accumulate beaten-down stocks. However, investors need more clarity on the trend reversal to conclude that the current bounce-back will turn into a Santa Claus rally,” said Vinod Nair, Head of Research at Geojit Financial Services.
Also Read: Gautam Adani’s net worth drops by over ₹88,726 crore in one day after US bribery indictment scandal
“Investors shrug off Adani's fears and expect state election results to bring more stability to the market. Many of the blue chips are available at below-average valuations, while meaningful corrections in mid- and small-cap indices provide an opportunity for broad-based momentum,” added Nair.
This week, the primary market will witness action as some new initial public offerings (IPO) and important listings are slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track domestic developments, global markets and macroeconomic data.
India is set to reveal the gross domestic product (GDP) data for the July-September quarter (Q2) of the current fiscal 2024-25 (FY25) on Friday, November 29. According to credit rating agency ICRA, economic growth likely moderated to 6.5 per cent in the September quarter. Other macroeconomic data, such as the fiscal deficit, infrastructure output, and purchasing managers' index (PMI) data, may also be released this week.
On the domestic front, the outcomes of the Maharashtra and Jharkhand elections will be crucial market triggers. In Maharashtra, the NDA witnessed a one-sided victory, which is likely to boost bullish sentiment further.
"Panic dominated the midweek session, but the bulls' strong Friday recovery, supported by exit poll predictions of an NDA alliance victory in the Maharashtra elections, helped stabilize sentiment," said Santosh Meena of Swastika Investmart Ltd.
The results of the Maharashtra and Jharkhand assembly elections on Saturday, November 23, which have crucial implications for state and national politics, have lifted the market sentiment. In Maharashtra, the BJP-led Mahayuti alliance is poised to form the government.
“This result is expected to provide political stability and positively impact investor sentiment, especially in the infrastructure, urban development, and manufacturing sectors aligned with BJP policies,” said Palka Arora Chopra, Director of Master Capital Services Ltd.
"The stability In Maharashtra could trigger a rally in the stock market, boosting investor confidence due to the continuity of pro-business policies, especially after uncertainty following previous coalition shifts," she added.
According to the D-Street expert, with a clear mandate, the government will likely pursue infrastructure projects, a key focus of the BJP, which would benefit the construction, real estate, and related sectors.
In Jharkhand, the JMM-led alliance’ return to power suggests continuity in social welfare policies. While this might not offer the same market enthusiasm as Maharashtra, the state’s ongoing focus on rural development, tribal welfare, and mining could provide investment opportunities in these areas.
"However, political stability in Jharkhand might not have the same immediate market impact as in Maharashtra. Overall, the political outcomes, particularly in Maharashtra, suggest a positive outlook for the Indian stock market, especially in sectors that benefit from infrastructure development and political stability," added Chopra.
In the mainboard segment, no new fresh issues are scheduled to open for subscription so far this week. The bidding for Enviro Infra Engineers IPO will close on November 26. In the SME segment, six new issues will open for subscription. NTPC Green Energy shares will debut on the BSE and NSE on November 27. Shares of two SMEs will also be listed on either the BSE SME or the NSE SME this week.
Several global triggers led to a record foreign institutional investor (FII) outflows of ₹1.55 lakh crore from Indian markets in October and November combined. Santosh Meena of Swastika Investmart Ltd says the direction of FII flows will remain a key market determinant following the recent correction.
According to Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, the relentless selling by FIIs continued till November 22. After selling equity for ₹1,13,858 crore through exchanges in October, FIIs have sold another ₹41,872 crore of equity through exchanges till November 22.
FII buying through the primary markets continued with ₹15,339-crore worth buying until November 22. “The total FII selling through the exchanges between October 1 and November 23 stands at ₹1,55,730 crore. This is the kind of selling that happens in a year when FIIs are in selling mode,” said the D-Street expert.
Three factors led to this massive selling by FIIs: the ‘Sell India, Buy China’ trade, the concerns surrounding FY25 earnings, and the ‘Trump trade.’ Of the three, the ‘Sell India, Buy China’ trade is over. The Trump trade also appears to be on its last leg since valuations have reached high levels in the US.
“Therefore, FII selling in India is likely to taper off soon. Also, valuations of large caps in India have come down from elevated levels. FIIs have been buying IT stocks, which has imparted resilience to IT stocks. Banking stocks have been resilient despite FII selling, mainly due to DII buying,” said Dr. V K Vijayakumar.
Global factors continue to pose significant risks. Escalating tensions between Russia and Ukraine, alongside rising crude oil prices, have added to inflationary concerns. Simultaneously, a strengthening dollar index and elevated US bond yields weigh the rupee, leading to record foreign capital outflows.
Interest in Chinese markets is fading, making Indian valuations more appealing post-correction. Global triggers will be critical in shaping investor sentiment, including US economic data such as PCE inflation, GDP growth rates, and FOMC meeting minutes. Commodities and geopolitical developments will also remain vital factors influencing global market trends.
Also Read: Russia-Ukraine war: Is volatility in the Indian stock market an opportunity for bottom fishing?
Oil prices climbed about one per cent in the previous session, settling at a two-week high, as the intensifying war in Ukraine this week boosted the market's geopolitical risk premium. Brent futures rose 94 cents, or 1.3 per cent, to settle at $75.17 a barrel.
US West Texas Intermediate (WTI) crude rose $1.14, or 1.6 per cent, to settle at $71.24. Both crude benchmarks were up about six per cent for the week, their highest settlements since November 7, after Moscow stepped up its Ukraine offensive after Britain and the US allowed Kyiv to strike deeper into Russia with their missiles.
Shares of several major companies will trade ex-dividend in the coming week, starting Monday, November 25, such as National Aluminium Co. Ltd , Gillette India, Godfrey Phillips India, among others. Some stocks will also trade ex-bonus this week. Check full list here
Technically, the Nifty reclaimed its 200-day exponential moving average (DEMA) and is approaching the next resistance at its 20-DEMA, near 24,020 and the 20-DMA of 24,030. A decisive move above this level could push the index further toward the 24,350-24,550 range. On the downside, 23,500 remains a strong support zone, cushioning any dips.
Ajit Mishra – SVP, Research, Religare Broking Ltd continues to favour the IT and banking sectors, which have shown resilience and contributed to the recovery. While other sectors show potential, he recommends being selective, especially in midcap and small-cap stocks, as they remain vulnerable to volatility. According to the expert, investors should focus on quality stocks within index-heavy sectors and be cautious in broader markets.
Santosh Meena of Swastika Investmart Ltd believes Nifty found strong support at 23,200, which aligns with the 61.8 per cent retracement of its previous rally from the election-day low of 21,281 to the high of 26,277. The index reclaimed its 200-DMA with a bullish harami candlestick formation, signalling a potential trend reversal.
Palka Arora Chopra of Master Capital Services Ltd believes Nifty 50 ended the week with a positive candle on the weekly chart, rebounding after eight weeks of selling. The recovery came from the 200-day EMA, closing above 24,900. "Until Nifty sustains above 24,500, the prevailing bearish trend suggests a "sell on rise" strategy for traders, focusing on resistance and support zones for positioning," said Chopra.
Bank Nifty ended the week positively, closing at weekly highs, driven by strong buying in PSU banks from lower levels. Immediate resistance is seen at 51,500, and a breakout above this could push the index toward 52,300.
"On the downside, a break below 50,800 may lead to further declines, with 50,200 as the next key support. Bank Nifty closing slightly above the 21-day EMA. Traders are advised to follow buying at lower levels this week to align with the prevailing trend, focusing on resistance and support levels," added Chopra.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
