Good, Bad & Ugly Weekly Review : 20 Dec 2024

Markets Overview

The year-end is not looking encouraging. The market has given up almost all the gains from October and November and currently appears bleak. On the hourly chart, we can see that this week has been a straight downward move.

Starting at around 24,800 at the beginning of the week, Nifty has now slipped to around 23,600. That’s a drop of roughly 1,200 points, or about 4.77%, and the 200 DMA has been breached once again. The market seems oversold, but it’s uncertain whether it will find support at this level or decline further.

On the weekly chart, there’s still some hope since the previous support hasn’t been broken yet. Chartists are watching the June election day high—similar to November’s support—as a potential bounce zone. If the index manages to hold above that level, it could avert a deeper correction.

S&P 500 Overview

Global markets aren’t faring well either. The US market dropped 2.4% this week despite the Fed cutting rates by a quarter-percent and projecting two rate cuts for 2025. The market had expected four cuts, so this discrepancy, combined with lingering inflation concerns, appears to be triggering a global knee-jerk reaction.

GOLD Overview

Gold also slipped by half a percent this week. It has been relatively less affected because the USD/INR exchange rate has weakened to about 85 rupees per dollar, providing some support to gold prices in rupee terms.

Dollar Index Overview

The main culprit for outflows from emerging markets and precious metals is the surging Dollar Index, which stands at around 108—a two- to two-and-a-half-year high. Although the new US president has expressed a desire for a weaker dollar, currencies worldwide are already declining against the dollar before he officially takes office. This could lead to currency battles as the US tries to reduce its fiscal deficit and government expenditure.

Benchmark Indices Overview

Looking at benchmark indices this week, the Nifty Next 50 was hit the hardest at -5.84%. The Nifty fell 4.7%, the Nifty 500 was down 4.4%, and midcaps lost 3.2%. Small caps, however, remained virtually flat, which is a saving grace. Over the past month, small caps have actually risen 9.5%, midcaps 3.9%, and other indices have been mostly flat. On a one-year basis, Nifty is still up 11.5%, the Nifty 500 up 18.9%, midcaps up 29%, small caps 34%, and the Nifty Next 50 at 35%, painting a healthy long-term picture despite the current volatility.

Sectoral Overview

In terms of Nifty sectors, the biggest losers this week were public sector enterprise, central public sector enterprise, metals, PSU banks, commodities, and energy—each down 6% to 7%. Energy stocks, infrastructure, banks, and financial services also saw declines. The only gainer was pharma, up 1.6%. FMCG and real estate faced relatively smaller hits. Over the past month, real estate, IT, pharma, services, PSU banks, and infrastructure have been spared from extreme losses, while energy, auto, central PSEs, media, and commodities have borne the brunt. Over the past year, only the media sector has posted a negative return; all other sectors are in positive territory, although private banks have been notably weak with just 0.5% gains.

Looking at sectoral momentum, pharma, IT, and real estate have dominated the scoreboards throughout the year. These sectors currently display the strongest momentum, making them potential areas of focus for investors seeking to ride prevailing trends.

Rebalance Update for the week !

Note : A special mid period rebalance is being pushed on Mi Evergreen with One stock exit and one stock addition