Weekly Market Wrap: D-Street ended with healthy gains led by strong macros. What lies ahead?

Indian markets ended the last week of FY24 with healthy gains on the back of strong macro forecast. The S&P Global Ratings has raised India's Gross domestic product (GDP) growth forecast for the next financial year (FY25) to 6.8 per cent.

Also, an RBI report stated that India's current account deficit declined to $10.5 billion or 1.2% of the GDP in October-December quarter of current fiscal from $11.4 billion in the previous quarter and $16.8 billion a year back. Besides, the earnings growth in India is expected to remain strong, going forward.

These positive signals led the BSE Sensex to surge 819 points, or 1.13%, at 73,651.35 during the holiday shortened week ended on March 28, 2024. While the Nifty gained 230 points, or 1.04%, to 22,326.9.   

Sector-wise, the BSE Capital Goods index surged the most (3.8%) during the week gone by. While BSE Realty index registered a gain of 2.9% followed by BSE Power, which jumped 2.5%. On the other hand, the BSE Teck index slipped 0.6%.             

As many as 38 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 7.1%, Bajaj Finance emerged as the top gainer in the index. It was followed by Adani Ports and Special Economic Zone (4.7%), Larsen & Toubro (4.3%), Bajaj Finserv (3.5%), and NTPC (3.4%). IndusInd Bank and Grasim Industries also advanced by three percent.  On the other hand, UPL, Tata Consumer Products, and Wipro declined 3%, 2.4%, and 1.4%, respectively. 

Market Macros: Vinod Nair, Head of Research at Geojit Financial Services says, "The financial year FY24 ended on a subdued note, with substantial selling pressure till the 20th of March. Nevertheless, there has been some relief in the market in recent trading sessions as the pressure from leveraged selling has eased and buying activity has improved, albeit at lower volumes. As we move on to a new financial year, we express optimism towards sectors such as Pharma, Capital Goods, and Infra, as we see them as key growth drivers, supported by both domestic and external demand.

Nair added, that although some sectors like FMCG and IT are facing challenges due to subdued demand at present, we anticipate a turnaround, driven by expectations of a normal monsoon and increased US demand following the Fed's rate cut. However, the focus is on large caps, as the premium valuation of Midcaps could have a hiccup in the short to medium term.

“In the coming first week of April, there is a flurry of significant data releases expected, like PMI in the US and India, factory orders, and unemployment data in the US. Additionally, market participants will closely monitor signals regarding policy rates, particularly from the RBI. Moreover, attention will be on India's Q4FY24 result forecasts, which are expected to indicate a healthy performance”, Nair commented.

Nifty outlook: According to Rupak De, Senior Technical Analyst at LKP Securities, The Nifty has rallied significantly, surpassing the 22,500 mark after maintaining momentum beyond 22,100. Furthermore, there's a clear breakout in consolidation on the daily timeframe, signalling rising optimism. Nevertheless, the Nifty encountered initial resistance near its previous swing high of 22,526. “Consequently, to sustain a continued rally, it must surpass the 22,525 level decisively. On the downside, 22,200 could serve as short-term support”, De said.