In the week gone by, our markets witnessed some profit booking during mid-week where the broader market corrected sharply alongwith the benchmark index, but we witnessed a pull back move from the lows to the end the week above 19000.

At the current juncture, both Nifty and Sensex are in uncharted territory. Both have recently touched their all time highs and that means two things. Firstly, short covering will continue till the remaining shorts in the market are squeezed out. Secondly, there will be the fear of missing out (FOMO), which will push many retail investors into equity markets.

This being the last week of the year, the FPI flows could be relatively tepid. Most of the institutions are taking their yearly off and so the activity in the markets would be quite limited at this point of time. Secondly, volumes normally tend to be lower in the last week of the year and that generally makes investors wary of participating in the market.

If we look back at the market movement in the last few weeks, there are two factors that have fundamentally been game changers for the Nifty and the Sensex, in terms of underlining the intensity of the rally. The first factor was the India GDP growth. At 7.6% for Q2, the GDP growth came in nearly 60 bps better than expected. This comes on top of the 7.8% growth in the first quarter. The net impact was that the RBI in its December MPC policy statement hiked the growth estimates for FY24 by a full 50 bps to 7.0%. That was one of the first big factors to trigger a rally in Indian stocks. Of course, subdued inflation in the US and in India also helped sentiments, but it was all about the growth push.

The second big factor that proved a game changer for the markets was the US Fed turning dovish. The US Fed, which had been only talking about rate hikes since early 2022, has now guided that it will cut rates thrice in 2024 and four times in 2025. However, CME Fed watch went aggressively ahead and indicated in 7 rate cuts of 175 bps in the year 2024 itself.

• India records 45% CAGR growth in digital payment transactions volume from FY18 to FY 23.

• According to IMF, India is expected to  contribute over 16% in global growth.

• Blackstone's sells 23.5% stake in Embassy REIT for Rs. 7100 Crs

• India tops global  remittance  flows  at $123 billion in 2023.

• In Nov, the retail inflation hits 7.37% for Farm Workers, 7.13% for Rural workers.

Best Regards,

Alpha Research Team