Market Outlook for Dec 2023 by Rakesh Pujara

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Global Market Scenario as on 28th Nov’23:

US markets have started their journey upwards and are 3 to 5% away from their all-time highs, and are showing positive momentum. Federal Reserve paused hiking interest rates and are cautiously optimistic about the economy. Fed Rates are at 5-5.25%. Inflation is also around 3.2%, which is comforting and probably the reason why the Fed has paused hikes. Interest rates are back to 2007 levels. Liquidity conditions are tight and all leading indicators like Copper Prices, Crude Prices are beginning to show signs of revival and might trend upwards suggesting a further revival in the economy. There are some layoffs happening in the services sector which is a cause of concern.

Dollar Index (DXY) has retraced to 103.70 level after hitting 107 on the upside. That establishes a range between 100-107 with current price being right in the middle. Any fall below 100 might trigger a sustainable rally in emerging markets. Any rise above 107 level might see all round selling in risk assets. Gold after hitting all time high at around USD 2067 retraced a bit and currently hovering around USD 1950 levels. Now it is back to USD 2000 levels. All timeframes are indicating bullish momentum in Gold and it might soon touch 2500 levels. Silver is showing better momentum in comparison to Gold and might outperform it in the recent future.

So things are very moderately positive so far as international markets are concerned.

Outlook on the Indian Stock Market:

Coming back to Indian Markets, Nifty 50 is trading at 19794.70 and India VIX at around 11.3 is suggesting a benign environment. Nifty 50 Daily, Weekly, Monthly charts are suggesting positive trend. Momentum on daily, weekly and monthly charts are in bullish range and therefore Nifty may further move up in the times to come. The ultimate target of Nifty is in the range of 21000-22500 in the next 12- 18 months, suggesting 10-15% rise from the current levels on earnings front 12 months trailing EPS is Rs 936 and projected EPS of around Rs 1139 in FY 2024-25 is pointing towards 21800 levels presuming PE levels of 22, suggesting a pre-election rally. The rise may be straight up or after a decent retracement from the current level depending on various events that may play out in the coming quarters. On retracement the Nifty should not break 18800 levels on the downside or else all the hypothesis will be revisited.

Sectors & Stocks in Positive Momentum:

On further analyzing the sectors of NSE, we found the following sectors to be strong. Also, the stocks showing relative strength to their respective benchmarks are mentioned below.

Nifty Auto: TVS Motors, Bajaj Auto, Hero Moto Corp
Nifty CPSE: NLC India, SJVN, Cochin Shipyard
Nifty Infra: Bharti Airtel, HPCL, BPCL
Nifty Realty: Phoenix, Shobha, Prestige, DLF
Nifty Consumption: VBL, Trent, Colpal
Nifty Pharma and Healthcare: Alkem, Gland Pharma, Granules, Lupin

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Aditya Manekar

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