Markets Hold Momentum: Key Drivers to Watch as 2025 Gains Steam
The Indian stock market extended its winning streak for the second consecutive week, closing on January 3 with a nearly 1% gain in key indices. However, profit-booking by participants, fueled by factors such as a strong US dollar, high valuations, persistent FII outflows, a weakening rupee, and rising oil prices, capped the rally.
Despite the headwinds, robust buying in sectors like auto, FMCG, pharmaceuticals, and oil & gas, coupled with steady inflows from domestic institutional investors (DIIs), lent crucial support to the market.
Key Events Shaping the Week Ahead
1. Earnings Season Kickoff
The December quarter earnings season is set to commence with Tata Consultancy Services (TCS) announcing its results on January 9, followed by Avenue Supermarts on January 11. Market participants will closely watch for sequential growth indicators, especially after a subdued September quarter. Other companies, including Tata Elxsi, PCBL, and GM Breweries, are also scheduled to release earnings this week, potentially driving stock-specific movements.
2. US Fed Minutes and Economic Data
The minutes from the December FOMC meeting will be under the spotlight as the Federal Reserve signals a cautious approach to rate cuts in 2025. With inflation and Trump-era policy announcements influencing the outlook, market watchers will also track key U.S. economic indicators, including employment data and factory orders, for cues on the interest rate trajectory.
3. IPO Market Buzz
The IPO market is off to a promising start in 2025, with seven new issues lined up for next week and six listings from recently concluded offerings. Over 100 companies have submitted draft proposals to SEBI, signaling robust activity ahead.
4. Global Cues and Oil Prices
Global investors will monitor PMI data, inflation rates, and retail sales figures from major economies, including China and the Eurozone. Meanwhile, Brent Crude prices surged to $76.51 per barrel, driven by optimism around China’s economic stimulus plans and potential U.S. rate cuts.
5. FII Trends
Foreign institutional investors (FIIs) began the year with net equity outflows of ₹4,285 crore in the first three trading sessions, largely due to a strong dollar and attractive U.S. bond yields. However, analysts highlight that FIIs remain active buyers in primary markets despite the selling pressure in cash markets.
Technical Overview
The Nifty formed a bullish high wave candle on the weekly chart, signaling a potential continuation of the uptrend. A breakout above 24,226 could see the index testing 24,400–24,500 levels, while immediate support lies at 23,930–23,840. Open interest data indicates strong resistance at the 24,200 call strike and support at the 24,000 put strike.
Corporate Developments
The record date for ITC’s demerger with its hotel business is set for January 6, while Kamdhenu’s stock split and Camlin Fine Sciences’ rights issue will go ex-date on January 8.
Outlook for the Week Ahead
Market sentiment remains optimistic as investors gear up for the December quarter earnings, U.S. economic data, and the Fed’s rate guidance. While volatility may persist, the overall trend points to continued resilience in the markets.
