Holiday haze and expiry jitters keep market in check: The Indian stock market ended a volatile session on a flat note, essentially treading water on December 26th. With the year-end holiday season in full swing, trading volumes were thin, and a lack of major market-moving news kept investors on the sidelines. Adding to the cautious mood was the looming monthly futures and options (F&O) expiry. Despite a late recovery in realty and metal stocks, the benchmark indices, Sensex and Nifty, ultimately failed to find any real direction.
Sensex and Nifty: A tale of two flatlines: The Sensex, after a day of see-sawing, closed almost exactly where it started, down a negligible 0.39 points (0.00 percent) at 78,472.48. The Nifty fared slightly better, managing a modest gain of 22.55 points (0.10 percent) to finish at 23,750.20. Market analysts are predicting this sideways movement to continue for the rest of the year, given the absence of any significant triggers, either positive or negative. The upcoming third-quarter earnings season and the Union Budget are being viewed as the next potential catalysts that could dictate the market's trajectory. Adding to the subdued sentiment were persistent selling by foreign institutional investors (FIIs), rising bond yields, and a strengthening US dollar index.
Sectoral Swings: Autos Shine, FMCG Falters
Among the sectoral indices, PSU Bank and private bank indices managed to recover from early losses and ended slightly in the green. Auto stocks continued their upward trend for the second consecutive day, with Maruti Suzuki, M&M, and Tata Motors leading the pack. M&M and Maruti Suzuki particularly benefited from Motilal Oswal's endorsement, being picked as the brokerage's top bets in the sector. The Nifty Metal and Realty indices, after spending most of the day in the red, staged a late recovery to close with gains. On the flip side, the Nifty FMCG and Media indices fell up to 0.4 percent, dragged down by losses in heavyweights like HUL, ITC, and Tata Consumer Products.
Broader Market: Midcaps Outperform, Smallcaps Stagnate: The broader market presented a mixed picture. While the midcap index managed a gain of 0.12 percent, the smallcap index ended flat. Experts suggest that action in the broader market is currently very stock-specific, advising investors to be cautious and focus on companies with strong earnings visibility and attractive valuations. Notably, both the midcap 100 and smallcap 100 indices have only fallen around 5 percent in the last three months, while the Nifty has dropped nearly 10 percent.
Stock Specific Action Shares of Godfrey Phillips surged almost 7 percent, recovering from a week-long decline. This jump followed the company's announcement of appointing former ITC veteran Siddharth Chawla as its new Chief Operating Officer (COO), effective January 7, 2025. EPACK Durable's stock climbed 5 percent after the company clarified that discussions regarding a potential investment from a Chinese television manufacturer in its subsidiary were still in the preliminary stages. Conversely, shares of NTPC Green Energy tumbled over 4 percent as the one-month lock-in period for anchor investors expired, making a significant chunk of shares eligible for trading.
Top Gainers and Losers on the Nifty:
- Gainers: Adani Ports, M&M, Maruti Suzuki, SBI Life Insurance, Shriram Finance
- Losers: Asian Paints, JSW Steel, Nestle, Titan Company, Grasim
Expert's Take: "Upside momentum continues to be missing. Hence, even though 23,700 remained intact on Tuesday despite several downswings, the bias is swiftly shifting lower. We would require an early push above 23,760 to negate all that and get back on to the 24,165 trajectory right away," says Anand James of Geojit Financial Services. "Downside markers will continue to remain at 23,600, with 23,900 seen as the immediate upside challenge, given the low momentum," he added.
A Market in waiting mode: The lackluster performance of the Indian stock market on December 26th reflects a broader trend of consolidation as investors await fresh cues. With the holiday season dampening trading activity and major triggers like the Q3 earnings and Union Budget still on the horizon, the market is essentially in a holding pattern. The rise in India VIX suggests underlying anxiety, while the mixed performance of the broader market highlights the importance of selective stock picking. The coming weeks will be crucial in determining whether the market can break out of this sideways trend and establish a clear direction. Investors will be closely watching corporate earnings, government policy announcements, and global economic indicators for any signs of a shift in momentum. This period of consolidation, while seemingly uneventful, is a critical juncture that could set the stage for the market's trajectory in the new year. The current market behavior underscores the importance of patience and a well-informed investment strategy in navigating periods of uncertainty.
