Indian Market Faces Volatility Amid IPO Activities and Global Trends
Indian Market Faces Volatility Amid IPO Activities and Global Trends
The Indian market is closely watching foreign institutional investment (FII) trends, global market performance, and domestic IPO activities for direction, according to market analysts. The 55th GST Council meeting decisions are also expected to impact market trends, particularly in sectors like insurance, auto, luxury goods, and food deliveries.
Market Insights
Ajit Mishra, SVP of Research at Religare Broking Ltd, noted that the upcoming week is shortened due to holidays, and participants will monitor FII flow trends and global market performance. The expiry of December's derivative contracts may increase volatility.
Manish Goel, Founder and MD of Equentis Wealth Advisory Services Limited, highlighted the busy IPO market next week, with several companies going public. While this may create short-term momentum, underperforming IPOs could lead to volatility. The surge in listings might divert investor capital from key stocks, affecting liquidity and market sentiment.
Current Market Challenges
The US Fed's decision to reduce interest rates by 25 bps, with a slower pace of further cuts, could limit foreign investor enthusiasm. The market lost nearly 5% this week, erasing gains from the past four weeks. Nifty and Sensex benchmarks closed near the week's lows at 23,857.5 and 78,041.59, respectively.
Foreign portfolio investors (FPIs) turned net sellers, with a net negative investment of Rs 977 crore. The widened trade deficit for November, at USD 37.84 billion, has dampened domestic sentiment. All key sectors except pharma ended lower, with metals, energy, and banking hit hardest.
Sectoral Performance
Pharma and healthcare sectors remain resilient, while IT is nearing a critical support zone. Energy is in an oversold territory, potentially triggering a short-term bounce. The banking index has significant support at the long-term moving average around 50,400 and further at the November low of 49,787.10. Auto, PSE, and metal sectors may continue to underperform in the near term. Traders are advised to focus on risk management.
Doubts Revealed
Volatility
Volatility means that the market prices are going up and down a lot, making it unpredictable. It's like a roller coaster ride for investors.
IPO
IPO stands for Initial Public Offering. It's when a company sells its shares to the public for the first time to raise money.
Foreign Institutional Investment
This refers to investments made by foreign entities like companies or individuals in another country's market. They can influence the market by buying or selling large amounts of stocks.
GST Council
The GST Council is a group in India that makes decisions about the Goods and Services Tax, which is a tax on goods and services sold in the country.
US Fed
The US Fed, or Federal Reserve, is the central bank of the United States. It controls the money supply and interest rates to help the economy.
Nifty and Sensex
Nifty and Sensex are stock market indices in India. They show how well the stock market is doing by tracking the performance of selected companies.
Sectors
Sectors are different parts of the economy, like pharma (medicine), metals, energy, and banking. Each sector can perform differently in the market.
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