Stock Market 2024 Outlook: 10 Crucial Factors to Monitor Including PMI figures, FOMC minutes, and Auto Sales
After a small loss the week before, the stock market bounced back and hit a new all-time high in the final week of 2023. Positive global cues, fresh purchases by foreign institutional investors, a reduction in the disruption caused by the Red Sea, and growing expectations of rate cuts by the US Federal Reserve—which lowered inflation—were the causes of this. The rally was also further fueled by expectations of political stability in 2024.
However, given the recent sharp upswing, the market may undergo some consolidation in the first week of 2024. The focus will be on global manufacturing and services PMI data, FOMC minutes, US unemployment data, and monthly auto sales, but the overall Stock Market 2024 outlook is still positive.
Looking ahead to the stock market 2024 outlook, the positive trajectory appears to persist, albeit with a watchful eye on potential market consolidation and key economic indicators.
The week ended December 29 saw a jump in the Nifty 50 of 382 points, or 1.8 percent, to 21,731, and a rally in the BSE Sensex of 1,133 points, or 1.6 percent, to 72,240, bringing the total gains for the year to 20 and 19 percent, respectively. Meanwhile, the broader markets saw gains of 2.4 percent and 2 percent during the week and 47 percent and 55 percent during the year for the Nifty Midcap and Smallcap 100 indices, respectively.
With the exception of technology, all of the indices closed in the green, signifying a strong inflow of foreign institutional investments, robust macroeconomic conditions, and encouraging global cues that propelled the market upward. The head of retail research at Motilal Oswal Financial Services, Siddhartha Khemka, believes that the upcoming week will be exciting due to a number of global economic data releases. In the near future, he believes the market will maintain its current positive momentum.
This sentiment is echoed by Vnod Nair, head of research at Geojit Financial Services, who believes that rate cuts and falling bond yields will sustain the euphoria come January 1. On the primary market, he anticipates a meager return of 10 to 12 percent.
Here are 10 key factors to watch for Stock Market 2024 Outlook
Auto Sales
Domestic Economic Data
Furthermore, on January 3 and January 5, respectively, the S&P Global Manufacturing and Services PMI data for December will be released. Most experts anticipate these numbers to be slightly below the levels observed in November, at 56 and 56.9, respectively.
Additionally, on January 5, the foreign exchange reserves for the week ending December 29 will be made public.
FOMC Minutes
The FOMC minutes of the December 2023 Federal Reserve meeting will be the focus of attention on a global scale. Market players will be on the lookout for indications of impending rate reductions in 2024.
The US Federal Reserve hinted at three rate cuts (totaling 75 basis points) in 2024 in light of the declining inflation during the December meeting, but kept the fed funds rate unchanged at 5.25–5.50 percent for three meetings in a row. Compared to earlier projections of 2.1 percent, economic growth is expected to be higher in 2023 at 2.6 percent, but lower in 2024 at 1.4 percent compared to earlier estimates of 1.5 percent.
Global Economic Data
Oil Prices
The oil prices, which dropped precipitously in November and stayed stable in December, will also be watched by the market players. Based on weekly charts, it appears that oil prices have temporarily formed a bottom during December, having recovered from levels around $72 per barrel and staying slightly below the 200-week EMA (exponential moving average). Furthermore, the price of a barrel has frequently tested the range of $70-72 in recent months of the year, but it has not broken the same.
For oil-importing nations like India, the price of a barrel has stabilized below $80, which is a huge plus. As a result, it has significantly supported the equities markets by easing fiscal pressure.
The global oil benchmark, Brent crude futures, fell 2.2% over the last week to close at $77.04 per barrel. After a sharp increase in the previous two years, prices fell 10.3 percent for the year.
“Given the recent increase in supplies from non-OPEC countries and the fact that US production is almost at an all-time high of 13.3 million barrels per day, we expect oil prices to decline.
The benchmarks have dropped by almost 20% from their highest point this year, as production cuts by OPEC+ have not been able to keep prices high,” said Mohammed Imran, research analyst at Sharekhan by BNP Paribas.
FII Flow
While domestic institutional investors purchased shares worth Rs 12,900 crore in December, foreign institutional investors increased their buying interest dramatically to nearly Rs 32,000 crore, the largest monthly buying since February 2021.
They both contributed to the market setting new records and posting gains of 8% for the month. The spike in FII inflow was brought on by the US 10-year bond yield falling to 3.8 percent from 4.9 percent in the previous two months due to growing expectations of a fed funds rate cut in 2024.
However, in 2023, FIIs were net sellers for a total of Rs 13,200 crore, significantly underperforming DIIs who purchased shares in the cash segment for Rs 1,68,988 crore. The majority of experts now predict a significant increase in flow from both the desk (FIIs and DIIs) in 2024.
According to Dr. V K Vijayakumar, chief investment strategist at Geojit Financial Services, “FPIs are likely to increase their purchases in 2024 too, particularly in the early months of 2024 in the run up to the General elections.” This is because further declines in US interest rates are anticipated in 2024.
IPO
The upcoming week is expected to be quiet for the mainboard segment in the primary market. There won’t be any new initial public offerings (IPOs) in the SME sector, but seven businesses will debut on the bourses.
January 1 will see the equity share listing for Sameera Agro and Infra, January 2 for AIK Pipes & Polymers, and January 3 for Akanksha Power & Infrastructure, HRH Next Services, Manoj Ceramic, and Shri Balaji Valve Components.
Additionally, the IPO for Kay Cee Energy & Infra will close on January 2 and the equity shares will go on sale on January 5. On the other hand, the IPO for Kaushalya Logistics will close on January 3.
Technical View on Stock Market 2024 Outlook
After a week of correction, the Nifty 50 recovered nicely and showed a bullish weekly candlestick pattern. Additionally, the index reached a new high of 21,800 during the week, albeit Friday saw some profit-taking. The relative strength index (RSI) and moving average convergence divergence (MACD), two momentum indicators, continued to show a positive bias.
Higher highs and lower lows were formed for five weeks in a row, and higher lows were formed for the ninth consecutive week.
Technically speaking, considering the recent smart rally, the market might prefer to consolidate for a few more days. However, following this consolidation, experts predict that the index will surpass the 21,800–22,000 zone in the upcoming weeks, with the vital 21,600–21,300 area serving as support.
According to Rajesh Bhosale, a technical analyst at Angel One, “Immediate support is observed around 21,600, followed by 21,500, while strong support lies around the week’s low around the 21,300 mark.”
He believes that even though prices are in unfamiliar territory and there isn’t any obvious resistance in sight, 21,850 and 22,000 provide an immediate obstacle given the overbought circumstances. He suggested that traders keep an eye on these levels and modify their tactics as necessary.
F&O Cues & India VIX
Options data revealed that the Nifty 50 is anticipated to encounter resistance at 21,800–22,000 levels in the near term and may potentially aim for the 22,500–23,000 zone in the short–to–medium term, with a support zone of 21,700–21,500 in the near term and then 21,000 as crucial support, given the strong optimism in the market.
According to the January series’ first weekly options data, the highest call open interest was observed at 22,000 strikes, with meaningful call writing at 23,000 strikes, followed by 22,500, 21,800, and 23,000 strikes.
On the put side, the 21,500 strike had the largest open interest, followed by the 21,000 and 21,700 strikes. At the 21,500 strike, followed by the 21,700 strike, and the 21,200 strike, the writing was noticed.
With the exception of one week, the volatility has been steadily rising every week since the market began to rise in November. This implies that investors are unduly optimistic about the Nifty 50. As a result, experts believe that caution is warranted at these levels and that profit booking is not completely ruled out in the near to short term.
It is worth noting that the fear index, India VIX, climbed 5.8 percent during the last week to 14.50 levels. Since November, it has jumped 33 percent.
Corporate Action
Here are key corporate actions taking place in the coming week:
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