Daily Morning Commentary

US Stocks Dip on Rising Yields, Strong Dollar, and Economic Slowdown

All three major U.S. stocks ended their first session of new year in negative territory, though they managed to recover somewhat from their session lows. Wall Street faced multiple headwinds: Treasury yields climbed to seven-month highs, the dollar reached its strongest level in two years, and crude oil prices advanced amid rising options volatility.

The market decline was led by technology giants Apple and Tesla, whose losses set a bearish tone for the new year. Adding to the pressure, the Atlanta Federal Reserve revised its fourth-quarter GDP estimates downward, indicating that the U.S. economy experienced further cooling in the final months of 2024.

Expectations of slower interest rate cuts and uncertainty over policies under incoming President Donald Trump also chipped away at sentiment.

The People’s Bank of China plans to cut interest rates further in 2025, as it brings monetary policy more in line with traditional policies in the U.S. and Europe. A shift in the PBOC’s policy stance comes as China grapples with sluggish economic growth, with lower interest rates and steady liquidity measures having so far provided little support to the economy.

Bulls Roar Back as Indian markets Surge nearly 2% Amid Strong Short-Covering Rally

Bulls staged a powerful comeback on Dalal Street yesterday, with the Nifty surging 445 points (1.88%) to close at 24,188 - marking its strongest single-day gain since November 22, 2024, in percentage terms.

FPIs have started covering their short positions in index futures as we expected and pending shorts gives this rally some more legs to go.

The Nifty has demonstrated remarkable strength, rallying over 750 points from its recent low of 23,460. The index's move above 24,178 has pushed it beyond its 20-day SMA, while establishing a higher top and higher bottom formation on the daily chart - signalling a potential trend reversal.

After a stellar 450 points rise – futures are signalling a 100 points fall, thought it will attempt a recovery post soft opening. The previous resistance at 23,900 now serves as support, with the next resistance anticipated around 24,400.

Daily Morning Commentary

Indian markets likely to open lower on weak global cues, though recovery possible due to short covering.

Most Asian markets are subdued in their first session of 2025. Major financial markets in the US and around the globe were closed for New Year celebrations on the 1st January.

Back home, December month’s gross GST inflows, for transactions undertaken in November, were a tad under ₹1.77 lakh crore, hitting a three-month low and reflecting 7.3% growth in comparison to the same month in 2023. Net receipts stood at ₹1,54,366 crore in December. Moderation in net collections’ growth vis-à-vis gross receipts, can be explained by a 45.3% uptick in refunds to taxpayers, which touched ₹22,490 crore. Domestic refunds were up 31% in December, and refunds to exporters were up 64.5%.

Fertilizer stocks rallied as the Union Cabinet extended a one-time package to subsidise key fertiliser DAP at the cost of up to Rs 3,850 crore and approved a one-year extension of two crop insurance schemes.

Foreigners have been net sellers for the 12th straight session – as they offloaded stocks worth Rs 1782 crore, while the DIIs bought stocks worth Rs 1690 crore.

Market has potential to recover on short covering. Short term trend turned favourable as the Nifty closed above its 5-day EMA for the first time since December 16th. FII positioning in index futures is approaching oversold region, suggesting a possibility of a short covering in the days to come. The hourly charts confirmed a bullish reversal pattern with higher tops and higher bottoms.

Nifty faces immediate resistance at 23,938, while support moves higher to 23562.

2025 Dawns: A Fresh Chapter Begins

Daily Morning Commentary

Global Wrap

2024 was a massive year for global equity gains driven by a trifecta of the AI explosion, a slew of Fed interest rate cuts and a robust U.S. economy.

The S&P 500 logged another year of double-digit gains of over 24% last year, logging its best two-year performance since 1998.

Looking ahead to 2025, financial markets are now pricing in about 50 basis points of additional interest rate cuts from the Fed, with investors eying stretched valuations and uncertainties surrounding tax and tariff policies from the administration of President-elect Donald Trump.

For the month, the S&P 500 tumbled 2.5%, its worst month since April, while the Dow shed 5.3% in December to book its largest monthly slump since Sept. 2022.

The three major U.S. stock indexes closed in negative territory on Tuesday, ending a languid, low-volume session that contrasted with the tumultuous year that preceded it.

All major financial markets around the globe are closed today.

Indian markets

Back home, currency weakness is bothering market participants - the Indian Rupee continue to weaken against the US Dollar on the final trading day of the 2024. As declining exchange rates affect everything from import costs to investment flows.

After six consecutive quarters of gains, the Nifty declined 8% in the December quarter.

Indian markets are slated to open lower on back of weak global cues. Foreign investors continue to remain sellers in cash and derivative markets and that will continue to put pressure on local indices.

The Nifty's positional trend remains sluggish as the index trades below key moving averages. The index faces immediate resistance at 23938, with support at 23450

Morning Market Comments

U.S. stocks ended sharply lower on Monday as some traders took profits before the end of the year, Wall Street closed in negative territory on Monday in light volume at the top of a holiday-shortened week in the second-to-last trading session of an eventful year in which all three indexes posted strong double-digit gains.

Global shares retreated Monday in thin trading as the year was drawing to a close without the euphoria that pushed many world markets to record highs in 2024.

China’s factory activity growth in December missed analysts’ expectations Tuesday, signaling that Beijing’s stimulus measures were not sufficient to meaningfully boost the country’s ailing economy.

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Asian shares are under pressure on the last trading day of the year on Tuesday, after weakness in the technology sector extended losses on Wall Street for a third session.

After four days of narrow move, Nifty resumed its downtrend by falling 168 points or 0.71%, on Dec 30 to close at 23644. The broader range for the Nifty has been 23500-24000 for the last 5 trading sessions and either side breakout would decide the further trend. However, the positional trend remains down as Nifty is currently placed below key moving averages.

Indian markets could open lower, despite mixed Asian markets today and in line with lower US markets on Dec 30

Morning Market Comments

U.S. stocks ended lower on Friday amid concerns around Donald Trump’s potential trade policy and the interest rate expectations next year. A selloff in the world’s largest technology companies hit stocks in the final stretch of a stellar year. A gauge of the “Magnificent Seven” sank 2%, led by losses in Tesla Inc. and Nvidia Corp.

India's current account deficit remained flat in the July–September period at $11.2 billion as increased receipts from services offset a rise in merchandise trade deficit. The CAD came in at 1.2% of the gross domestic product, as per the Reserve Bank of India data on Friday.

The U.S. goods trade deficit widened more than expected in November on a rebound in imports, clouding the picture over whether trade might add to economic growth this quarter for the first time in a year.

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Asian stocks were mostly range bound in low volumes in early trading after US equities dropped on Friday, led by losses in technology shares.

Nifty rose by 22 points or 0.10%, on Dec 27 to close at 23750. Nifty found resistance near its 200 days SMA for the third consecutive session. On the lower side, 23600 is expected to act as a support, while 23870 could act as an immediate resistance, above which Nifty could extend its pullback towards 24000.

Indian markets could open flat, in line with muted Asian markets today and despite lower US markets on Dec 27.

Morning Market Comments

U.S. stocks ended mixed Thursday, after the "Santa Claus rally" period kicked off on Tuesday. Stocks wavered in a quiet post-holiday session as mixed jobless claims data did little to alter bets on the Federal Reserve outlook.

Recurring applications for US unemployment benefits rose to the highest in more than three years, adding to signs that it is taking longer for out-of-work people to find a job. Initial claims, meanwhile, ticked down to 219,000 in the week ended Dec. 21.

China’s industrial profits extended declines to a fourth straight month, dropping 7.3% in November from a year earlier, signaling that Beijing’s stimulus measures have yet to meaningfully stem the slide in corporate earnings.

The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025, reflecting the recent policy adjustments. It now expects China’s GDP to grow 4.9% in 2024 compared with its previous projection of 4.8%, while in 2025, China’s GDP is expected to expand by 4.5%, higher than the organization’s prior forecast of 4.1%.

India will impose restrictions on the import of low-ash metallurgical coke, a key steelmaking ingredient, for six months starting January 1, 2025, a government order said on Thursday. The move aims to protect domestic producers from rising imports, which have surged by over 61% in the past four years, according to data from the federal trade ministry.

Asia-Pacific markets were mixed Friday in thin year-end trading, as some markets returned from the Boxing Day holiday and investors assessed economic data from the region.

It was yet another muted session for the index on Dec 26, as Nifty rose by 22 points or 0.10%, to close at 23750. Nifty remained in the 200 points range of 23654-23854 on the December monthly expiry day. Nifty found resistance near its 200 days SMA for the third consecutive session. Trend of the index is still on the downside as Nifty is placed below 20,50,100 and 200 days SMAs. On the lower side, 23600 is expected to act as a support, while 23870 could act as an immediate resistance, above which Nifty could extend its pullback towards 24000.

Morning Market Comments

U.S. stocks finished higher on Tuesday to kick off the so-called Santa Claus rally period in a holiday-shortened session for Christmas Eve. Wall Street's main indexes all closed higher on Tuesday, with gains in megacap and growth stocks bolstering benchmarks in a truncated Christmas Eve session.

U.S. Treasury interest rates remained elevated - the benchmark 10-year note yielded around 4.61% on Tuesday, its highest level since May.

India's growth trajectory is expected to pick up in the second half of 2024-25, driven by domestic private consumption and a sustained revival of rural demand, the central bank said in its monthly bulletin released on Tuesday.

Reuters reported that Beijing planned to issue a record amount of special treasury bonds next year as it ramps up fiscal stimulus to revive a faltering economy.

World stocks looked set to end the year on a high with a second consecutive annual gain of more than 17%, unfazed by escalating geopolitical tensions and various economic and political headwinds globally. That is mostly thanks to a second year of huge gains for shares on Wall Street as artificial intelligence fever and robust economic growth sucked more global capital into U.S. assets.

Stock prices in the Tokyo and Shanghai markets – the only markets open on Christmas – saw a slight dip on Wednesday as markets across the world remained closed for the holiday.

Asia shares rose slightly in holiday-thinned trade on Thursday, extending gains from earlier in the week with little news or data in the way to alter their direction of travel, while the dollar was perched near a two-year high.

Nifty fell marginally by 26 points or 0.11%, to close at 23727 on Dec 24. Nifty attempted to surpass previous session’s high of 23869 but failed to do so. Index found resistance at its 5 DEMA and turned southward. immediate resistance is seen at 23870. Support for the Index is seen at 23537.

U.S. stocks ended higher on Monday, with tech stocks leading the gains, boosting investors' hopes for a year-end "Santa Claus rally." A rally in some of the world’s largest technology companies prompted a rebound in stocks, following a brief slide fueled by weaker-than-expected data on US consumer confidence.

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Stocks in Asia saw muted gains amid relatively thin holiday trading after a rally in some of the world’s largest technology companies boosted US benchmarks. Sentiment has soured in Asia in recent months due to concerns over higher global tariffs threatened by US President-elect Donald Trump, a stronger dollar and China’s lackluster economic recovery.

Nifty broke five session’s losing streak on the back of strong global cues on Dec 23 by rising 166 points or 0.70%, to close at 23753. Combination of Friday’s fall with Monday’s pullback resulted in a bullish candlestick pattern on the Nifty daily chart. Nifty moving above 23870 could extend the pullback towards the next resistance of 24065. On the lower side 23500 seems to have become a strong base in the near term.

Immediate support lies around 23,500, where significant put writing has been observed. A close below this level could trigger further unwinding or short build-up, potentially dragging the Nifty toward the 23,200–23,300 range. Overall, the Nifty remains in a consolidation range between 23,200 and 24,000, with a breakout on either side likely to determine the next clear trend.

Morning Market Comments

U.S. stocks finished lower on Tuesday, with the Dow Jones Industrial Average posting its longest losing streak since February 1978 (falling nine straight days), as investors digested the strong retail-sales data and awaited the Federal Reserve's policy decision, due out on Wednesday afternoon.

ITC Ltd has fixed January 1, 2025 as the effective date for demerger of its hotel business.

Gulf Oil Lubricants and Piaggio India, a 100% subsidiary of the Italian auto giant Piaggio Group, announced the renewal of their strategic partnership agreement for two-wheeler lubricants

Sonata Software has launched IntellQA, a Harmoni.AI powered Testing automation and acceleration platform for global enterprises.

While the US Fed is widely expected to cut interest rates by another 25 basis points later Wednesday, the focus is on its outlook for next year given Donald Trump’s proposed policies that may rekindle inflation.

Asian shares turned mostly higher, shrugging off Wall Street’s modest declines as traders braced for the Federal Reserve’s final policy decision of the year.

Nifty registered a sharp cut of 332 points or 1.35%, to close at 24336 on Dec 17. This fall has resulted in a violation of all short term supports all at once. An upward sloping trend line adjoining the lows of 21st Nov and 13th Dec 2024, projects the support near 24300. Any level below 24300 would confirm the bearish trend reversal for the short term, which could drag the Nifty towards an immediate support of 24180. Resistance for the index has shifted down to 24500.

Indian markets could open flat to mildly lower, despite mostly higher Asian markets today and in line with negative US markets on Dec 17