Market Commentary     10-Jan-25
The Week That Was
Barometers snap 2-week gains; Nifty ends below 23,450; Rupee hits record low twice in a week
Domestic equity benchmarks posted significant losses this week, largely due to weak economic data. Concerns over India’s foreign exchange performance and GDP growth projections pointing to a four-year low further weighed on market sentiment. Meanwhile, rising consumer price inflation in China and annual inflation in the Euro area added to global market jitters. The Indian rupee hit its lowest point twice, while the Japanese yen also weakened against the US dollar. Broader market indices declined sharply, with geopolitical instability exacerbating overall market volatility.

In the week ended on Friday, 10 January 2025, the S&P BSE Sensex slumped 1,844.20 points or 2.33% to settle at 77,378.91. The Nifty 50 index tumbled 573.25 points or 2.39% to settle at 23,431.50. The BSE Mid-Cap index dropped 5.74% to close at 44240.89. The BSE Small-Cap index plummeted 6.04% to end at 52,722.34.

Weekly Index Movement:

The headline equity benchmarks witnessed a sharp decline on Monday. The S&P BSE Sensex plunged 1,258.12 points or 1.59% to 77,964.99. The Nifty 50 index tumbled 388.70 points or 1.62% to 23,616.05.

The domestic equity indices staged a rebound on Tuesday, ending with modest gains after two consecutive days of declines. The S&P BSE Sensex gained 234.12 points or 0.30% to 78,199.11. The Nifty 50 index added 91.85 points or 0.39% to 23,707.90.

The key equity benchmarks concluded Wednesday's trading session with minor losses. The S&P BSE Sensex shed 50.62 points or 0.06% to 78,148.49. The Nifty 50 index lost 18.95 points or 0.08% to 23,688.95.

The domestic equity benchmarks declined on Thursday, mirroring a cautious mood in the market as investors held their breath ahead of TCS' quarterly results. The S&P BSE Sensex dropped 528.28 points or 0.68% to 77,620.21. The Nifty 50 index tumbled 162.45 points or 0.69% to 23,526.50.

The frontline indices ended with limited losses on Friday due to foreign institutional investor (FII) selling and ongoing global uncertainty. The S&P BSE Sensex declined 241.30 points or 0.31% to 77,378.91. The Nifty 50 index fell 95 points or 0.40% to 23,431.50.

Economy:

The HSBC India Services PMI surged from 58.4 in November to 59.3 in December, marking the most robust expansion in four months.

Concurrently, the HSBC India Composite Output Index, which reflects combined manufacturing and services activity, also strengthened, climbing from 58.6 in November to 59.2 in December, signifying the strongest growth in four months.

Meanwhile, India’s foreign exchange (forex) reserves declined by $4.112 billion to an eight-month low of $640.279 billion during the week ended December 27, according to the latest RBI data.

Meanwhile, India's GDP growth is projected to slow down to a four-year low of 6.4% in the current fiscal year (2024-25), according to the first advance estimates released by the National Statistics Office. This lower-than-expected growth is attributed to weak industrial and investment activity. The estimate falls short of both the Reserve Bank of India's forecast (6.6%) and the government's projection (6.5-7%). While growth is expected to improve in the second half of the year, the initial slowdown is likely to impact the overall growth figure. These estimates are released early to assist the government in formulating the upcoming Union Budget.

Stocks in Spotlight:

Tata Consultancy Services (TCS) jumped 4.05%. The IT major reported a 12% year-on-year rise in consolidated net profit for the December quarter, reaching Rs 12,380 crore. Its revenue for the quarter stood at Rs 63,973 crore, marking a 5.6% YoY increase (4.5% in constant currency). The operating margin was 24.5%, reflecting a YoY decline of 50 basis points but a sequential improvement of 40 basis points. The net margin for the quarter was 19.4%.

Meanwhile, the company announced a total dividend of Rs 76 per share, including a special dividend of Rs 66 per share. The record date for the dividend is January 17, 2025, and the payment date is February 3, 2025.

Tata Elxsi dropped 9.69%. The design-led technology service provider reported a 3.59% decline in net profit to Rs 199 crore on 2.72% increase in revenue from operations to Rs 939.17 crore in Q3 FY25 over Q3 FY24. On a quarter-on-quarter basis, the company's net profit and revenue were lower by 13.26% and 1.66%, respectively.

Tata Motors declined 2.01%. The company said that its global wholesales in Q3 FY25, including Jaguar Land Rover, were at 3,41,791 units, higher by 1% as compared to Q3 FY24.

Meanwhile, the company said that its wholly owned subsidiary, Jaguar Land Rover (UK), reported a 3% increase in wholesale volumes to 104,427 units in Q3 FY25 as compared with 101,043 units in Q3 FY24.

HDFC Bank fell 5.26%. The bank’s average deposits stood at Rs 24,52,700 crore as of 31st December 2024, registering the growth of around 15.9% as compared with Rs 21,17,100 crore as of 31st December 2023.

JSW Steel lost 1.67%. The company recorded its highest ever consolidated crude steel production for the Q3 FY25 was at 7.03 million tonnes, which is higher by 2% as compared with 6.87 million tonnes reported in Q3 FY24.

Bank of Baroda tumbled 6.45%. The bank said that its domestic deposits increased 9.23% to Rs 11,65,874 crore as on 31st December 2024 as compared with Rs 10,67,371 crore as on 31st December 2023.

Marico added 1.70%. The company said that the rising trend in input costs is expected to result in a higher-than-anticipated gross margin contraction on a year-on-year basis.

Mahindra & Mahindra declined 2.98%. The company said that its total production rose 19.93% to 53,361 units in the month of December 2024 as compared with 44,495 units produced in the same period last year.

Biocon slipped 2.38%. The foreign brokerage firm upgrades the stock’s rating from "Underperform" to "Hold" and raises its target price to Rs 400 from the previous Rs 280.

Larsen & Toubro (L&T) fell 3.43%. The company announced that its heavy engineering arm had secured multiple orders in Q3 of FY25, both in overseas and domestic markets.

Tata Steel slumped 7.88%. The company informed that its India crude steel production stood at 5.68 million tons (MT) in Q3 FY25, up 6% as compared with 5.35 MT in Q3 FY24.

Global Markets:

China's services sector expanded in December at the fastest pace in seven months, driven by robust domestic demand. The Caixin services PMI surged to 52.2, exceeding both market expectations of 51.4 and the November reading of 51.5.

Meanwhile, China’s consumer price inflation in December slipped to 0.1% year on year from 0.2% in November, data from the National Bureau of Statistics showed.

The Euro area annual inflation came at 2.4% in December 2024, up from 2.2% in November 2024.

Job openings, a measure of labor demand, rose 259,000 to 8.098 million by the last day of November, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report.

Meanwhile, U.S. services sector PMI increases to 54.1 in December from 52.1 in November.

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