Markets edge lower as tech stocks, global cues weigh; Adani Group firms buck trend

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Markets started the last trading week of 2024 on a subdued note, with the benchmark indices declining in early trade amid weakness in technology stocks and mixed global cues. The Sensex opened slightly lower at 78,637.58 from its previous close of 78,699.07 and has declined to 78,432.81 as of 9.46 AM, losing 266.26 points or 0.34 per cent. Similarly, the Nifty opened at 23,796.90 compared to its previous close of 23,813.40 and is currently trading at 23,739.00, down by 74.40 points or 0.31 per cent.

The technology sector led the losses, with major IT firms facing selling pressure. Infosys dropped 1.46 per cent, followed by Wipro (-1.20 per cent), HCLTech (-1.08 per cent), and Tech Mahindra (-0.96 per cent). Retail major Trent also declined 1.18 per cent.

However, Adani Group stocks showed strength, with Adani Enterprises surging 2.82 per cent and Adani Ports gaining 1.80 per cent. Other gainers included Shriram Finance (0.56 per cent), Apollo Hospitals (0.47 per cent), and UltraTech Cement (0.44 per cent).

“The biggest concern for stock markets, globally, is uncertainty surrounding Trump 2.0. The concern is that since market valuations are high any negative news might cause corrections,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The market sentiment remains cautious due to persistent foreign institutional investor (FII) outflows and a weakening rupee. FIIs have net sold ₹10,444 crore in December alone and ₹2.97 lakh crore throughout 2024. The Indian rupee has hit a record low of 85.53 against the US dollar, while rising US bond yields, currently at 4.61 per cent, are adding to the challenges.

“The resilience of the US economy continues to surprise. The lower-than-expected jobless claims have pushed the US 10-year bond yield to 4.62 per cent. This will be a headwind for stock markets globally and particularly for emerging markets where FIIs might continue to sell,” Vijayakumar added.

Technical analysts suggest the market is at a crucial juncture. “The Nifty will have to stay above the 23500 level; any violation of the support zone will instil prolonged weakness in the markets and push them into intermediate corrective trends,” said Ameya Ranadive, Senior Technical Analyst at StoxBox.

Looking ahead, market participants will focus on upcoming manufacturing PMI data and monthly auto sales figures. “Optimism about strong Q3 results and a favorable Union Budget should help boost market sentiment. The rally is expected to continue in pharma, real estate, auto, and energy stocks,” noted Vikas Jain, Head of Research at Reliance Securities.

In the commodities space, gold declined marginally by 0.4 per cent to $2,624/ounce, while Brent crude traded above $74 per barrel. “Gold and silver showed very high price volatility last week… The Bank of Japan’s signal for interest rate hikes and weakening emerging market currencies are pressuring precious metals,” said Rahul Kalantri, VP Commodities at Mehta Equities.

Despite the current volatility, the Nifty is poised to record its ninth consecutive year of gains, although December has been disappointing for investors. The market is expected to remain range-bound in the near term as investors await fresh triggers from the upcoming earnings season and the Union Budget.