The Indian stock market has overcome rough conditions and started 2025 on a sharp decline as the correction continues. Driven by a series of technical, domestic, and global factors, the market fell by more than 2.4%, the biggest weekly decline in about a month.
In the second week of 2025, investors will receive the following December quarter results for the current fiscal year 2024-25 (3rd quarter of 2025), domestic and international macroeconomic data, US market, foreign capital outflows, and crude oil prices. , and other global cues.
Domestic equity benchmarks Sensex and Nifty 50 ended their two-week winning streak, extending the ongoing correction phase. Weak quarterly earnings updates and growing concerns over HMPV virus cases in India have dampened investor sentiment over the past five days.
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Although the frontline indexes tried to recover in mid-week, late sell-off took Nifty and Sensex to weekly lows of 23,431.5 and 77,378.91, respectively. A continued exodus of foreign investors, continued depreciation of the Indian rupee against the US dollar, and rising US 10-year bond yields also contributed to the market’s sharp decline.
On Friday, the index posted its third consecutive session of declines, in line with a bearish trend in global stocks as concerns about economic growth dampened risk appetite. Sentiment further deteriorated as inflation concerns grew due to a rise in the US dollar index and a sharp rebound in oil prices.
For the week, the BSE benchmark fell 1,844.2 points or 2.32 per cent and the Nifty fell 573.25 points or 2.38 per cent. The BSE Small Cap Index fell by 2.40% and the Midcap Index fell by 2.13%. Most sectors were under significant pressure, with real estate, energy and metals hardest hit.
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Twelve out of 13 major sectors posted weekly losses. The only outlier was the IT sector, which closed up 2% for the week after sector leaders showed early signs of demand recovery. The broader domestically focused market fared worse, with mid-cap and small-cap indexes down 5.8% to 7.3%.
Pravesh Guru said: “Mid-cap indexes have borne the brunt of the selling pressure, falling sharply by 6% this week. This is the biggest decline for mid-cap indexes in more than two months, and investors across the market have “This reflects growing anxiety.” Senior Technical Analyst at Swastika Investmart Ltd.
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“The downward revision of the FY25 growth forecast to 6.4% casts a shadow on economic momentum. The market is driven by persistent selling by foreign investors due to high valuations, especially in the face of broad market and global headwinds. A glimmer of hope has begun to appear. “The initial set of results for the IT sector has shown promise and volatility is expected to continue as investors react to a range of earnings, macroeconomic data and global indicators,” Vinod said. Ta. Mr. Nehru, Head of Research, Geojit Financial Services
This week will see activity in major markets, with several initial public offerings (IPOs) and significant listings scheduled across the mainboard and small and medium-sized enterprises (SME) segments. This week will be important from a domestic and technical perspective as investors track domestic and global economic data along with quarterly corporate earnings.
Here are the main drivers for the stock market next week:
Domestic macroeconomic data
Market attention is expected to turn to macroeconomic indicators such as Consumer Price Index (CPI)-based inflation and Wholesale Price Index (WPI)-based inflation. Macroeconomic data will play a key role in shaping market direction this week. The RBI Governor emphasized the importance of inflation management and suggested that potential inflation easing and slowing growth could create scope for rate cuts at the next policy meeting.
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Third quarter results
Major companies, including major IT companies, have announced their third quarter financial results, and attention is focused on corporate profits. Investors are eagerly awaiting the release of third-quarter earnings reports from major blue-chip companies this week.
Prominent companies like Infosys Ltd, L&T Tech, Reliance Industries, HCL Technologies, HDFC AMC, HDFC Life Insurance Company, Wipro, Axis Bank are scheduled to announce their financial performance, which is likely to have a significant impact on market sentiment .
“Earnings releases can present stock-specific opportunities. IT, FMCG, and some pharma sectors look relatively resilient, while the broader market and other sectors It is likely to remain under pressure,” said Ajit Mishra, senior vice president, research, Religare Broking Ltd.
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5 new IPOs, 8 to be listed on D Street
Laxmi Dental IPO will open for subscription on January 13 under the main board category. In the SME sector, bidding for four initial public offerings is scheduled to begin this week. Among the listed stocks, shares of Standard Glass Lining Technology, Quadrant Future Tech and Capital Infrastructure Trust Invit will be listed on stock exchanges BSE and NSE. The stocks of five small and medium-sized enterprises will debut in either BSE SME or NSE SME.
FII activities
In the domestic market, foreign institutional investors (FIIs) remained net sellers and offloaded funds. INRThe cash sector is 1,685.4 billion. However, domestic institutional investors (DII) provided strong support, with net inflows. INR2,168.2 billion, partially cushioning the market decline.
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Master Trust Group director Puneet Singhania said there is a tug-of-war between FIIs and DIIs, further escalating the market dynamics. Recently, while FIIs have been offloading Indian stocks, DIIs have also been aggressively accumulating, creating a complex interplay of forces within the market.
global queue
On the global front, updates on the US economy, particularly labor market data and inflation trends, could impact FII flows. Rising oil prices will increase inflationary pressures. Analysts said ongoing overseas capital outflows and stimulus from the US market are expected to impact sentiment.
oil price
International oil prices rose nearly 3% in pre-market trading as commodity traders braced for supply disruptions from the most far-reaching U.S. sanctions targeting Russia’s oil and gas revenues as military attacks on Ukraine continued. It hit a three-month high.
Brent crude oil futures rose $2.84 (3.7%) to settle at $79.76 per barrel, rising above $80 per barrel for the first time since October 7, 2024. US West Texas Intermediate (WTI) crude oil futures rose $2.65, or 3.6%, to close at $76.57 per barrel on January 10, 2025, also a three-month high.
Both crude oil contracts rose more than 4% at new highs after traders in Europe and Asia distributed unverified documents detailing the sanctions. Back home, crude oil futures last settled 3.14% higher. INRAt $6,572 per barrel on the Multi Commodity Exchange (MCX).
corporate behavior
Stocks such as software giants Tata Consultancy Services (TCS) and PCBL will trade ex-dividend next week. Shares of several other companies will also be traded after bonuses and splits. See complete list
Technical view
On the technical front, the Nifty 50 index is close to its November 2024 low of 23,263.15. If the downtrend continues, especially in the banking sector, the next major support could be at 22,700, which could trigger a breakdown.
“On the upside, the 23,850-24,200 zone is a challenging resistance area. The 47,300-48,200 zone on the Banking Index will be important as support on the downside, while 49,900-51,150 will be a strong resistance range. We are advised to continue to be cautious as this is prevalent,” said Ajit Mishra of Religare Broking.
Mishra said tight risk management is essential for cash market positions given the sharp correction in mid-cap and small-cap stocks. A disciplined approach with clearly defined stop losses is essential to effectively navigate the current market environment.
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Puneet Singhania of Master Trust Group believes that the Nifty is trading below the 21-week and daily EMAs and below the uptrend line, indicating a bearish trend in the market. It is currently located in an important support zone of horizontal band support between 23,200 and 23,300, which has historically served as strong support.
“A break below this level could trigger further selling and push the index towards 22,900,” Singhania added. Swastika Investmart’s Pravesh Guru believes that a meaningful recovery in the market can only be expected if the Nifty 50 index sustains above the 23,900 level this week.
Bank Nifty plunged 2,254 points (-4.42 percent), broke through the maintenance zone, and closed below the 21-week and daily EMAs, forming a bearish round on the weekly chart. Strong selling pressure indicates a change in sentiment. According to the Fibonacci retracement, the next support lies at 48,300 points, and a break below this level could trigger a 1,000 point decline.
“The index is currently in a ‘sell on the rise’ trend, and a rebound near 49,100 would be a selling opportunity.Traders can place a stop loss at 49,500 to effectively manage risk. “Unless the key resistance levels are regained, further downside is likely,” Singhania added.
Disclaimer: The views and recommendations provided in this analysis are those of the individual analysts or brokerage firms and not of Mint. Market conditions can change rapidly and individual circumstances may differ, so before making any investment decisions, consult a certified professional, consider your personal risk tolerance, and conduct a thorough We strongly encourage investors to do their research.
