Sensex Up 13,235 Pts, Nifty Gains 4,203 Pts In 1 Year; Can Ram Mandir Ceremony Stir New Record High Rally?

Indian stock market is at new heights with Sensex crossing the 73,400 mark and Nifty 50 touching over 22,115 levels for the first time. The two benchmarks have now given whopping 22-24% returns in 1 year. Apart from Q3 earnings and major economic data, Ram Lalla's temple inauguration in Ayodhya is also among the key major events to influence market sentiment. Experts believe it will not be surprising if Sensex and Nifty rise further up before the Ayodhya ceremony.

The reason why Ayodhya's Ram temple inauguration could stir a bull rally in Sensex and Nifty is because a host of sectors are well-poised to benefit from the development. The government has announced thousands of crores worth of projects for transforming the infrastructure, road, rail, air transport and businesses in Ayodhya, which will improve not just the economy of the city and common livelihood but is also expected to drive the economy of Uttar Pradesh.

Sectors like travel, tourism, railways hotels, resorts, aviation, IT, real estate, and infrastructure among others are set to benefit after Ayodhya's temple launch. Ram Temple will be inaugurated on January 22nd and will be open for Indian residents and tourists across the world to visit from January 23rd onward. Prime Minister Narendra Modi has laid the foundation stone for multiple projects which are to the tune of more than Rs 15,700 crore. From infra, and railways to tourism, these projects will drive the city's economy and its people.

Ahead of Ayodhya's Ram Mandir inauguration, Indian market kickstarted the week with a bang. On Monday, the Sensex ended at 73,327.94, up by 759.49 points or 1.05%, and the Nifty 50 closed at 22,097.45, higher by 202.90 points or 0.93%. In the trading session, the 30-scrip benchmark touched a fresh historic high of 73,402.16, and Nifty a new lifetime high of 22,115.55. IT stocks were the biggest gainers.

In a year, Sensex has rallied by a breathtaking 13,234.97 points or 22.02%. Meanwhile, Nifty 50 jumped by 4,202.60 points or 23.48%.

Will Stock Market Hit New Record High Ahead Of Ayodhya Ram Mandir Ceremony?

Manish Chowdhury, Head of Research, StoxBox said, "We will not be surprised to see markets inch up further before the ceremony in Ayodhya, with travel and hospitality sector stocks in focus. Additionally, we expect positive corporate earnings from a slew of companies this week including HDFC Bank, Reliance Industries, Kotak Mahindra Bank, HUL, Asian Paints and Ultratech Cement to provide further support to market sentiment. Our sense is that this optimism is likely to carry in the medium term as well on the back of strong corporate earnings visibility, a likely comeback by the ruling government, strong inflows by both domestic institutions and FIIs and growing appeal of the Indian economy on all facets."

Here are the stock market outlook for this week:

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services:

The Earning season begins reporting their Dec quarter results which may determine the market trajectory going forward. It is expected that the Nifty50 companies see good Q3FY24 earnings for yet another quarter as the macro factor improves in India. Most of the companies in Nifty50 are automobile, auto ancillary, metals, capital goods, electronics and a few financial services.

The auto sector is expected to post good numbers due to healthy volumes and margin expansion led by operating leverage and cost efficiency. Capital goods sector performance will be driven by strong order inflows and healthy execution. Metal stocks are expected to see double profits due to the easing of cost pressure and better realisation. The Pharma sector posts strong numbers due to US generics' robust demand and strong results in the domestic formulation market.

The Q3FY24 earnings season will be the biggest factor in driving the market movement. Many major companies will be announcing their quarterly numbers in the coming week such as Federal Bank, HDFC Bank, Asian Paints, ICICI Pru life, IndusInd Bank, Hindustan Unilever, Ultratech cement and many more. Trends in the global markets, domestic and global macroeconomic data, crude oil prices and the movement of the rupee against the dollar will also dictate trends on the bourses in the coming week. Investment by FPIs and DIIs will also be monitored.

As markets are trading at an all-time high level, looking forward, the immediate resistance for Nifty is identified at the record high level of 21950, with an additional resistance level of 22,050. On the downside, crucial support levels are recognised at 21,500 and 21400.

In Bank Nifty a significant hurdle for the index is identified at 48,000, marked by substantial Call writing. A decisive breakthrough above this level is anticipated to trigger a sharp short-covering rally. The immediate support is at 47,200-47000. A breach would trigger aggressive selling pressure, potentially leading to a downside.

Santosh Meena, Head of Research, Swastika Investmart:

Last week witnessed a remarkable performance in the Indian stock market, marked by fresh record highs in Nifty and Sensex, largely driven by the stellar performance of Reliance and IT stocks. Reliance saw a significant breakout after a multi-month consolidation, contributing to the positive sentiment. Meanwhile, the IT sector's earnings reports, devoid of any negative surprises, were well-received by the market.

In contrast, banking and FMCG stocks underperformed, creating a divergence in sectoral performance. However, individual stocks saw heightened activity, presenting opportunities for traders and investors alike. Notably, domestic institutional investors played a pivotal role in driving the rally, with net purchases exceeding Rs 6800 crore, while foreign investors were net sellers with a total divestment of Rs 3900 crore.

Looking ahead, this week promises to be eventful, with a special live trading session scheduled for Saturday. The focus will shift towards Q3 earnings releases, with key players such as HDFC Bank, HUL, L&T Technology, L&T Mindtree, Asian Paints, IndusInd Bank, and Ultratech Cement set to announce their results. Pre-budget expectations are also likely to influence sector- and stock-specific movements, adding to the market's dynamic environment.

As the market gears up for the budget, institutional flows will play a crucial role in determining its direction. On the global front, macroeconomic data from the USA and China, along with movements in the dollar index, US bond yields, and crude oil prices, will be closely monitored. Geopolitical tensions worldwide continue to be a source of uncertainty, demanding the market's vigilant attention.

From a technical standpoint, Nifty successfully breached the 21800 resistance level, with 22000 acting as a psychological hurdle and 22220 identified as the next target level. On the downside, the 21750-21650 range constitutes the immediate demand zone, with 21500 serving as a key support level.

In the case of Banknifty, underperformance is evident, with 48000 acting as an immediate resistance and 48300-48600 representing a critical resistance zone. Meaningful strength is anticipated only above this range, while 47,000 stands as a key support level on the downside.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.