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Weekly Market Outlook 29 December from Vinod Nair, Head of Research at Geojit Financial Services

"Despite a slight profit booking on the last trading day of the year, the domestic market experienced a gradual rally, riding on the positive global market trend. The optimism is fuelled by expectations of rate cuts by the US Fed and a cooling global inflation scenario. Further, an ease in red sea disruption and a reversal of FII inflows supported the market to touch new highs. The anticipation of political stability in the upcoming national poll in 2024 and a positive market outlook are supportive factors. Sector-wise, auto and FMCG outperformed in expectation of a revival in demand, while the IT sector underperformed due to profit booking.

The euphoria is expected to continue during the start of the next year on account of the exuberance of rate cuts and the drop in bond yields. We expect a modest return of 10 to 12% on the main market in CY24. It is advised to diversify the investment pattern to multi-assets. It is suitable to be diverse when equities are trading above the long-term average for a prolonged period. We presume CY24 to be a year of reversal in sector and category wise. We like large caps compared to mid and small caps. Generally, it will be a stock- and sector-specific year. Sectors we like are Banks, Manufacturing, Pharma, Chemical and IT. A correction in the consumer sector should be capitalised in CY24."

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