Domestic markets are expected to open with a negative bias on Monday, amid mixed global cues. Nifty futures on Friday closed at 24,830.75, while Nifty futures at Gift City is currently ruling at 24,770. This indicates a gap-down opening of about 50-60 points for Nifty. Analysts expect buying by foreign portfolio investors will keep the market in consolidation phase.
Benchmark indices had extended their upward momentum for the fourth consecutive week, driven by sustained strength in banking and IT heavyweights, which bolstered investor sentiment. The recovery was attributed to value-buying in beaten-down stocks amid easing inflation and resilience in key sectors.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: “FIIs turning buyers in December after relentless selling in October and November has contributed to the recovery in the market from the November lows. FIIs have bought equity for ₹14435 crores through exchanges till 13th December. The total buy figure, including the exchange buying and buying through the ‘primary market and others category’ , stood at ₹22765 crores as on 13th December (NSDL).FII buying has triggered a rally in large-caps, particularly in banking and IT.
Despite the recovery, analysts are advising investors to remain cautious.
Puneet Singhania, Director at Master Trust Group, said: “Caution persists ahead of next week’s US Federal Reserve policy meeting and domestic macroeconomic data releases.
SBI Securities in a note said: investors are recommended to stick to quality businesses with supportive valuations for the medium to long-term investment horizon.
The focus now shifts to macro economic indicators and central bankers, especially RBI and the US Federal Reserve, decision on rates.
Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors, said: “The recent rally in the Indian market has been driven by positive political developments, a recovery in corporate stocks, increased foreign investments – both in the primary and secondary markets and broad sector participation. Historical data shows that the Nifty index has closed higher in 71% of December since 2000, with significant gains noted in 2023 and 2020.
The Reserve Bank of India (RBI) enhanced liquidity by lowering the Cash Reserve Ratio (CRR), likely boosting market sentiment. Additionally, India’s Consumer Price Index (CPI) inflation dropped to 5.48% in November from 6.21% in October, enhancing investor confidence and raising hopes for potential monetary policy easing by the RBI.
Ajit Mishra – SVP, Research, Religare Broking Ltd, said: Looking ahead to the coming week, participants will closely monitor the HSBC Composite PMI, HSBC Manufacturing PMI, and HSBC Services PMI. However, the key focus will be on the US Federal Reserve meeting, where a 25 basis points rate cut is already factored in. The Fed’s commentary on future rate policy will hold significant importance. Ahead of the event, the Dow Jones Industrial Average (DJIA) has seen a notable correction, while the S&P 500 and Nasdaq Composite continue to hold their ground.
