Stock market participants are expected to track global trends and the trading activity of foreign investors in a holiday-shortened week ahead, with no significant domestic triggers in sight, analysts said. The equity markets will remain closed on Wednesday for Christmas.
Looking ahead, analysts pointed out that while no major domestic events are scheduled, several global economic indicators will play a pivotal role in shaping market direction. Key factors to watch include US bond yields, the performance of the dollar index, and important data releases like initial jobless claims and new home sales.
Last week, the BSE benchmark tanked 4,091.53 points, or 4.98 per cent, while the Nifty slumped 1,180.8 points, or 4.76 per cent, reflecting the sharp impact of FII sell-offs.
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FPI
Manoj Purohit, Partner and leader, FS Tax, Tax and Regulatory Services, BDO India said,”After a couple of months of continuing hefty burnouts, the capital markets have witnessed a comeback from the foreign fraternity this month. The feather in the cap is the record-breaking investments via the FDI route thereby crossing the USD one trillion mark.”
He added,”The return of foreign participants to the India market can be attributed to various factors. Primarily, on the macro front, the recent policy announcements in the US impacting the peer countries, settling geopolitical situations amongst middle east countries, the well-controlled inflation, and interest rate check.”
FII
Amid heightened volatility and persistent selling pressure from foreign institutional investors (FIIs), it is expected that a cautious approach will be adopted by investors. Despite recent market weakness, the outlook remains cautiously optimistic. However, the relentless selling by FIIs has added pressure to the market, influencing investor sentiment.
The movement of the rupee-dollar exchange rate and global oil prices, particularly the Brent crude benchmark, will also be critical in dictating the market’s direction.
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V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said,”The sudden change in FII strategy from buying to selling has impacted markets. In the early days of December FIIs were consistent buyers; they bought equity for Rs 14435 crores in the cash market till 13th December.
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