With liquidity conditions subdued and awaiting key macro cues, analysts predict that the Indian markets will likely remain range-bound in the near term as consolidation takes place before the New Year. Market sentiment this week was influenced by a mix of domestic macroeconomic indicators and global events.
India recently finalized a comprehensive Free Trade Agreement (FTA) with New Zealand, enhancing its Indo-Pacific involvement and export diversification strategy. However, growth in the eight core infrastructure sectors slowed significantly to 1.8% in November, indicating a temporary slowdown in industrial momentum.
Foreign Institutional Investors (FIIs) were net sellers throughout the week, reversing the brief inflows observed in the prior week. Stable currency movements, record highs in bullion prices, and reduced market participation due to holidays all contributed to a varied trading atmosphere, according to Ajit Mishra, SVP of Research at Religare Broking Ltd.
The upcoming week, marking the transition to the new year, is expected to experience increased volatility due to the December F&O expiry. Key domestic data points to monitor include Industrial Production data for November, government budget value figures, external debt statistics, and the final HSBC Manufacturing PMI reading, as highlighted by market experts.
Globally, markets will be closely watching US macroeconomic indicators, such as the FOMC minutes and updates on the Federal Reserve’s balance sheet. These developments have the potential to impact short-term growth expectations, liquidity, and global risk sentiment.
According to a Bajaj Broking note, the Nifty index displayed a bearish candlestick pattern with a lower high and lower low, indicating profit booking following a recent upward movement. The index is anticipated to consolidate within a range with stock-specific movements. A breakout above 26,300 could lead to further upside towards 26,500 levels in the upcoming weeks.
