Market trends during the week were mainly influenced by macroeconomic factors and global developments. On the domestic front, the rupee fell to a new record low of 90.56 against the US dollar, which weakened investor confidence. Some relief came after the US Federal Reserve announced a 25-basis-point interest rate cut. Positive signals from India–US trade talks also helped prevent sharper losses.
Auto retail demand remained stable. Vehicle registrations in November rose 2% year-on-year across passenger vehicles, three-wheelers, commercial vehicles and tractors. At the same time, reports that public sector banks had written off loans worth Rs 6.15 lakh crore over the past five-and-a-half years kept banking stocks in focus.
Foreign institutional investors continued to reduce their equity exposure, putting pressure on the markets.
However, steady buying by domestic institutional investors provided some support and limited deeper falls. As a result, the Nifty slipped 139 points to close at 26,046, while the Sensex fell 445 points to end at 85,268.
Factors to watch in the coming week
1. Domestic data releases
The week ahead has several important economic announcements. These include India’s Wholesale Price Index (WPI) inflation data and trade balance figures. Flash readings of the HSBC Composite, Manufacturing and Services PMI will also be tracked to assess economic activity ahead of the year-end.
2. India–US trade talks
Updates related to ongoing India–US trade negotiations will remain an important trigger for the markets.
3. Technical view
The Nifty has moved back above its short-term moving average (20 DEMA) around the 25,950 level. Holding above this zone will be important for a possible move towards the record high of 26,300, with further upside towards 26,550. According to Ajit Mishra, SVP – Research at Religare Broking, if the index fails to stay above this support, it could fall back to 25,700, followed by a stronger support near 25,400, which aligns with the 100 DEMA.
On strategy, Mishra advised investors to remain selective and balanced amid currency volatility and mixed global signals. He also cautioned traders against buying stocks with negative news flows and suggested waiting for clear stability before taking fresh positions.
4. Currency movement
The rupee continues to face pressure due to ongoing foreign portfolio investor outflows from both equity and bond markets. Rising global bond yields have added stress, with unwinding of USD and JPY carry trades impacting Indian bonds. Anindya Banerjee, Head of Currency and Commodity at Kotak Securities, said that progress in India–US trade talks could offer occasional support to the rupee. Overall, the USD-INR spot rate is expected to trade in a range of 89.50 to 91.00.
5. FII and DII activity
On Friday, foreign institutional investors sold shares worth Rs 396.26 crore, while domestic institutional investors bought equities worth Rs 2,828.21 crore.
