Global trends & FIIs to steer markets in holiday shortened week

Stock market participants will focus on global trends and foreign institutional investors' (FIIs) trading activity in the upcoming holiday-shortened week, as domestic markets lack major triggers, analysts noted. Indian equity markets will be closed on Wednesday, December 25, for Christmas, adding to the subdued trading environment.
With no significant domestic events scheduled, analysts expect global economic indicators to play a pivotal role in shaping market trends.Investors are likely to keep an eye on U.S. bond yields, the dollar index, initial jobless claims, and new home sales data. These factors, coupled with persistent volatility, may lead to a cautious approach among market participants.
The rupee-dollar exchange rate and fluctuations in global crude oil prices will also play a critical role in shaping market trends. The ongoing shift in FIIs' trading strategy—from net buyers to sellers—has added pressure to the markets, and participants are expected to closely monitor their activity for further insights.
According to information, last week, the benchmark BSE Sensex tumbled 4,091.53 points, or 4.98%, while the NSE Nifty slumped 1,180.8 points, or 4.76%. Analysts attribute the sharp declines to a sudden shift in FII strategy from buying to selling, which has exerted significant pressure on the market."The sudden change in FII strategy has dampened market sentiment. This, coupled with other global factors, has made investors adopt a wait-and-watch approach," noted V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Key Drivers for the Week
In addition to FII activity, the rupee-dollar trend and the movement of global oil benchmark Brent crude will be critical in influencing market sentiment.
Ajit Mishra, SVP, Research, Religare Broking Ltd. reportedly highlighted the significance of derivative contracts set to expire this week. "The expiry of December’s derivative contracts may amplify volatility in an already cautious market. Participants will closely monitor FII flows and global market performance," he stated.
Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services Ltd., noted that subdued activity is expected given the holiday season and global market closures. "Market activity is expected to remain low this week as festive season approaches, with global markets closed for 2-3 days, including the domestic holiday on December 25," he added.
Outlook for the Week
Amid global uncertainties, selling pressure, and low market participation during the holiday season, Indian markets are likely to remain subdued. Analysts suggest that investors adopt a cautious approach, keeping an eye on global developments and FII trends to navigate the volatile environment effectively.

(Business Correspondent)