Indian stock markets open flat, Fed rate cut will be dominant theme this week: Experts

MUMBAI: The flat movement has returned to the Indian stock markets after a positive rally witnessed last weekend, with domestic indices opening slightly lower on Monday. Investors adopted a cautious approach ahead of the US Federal Reserve meeting scheduled on December 9-10.

Market participants remain watchful over global monetary cues, tariff clarity, and geopolitical developments that could shape investor sentiment in the remaining weeks of the year. The Nifty 50 index opened at 26,159.80, registering a decline of -26.65 points or (-0.10 per cent), while the BSE Sensex began the session at 85,624.84, down by -87.53 points or -0.10 per cent.

Experts noted that India’s domestic fundamentals remain strong and the recent RBI rate cut has further provided support; however, investors are awaiting concrete developments on tariff-related issues before decisively participating in a year-end rally.

Ajay Bagga, banking and market expert, said, “For Indian markets, the RBI delivered a rate cut on Friday, leading to a boost in interest rate sensitives except for real estate players. The Fed rate cut will be welcomed as that should eventually lead to a weaker US dollar and stronger EM inflows. The US trade delegation’s visit is raising hopes for some relief on the tariff front. We expect Indian markets to do well, and any relief on the US tariffs front could lead momentum to a year-end rally.”

Bagga added, “A hawkish Fed rate cut will be the dominant theme this week in global markets. The Fed is expected to cut rates by 25 basis points, but a significant number of the 12 voting members of the FOMC are expected to dissent, making the cut a hawkish-toned one”.

In the broader market, the Nifty 100 opened down by 0.2 per cent, and a similar trend was visible across Nifty Midcap and Small Cap indices, which opened in red, reflecting pressure on non-index heavyweights.

Across sectoral indices on the NSE, the performance remained mixed during the opening session. Nifty IT, Media, and Metal sectors started in positive territory, while most others witnessed selling pressure. Nifty Auto declined by 0.3 per cent, Nifty FMCG traded flat in the red, and Nifty Pharma was down by 0.29 per cent, indicating selective participation from investors.

Sunil Gurjar, SEBI-registered analyst and founder of Alphamojo Financial Services, stated, “The Nifty 50 did not perform well last week, remaining flat. Due to this ‘tug-of-war,’ the index remained largely unchanged. This consolidation is due to various conflicting factors, including positive news (like potential repo rate cuts, Nifty reaching an ATH, the Russia-India trade deal, and the IPO booming) and negative concerns (like rupee weakness, heavy FII selling, and geopolitical tension). Overall, the Nifty 50 is showing strong relative strength, inching towards a new high. Technically, the price trading above all key moving averages further signals more potential upward momentum in the sector”.

Meanwhile, the IPO market remains active with strong investor interest. The Meesho IPO allotment will be finalized today. The issue was oversubscribed 23.33 times, with the retail segment subscribed 15 times, QIB by 17 times, and NII by 28 times, signaling significant demand for the offering. The e-commerce platform’s IPO has a price band fixed between Rs 105 to Rs 111 per share, with a total issue size of Rs 5,421 crore.

On the global front, concerns persist as China-Japan relations deteriorate, posing challenges to market sentiment in Asia. The US publishing a new National Security Strategy has sparked worry among European allies and South American states, adding further layers to the geopolitical uncertainty influencing markets.

Experts also believe that upcoming decisions by major global central banks will play a crucial role in guiding market momentum. The meetings of the European Central Bank (ECB), the Bank of England, and the Bank of Japan scheduled for next week are expected to draw close attention.

The Bank of Japan is anticipated to raise rates by 0.25 per cent, a move that could impact carry trade momentum, although markets have had time to price in the possibility.

In other Asian markets, major indices witnessed mixed sentiment during Monday’s opening session. Japan’s Nikkei 225 index was down by 0.13 per cent, Hong Kong’s Hang Seng index fell by 0.77 per cent, Singapore’s Straits Times declined by 0.34 per cent, while South Korea’s KOSPI index traded up by 0.22 per cent. (ANI)