Indian equity markets are poised for a week driven by global developments, with investors anxiously awaiting the US Federal Reserve's monetary policy decision and closely monitoring foreign fund flows for direction. After a largely flat close in the previous week, domestic indices are expected to react to a cocktail of international monetary signals, macroeconomic data, and currency movements.
Global Events Take Center Stage
Analysts highlight that the spotlight is firmly on the US Federal Open Market Committee (FOMC) meeting scheduled for December 9–10. The interest rate decision and subsequent commentary from the Fed Chair will be critical in shaping global risk sentiment. Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd, noted that alongside the FOMC decision, key US economic indicators will be tracked. These include the US JOLTs Job Openings data on December 9 and the Employment Cost Index on December 10, which will offer fresh insights into the labour market and wage pressures.
"Movements in the US dollar index and Treasury bond yields will be critical, as sharp swings could influence risk appetite across global equity and debt markets," Gour added. The tone of the Fed’s post-policy guidance is considered potentially more influential than the rate action itself for future market direction.
Domestic Triggers and Currency Concerns
On the home front, India’s Consumer Price Index (CPI) inflation print for November, due on December 12, will be a key monitorable for domestic investors. Ajit Mishra, SVP (Research) at Religare Broking Ltd, stated that this data point, combined with the Fed's actions, will drive sentiment across emerging markets already facing currency pressures.
The Indian rupee, which breached the 90-per-dollar mark last week, remains a concern. Its trajectory will be influenced by global risk appetite and the flow of foreign institutional investor (FII) capital. Market participants are wary of continued volatility in forex markets impacting equity inflows.
Market Outlook and Analyst Views
Despite global headwinds, India's relatively resilient economic growth offers a silver lining. Analysts believe that if the Fed's stance leads to a rotation of global funds back towards emerging markets, India could be a prime beneficiary. However, the immediate path is likely to be volatile.
Ponmudi R, CEO of Enrich Money, emphasized the importance of the Fed's messaging. "Beyond the rate action itself, investors will be keenly tracking the Fed’s commentary and guidance on the future path of interest rates — an element that may prove even more influential in the weeks ahead," he said. He concluded that the Fed's communication will be pivotal in shaping near-term sentiment and market direction for Indian equities.
Benchmark indices Sensex and Nifty ended the previous week with marginal losses, reflecting the cautious mood. The coming days will test whether domestic markets can decouple from negative global cues or will follow the direction set by international events and data.
