The Indian stock market is likely to witness a tepid opening on Friday, December 26, as trading activity remains subdued in a holiday-shortened week. Key benchmark indices, the Sensex and Nifty 50, are expected to open on a cautious note despite mixed signals from global peers.
Mixed Global Cues and Domestic Sentiment
On the last trading day of the week, Asian markets showed modest gains, led by Japan and South Korea, although many regional exchanges were shut for holidays. This thin trading environment is reflected in the domestic outlook. The Gift Nifty, an early indicator for the Indian market, was trading around the 26,143 mark, down 33 points or 0.13% from the previous close of Nifty futures, hinting at a flat to negative start.
Indian markets were closed on Thursday, December 25, for Christmas. In the previous session on Wednesday, both key indices had ended in negative territory. The Sensex slipped 116 points, or 0.14%, to close at 85,408.70, while the Nifty 50 declined 35 points, or 0.13%, to settle at 26,142.10. The dip was attributed to profit-booking in heavyweight stocks like Reliance Industries and ICICI Bank.
Expert View and Key Market Drivers
Vinod Nair, Head of Research at Geojit Investments Limited, noted that equities moved sideways in the holiday week with low volumes. He highlighted that the Reserve Bank of India's (RBI) liquidity measures, including Open Market Operations (OMOs) and a USD/INR buy-sell swap, are expected to improve systemic liquidity and curb currency volatility. On the global front, he pointed to strong US GDP data indicating economic resilience, though rising unemployment has tempered optimism.
Several key developments since Wednesday's close are set to influence market movement:
Wall Street's Record Highs: US stock indices climbed to fresh records in a pre-Christmas session. The S&P 500 rose 0.3% to 6,932.05, the Dow Jones gained 0.6% to 48,731.16, and the Nasdaq Composite edged up 0.2% to 23,613.31. Markets were shut on Thursday and resume Friday, albeit with expected light volumes.
Precious Metals Shine: Silver prices soared to a historic high, trading above $73.78 an ounce, while gold hovered near its all-time peak. This rally is fueled by geopolitical tensions and strong speculative inflows.
Oil Prices Firm: Crude oil is headed for its strongest weekly gain since late October, with US West Texas Intermediate holding above $58 a barrel. This surge follows developments related to a partial US blockade on Venezuelan crude shipments.
Japan's Bond Market: Benchmark Japanese Government Bond (JGB) yields eased slightly, with the 10-year yield slipping to 2.035% from multi-decade highs, on expectations of restrained debt issuance.
Geopolitical Developments and Outlook
In a significant update on the Russia-Ukraine conflict, Ukrainian President Volodymyr Zelensky shared details of a new US-led peace proposal. He stated that consensus has been reached on several points with US negotiators, and the plan has been sent to Moscow for its response, though territorial issues remain unresolved.
As the year draws to a close, market activity is anticipated to remain muted. Investors are likely to keep a close watch on global trade developments and liquidity conditions while positioning for the new year. The overall trend suggests a cautious, range-bound movement for Indian indices in the absence of major domestic triggers and amid thin holiday trade worldwide.
