Indian equity markets concluded last week on a powerful upward trajectory, marking their third consecutive week of gains and establishing fresh historical peaks. Following initial profit-taking activities, a robust mid-session recovery revitalized market sentiment, leading to healthy consolidation patterns.
Market Performance and Closing Figures
The benchmark indices demonstrated remarkable strength with Nifty climbing 0.52% to settle at 26,202.95, while the Sensex advanced 0.56% to reach 85,706.67. This sustained bullish momentum reflects growing investor confidence across multiple fronts, both domestically and internationally.
Global and Domestic Catalysts
The rally found substantial support from increasing expectations of a 25-basis-point rate reduction by the U.S. Federal Reserve in December, which positively influenced global market dynamics. Additionally, optimistic developments in Russia-Ukraine peace discussions enhanced risk appetite among investors, raising prospects of softer crude oil prices in the near term.
Domestically, robust growth projections and resilience in specific sectors bolstered market confidence, although persistent weakness in export trends continued to limit the upside potential. The intricate balance between domestic strengths and global uncertainties continues to shape market direction.
Eight Critical Factors for Market Movement This Week
1. RBI Monetary Policy Committee Decision
All eyes will be on the December 5 RBI MPC meeting, which stands as the most significant event this week. Market participants will closely monitor the central bank's commentary on inflation trends, domestic growth outlook, and potential timing for rate adjustments.
2. Automotive Sector Sales Data
The monthly auto sales numbers will provide crucial insights into consumer demand patterns and the overall strength of India's domestic consumption cycle. This data serves as a vital indicator of economic health and consumer sentiment.
3. Domestic PMI Readings
HSBC will release Manufacturing, Services, and Composite PMI figures this week, offering valuable gauges of economic activity and momentum across different sectors. These readings help assess the pace of business expansion and contraction.
4. United States Macroeconomic Data
Global market sentiment will be significantly influenced by upcoming US economic indicators as investors evaluate expectations from the Federal Reserve's December policy decision and its subsequent impact on foreign capital flows into emerging markets.
5. Technical Market Structure
According to Ajit Mishra of Religare Broking, Nifty maintains its positive trend as it continues to achieve fresh highs. The next resistance levels are positioned at 26,500, followed by 27,000. On the support side, the 20-day exponential moving average around 25,900 acts as initial cushion, with the subsequent critical level at 25,700.
Mishra recommends that investors adopt a buy-on-dips strategy near support zones while prioritizing large-cap stocks. Traders should maintain trailing stop-losses and concentrate on sectors demonstrating strong price structures and institutional interest.
6. Crude Oil Price Movements
WTI crude remains on track for its fourth consecutive monthly decline due to persistent oversupply concerns. Market sentiment has been additionally shaped by President Putin's comments regarding President Trump's Ukraine peace proposals, which could influence future negotiations and potentially ease sanctions, allowing increased Russian crude volumes into global markets.
Rahul Kalantri of Mehta Equities noted that attention now shifts to Sunday's virtual OPEC+ meeting, where officials are expected to maintain plans to pause output increases in early 2026 while reviewing long-term capacity strategies.
7. Indian Rupee Trajectory
The rupee continues to experience pressure against the US dollar, struggling near the 89.25 level amid sustained dollar strength and mixed foreign investment flows. Jateen Trivedi of LKP Securities observed that with limited progress on India-US trade agreements and prevailing uncertainty, rupee weakness might extend toward the 90.00 mark. Immediate resistance for the currency stands at 89.20, with the bias remaining firmly downward.
8. Institutional Investment Flows
Foreign institutional investors maintained a cautious stance, recording net sales of Rs 3,672.27 crore on Friday. Conversely, domestic institutional investors provided substantial support with net purchases of Rs 3,993.71 crore. The pattern of institutional fund flows will be crucial for determining near-term market direction and stability.
As Indian markets navigate through this crucial period, these eight factors will collectively determine whether the record-breaking rally can sustain its momentum or face consolidation pressures. Investors should maintain vigilance and adapt their strategies according to evolving market conditions and emerging economic data.
