The Indian stock market is gearing up for a robust opening on Monday, December 22, with key benchmarks Sensex and Nifty 50 expected to rally. This positive momentum is fueled by strong signals from global markets and a firm trend in Gift Nifty futures.
Global Markets Provide a Positive Backdrop
Asian share markets advanced on Monday, taking cues from a technology-driven surge on Wall Street. Investors are hopeful for a year-end rally, with dip-buying activity late last week helping equities recover from a recent slump. The MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3%. South Korea's market jumped 1.8% on optimism surrounding AI-related corporate earnings. Japan’s Topix and Australia’s S&P/ASX 200 also rose by 0.8% and 0.7%, respectively.
This global optimism follows a powerful performance on Wall Street on Friday. The S&P 500 climbed 0.9% to close at 6,834.50, while the Dow Jones Industrial Average added 0.4%. The tech-heavy Nasdaq Composite was the standout performer, surging 1.3% or 301.26 points to settle at 23,307.62. Technology giants like Nvidia and Broadcom were primary drivers of this rally.
Indian Markets: A Look Back and Forward
Domestic indices snapped a four-day losing streak on Friday, December 19, closing with significant gains. The Sensex jumped 448 points (0.53%) to end at 84,929.36, while the Nifty 50 advanced 151 points (0.58%) to settle at 25,966.40. This rebound was supported by a stable rupee, positive global cues, and a policy decision from the Bank of Japan that met market expectations.
According to Vinod Nair, Head of Research at Geojit Investments Limited, markets traded cautiously for most of the week due to foreign institutional investor (FII) outflows and rupee depreciation. However, sentiment improved after softer US inflation data boosted hopes for a milder Federal Reserve stance. Bargain hunting and lower crude oil prices further aided the late-week recovery.
The early signal for Monday's session comes from Gift Nifty, which was trading near the 26,170 level, up 139 points or 0.54% from the previous close of Nifty futures, indicating a firm opening for Indian benchmarks.
Key Factors Influencing Market Sentiment This Week
Several critical developments will guide market direction in the coming days:
US GDP Data: The US quarterly Gross Domestic Product (GDP) data, scheduled for release on December 23, is a crucial input for the Federal Reserve's future interest rate decisions. Economists anticipate growth in the 3–3.5% range, slightly below the 3.8% expansion seen in Q2 2025.
Global Central Bank Policies: Commentary from major central banks, including the Federal Reserve and the European Central Bank, regarding their policy trajectory for 2026 will be closely monitored. The Bank of Japan recently raised its key interest rate to a three-decade high, causing Japanese Government Bond (JGB) yields to spike. The two-year JGB yield hit a record high of 1.105%.
Commodity Movements: Geopolitical tensions and expectations of Fed rate cuts are boosting precious metals. Silver prices rose to a record high near $67.55 an ounce, while spot gold advanced to $4,363.21 an ounce, close to its all-time peak. Oil prices also edged higher as the US intensified an oil blockade against Venezuela.
Nair of Geojit concludes that while markets may retain a cautiously positive bias, they will remain highly sensitive to these global cues. Near-term volatility could persist due to uncertainties over trade deals and the stability of the Indian rupee.
