Mumbai: Indian stock markets are expected to witness a subdued performance this week due to a holiday-truncated schedule and the absence of major economic data triggers, according to a report by SBI Securities.
The report highlighted that the markets are likely to experience stock-specific activity amid heightened volatility. It noted that the Nifty 50 index is expected to test its previous swing low of 23,263, with the next key support level at 23,000 in the short term. On the upside, resistance levels have shifted lower and are now seen in the 23,850-23,900 zone.
It said "markets are likely to remain muted due to a holiday truncated week on account of Christmas and lack of any major economic data triggers".
The muted market sentiment this week coincides with the Christmas holiday season. The report suggested that investors should focus on quality stocks to navigate the ongoing volatility. Globally, investors will be keeping an eye on US consumer confidence and weekly jobless claims data for further cues.
The report also reviewed the major events from last week, particularly the outcome of the Federal Open Market Committee (FOMC) meeting.
The Federal Reserve reduced interest rates by 25 basis points to a range of 4.25 per cent-4.50 per cent, as widely anticipated. However, the Fed adopted a hawkish stance by lowering its forward guidance for 2025 to only two rate cuts of 25 basis points each, down from the earlier projection of four cuts.
This hawkish commentary led to a surge in US bond yields and the dollar index. The 10-year US bond yield climbed to 4.59 per cent during the last week, while the dollar index surpassed the 108 mark, exerting pressure on other currencies.
The Indian rupee also hit a fresh all-time low of Rs 85.34 against the US dollar, primarily due to the strong dollar and significant selling by foreign institutional investors (FIIs).
After the Federal Reserve's monetary policy announcement on Wednesday, global indices witnessed a sharp decline. The sell-off was triggered by the Fed's decision to lower interest rates by a quarter point, as anticipated, but its projection of fewer rate cuts next year than previously estimated dampened investor sentiment. (ANI)