RBI MPC Outcome, FII Flows Among 8 Factors Impacting Stock Markets This Week

Equity benchmarks extended their winning streak for the third week in a row, hitting new record highs on improved global risk appetite and supportive domestic signals. After some initial profit-taking at the start of the week, a sharp recovery mid-week provided renewed bullish momentum, followed by a phase of healthy consolidation. Towards the end of the week, the Nifty added 0.52% to settle at 26,202.95, while the Sensex rose 0.56% to end at 85,706.67.The rally was largely supported by growing expectations of a 25 basis point rate cut by the US Federal Reserve in December, improving sentiment in global markets. Hopes for progress in talks between Russia and Ukraine also lent support, raising expectations of softer crude prices. Domestically, robust growth forecasts and resilience in certain sectors boosted investor confidence, although persistent concerns about weak exports continued to weigh on upside.

Key factors that could influence market movement as trading resumes this week:RBI MPC Result: The most crucial event will be the RBI’s monetary policy meeting on December 5, where commentary on inflation, growth and rate cut prospects will be closely monitored.

Car sales figures: The domestic focus will be on monthly car sales.

Domestic data: HSBC Manufacturing, Services and Composite PMI figures will be released in the coming week. Global Factors: Globally, US macro data will remain the dominant driver of risk sentiment as markets adjust expectations for the Federal Reserve’s December policy decision and its implications for foreign flows. Technical Factors: Ajit Mishra of Religare Broking noted that Nifty continues to hit new highs, and the bias remains positive. “The next positive levels are placed at 26,500, followed by 27,000. On the downside, the 20-DEMA around 25,900 serves as initial support, with the next major level at 25,700,” he added.

“Investors should continue to take a buy-on-dips approach near key support levels and prioritize large caps for stability. Instead, traders should continue to monitor stop-losses on profitable positions and focus on sectors that demonstrate strong price structure and consistent institutional demand,” he suggests.

Crude Oil: WTI crude traded on track for a fourth straight monthly decline, the longest losing streak in more than two years, as oversupply concerns mounted. Market sentiment was also shaped by President Putin’s comments that President Trump’s peace proposals in Ukraine could influence future negotiations, potentially easing sanctions and allowing Russian crude oil to return to global markets. Still, traders remain cautious and doubtful of a quick breakthrough or significant increase in Russian shipments.

“The focus now shifts to Sunday’s virtual OPEC+ meeting, where officials are likely to maintain plans to pause production increases in early 2026 while reviewing long-term capacity strategies,” said Rahul Kalantri, VP Commodities at Mehta Equities.

INR Movements: The overall trend for USD/INR remains weak with the rupee persistently hitting a hurdle around 89.25 due to continued strength in the dollar and mixed FII activity.

“If there is no clear progress on the India-US trade deal and uncertainty still dominates sentiment, the rupee’s weakness could continue towards 90.00. The immediate resistance for the rupee now stands at 89.20, while the trend remains firmly on the downside,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, at LKP Securities.

FII activity: On Friday, foreign institutional investors (FIIs) posted net sales of Rs 3,672.27 crore in Indian equities, while domestic institutional investors (DIIs) were net buyers at Rs 3,993.71 crore.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)