Commenting on the trend, Ravi Singh, Chief Research Officer at Master Capital Services, said Friday’s sharp rise reaffirmed the strength of the prevailing uptrend. He added that the market structure remains bullish and supports a buy-on-dips strategy for a constructive medium-term outlook.”The daily RSI at 63 reflects healthy buying momentum, while the MACD remaining in positive territory supports continued trend strength. On the technical front, resistance is near 26,350 and a decisive break above this zone could extend the move towards 26,600,” Singh said.
Factors likely to drive market movement when trading resumes this week:
1. Fed FOMC
Global markets will aim their guns at the US Federal Reserve’s policy results this week when the rate-setting committee meets on December 9 to decide whether to implement a 25 basis point rate cut. Investors will also monitor the central bank’s commentary on the economy, the labor market and the likely interest rate path going forward.
The two-day meeting will conclude on December 10, followed by a press conference by Chairman Jerome Powell.
2. US markets
Wall Street’s major indices closed higher on Friday, supported by favorable economic data and expectations of a rate cut. Consumer spending rose 0.3% in September, in line with Street estimates, Reuters reported. The personal consumption expenditure (PCE) price index also rose 0.3%, similar to the previous month’s increase. On an annual basis, the PCE price index rose 2.8% in September, following a 2.7% increase in August, with both figures in line with forecasts.
Supported by these developments, the Nasdaq Composite closed at 23,578.10, up 72.99 points or 0.31%. The Dow Jones Industrial Average ended at 47,955, up 104.05 points, or 0.22%, while the S&P 500 settled at 6,870.40, up 13.28 points, or 0.19%.
Domestic and global markets are likely to be guided by US market trends.
3. IPO monitoring
It will be an action-packed week for the primary market, with five motherboard IPOs and seven SME IPOs on D-Street. Together, these companies aim to raise Rs 13,807 crore.
The biggest news is the public issue of ICICI Prudential Asset Management Company, in which the promoter Prudential Corporation Holdings Limited will sell a maximum of 48,972,994 shares. The OFS size stands at a hefty Rs 10,603 crore. The IPO opens on Friday, December 12.
Read more: ICICI Prudential AMC sets a price band of Rs 2,061-2,165 for its Rs 10,603 crore IPO
The other mainboard IPOs opening this week are Corona Remedies, Wakefit Innovations, Park Medi World and Nephrocare Health Services. The SME issues include Riddhi Display Equipments, Prodocs Solutions, KV Toys India, Shipwaves Online, Unisem Agritech, Pajson Agro India and Ashwini Container Movers.
Five additional SME IPOs will close this week: Western Overseas Study Abroad, Luxury Time, Flywings Simulator Training Centre, Encompass Design India and Methodhub Software.
On the listing front, Vidya Wires, Aequs and Meesho will be making their debut in the motherboard category. Nine SMEs are also making their market debut this week.
Also read: IPO calendar: ICICI Pru AMC, Wakefit to anchor Rs 13,000 crore pipeline next week
4. BE/DII action
The activities of foreign institutional investors (FIIs) remain a crucial factor for the domestic markets, impacting not only equities but also the rupee. FIIs turned net sellers on Friday, selling Indian equities worth Rs 439 crore. Meanwhile, domestic institutional investors (DIIs) were net buyers, purchasing shares worth Rs 4,189 crore.
Also read: FIIs sell Rs 11,820 crore worth of Indian equities in the first week of December. Can RBI liquidity be a help?
5. Technical factors
Rupak De, Senior Technical Analyst at LKP Securities, said the sharp post-policy rally in the Nifty has reinforced a positive trend with the index remaining comfortably above its 21-EMA. He deciphered the charts and noted that the index has broken the recent consolidation on the hourly chart, indicating increasing optimism.
“The RSI has regained a bullish crossover, indicating strong momentum. In the short term, the trend may remain firm with the Nifty likely to move towards 26,300-26,440. Support is placed at 26,060-26,000. Buying on dips may be preferable as long as the index remains above 26,000,” De said.
6. Rupee vs Dollar
The rupee gave away initial gains on Friday to end 6 paise lower at 89.95 against the US dollar after the Reserve Bank cut the key benchmark interest rate for the first time in six months.
Forex traders said the RBI’s rate cut is likely to weigh on the rupee, but the central bank’s decision to buy government bonds worth up to Rs 1 lakh crore through open market operations (OMO), along with a buy-sell swap worth USD 5 billion, will provide support to the local currency.
“In addition to the rate cut, the RBI’s decision to buy government bonds worth up to Rs 1 lakh crore through OMO, combined with a USD 5 billion buy-sell swap, marks a decisive effort to restore sustainable liquidity and stabilize the foreign exchange markets following the sharp depreciation of the rupee,” said Sachin Bajaj, Executive Vice President & Chief Investment Officer, Axis Max Life Insurance.
7. Corporate Action
This week, a number of stocks will be in focus for corporate actions. Tuesday, December 9 is the record date for the rights issue of Deccan Gold Mines.
Friday will be the record date for the 5:1 stock split of Ms. Bectors Food Specialties. It will also be the record date for Bharat Rasayan’s 1:1 bonus issue and 5:1 share split. In addition, Nureca and VLS Finance have set Friday as a record date for their share buybacks.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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