Market Outlook: US bond yields, dollar index, FII data key triggers for next week

Mumbai: The market outlook for next week will depend upon several global and domestic cues, including factors linked to the US market, and FII data, according to experts on Sunday.

The US factors are — bond yields, the dollar Index, initial jobless claims, new home sales data, and Durable Goods Orders data.

The global and Indian stock markets will remain closed on Wednesday, December 25, in observance of Christmas. This will result in a four-day trading week instead of the usual five days. Both markets reflect a “Santa effect” but in red, as heavy profit booking was witnessed before Christmas.

The Indian stock market witnessed a sharp decline in the trading session from December 16-20. Nifty fell 1,180 points or 4.77 per cent to 23,587 and Sensex fell 4,091 points or 4.98 per cent to close at 78,041 breaking the important support of 80,000. Meanwhile, Bank Nifty closed at 50,759, falling 2,824 points or 5.27 per cent.

Last week, only the pharma sector closed with gains, while all other sectors saw selling.

The reason for this decline is attributed to FII selling and the US Fed’s outlook on interest rates, which has projected only two rate cuts in 2025.

Last week also, FIIs sold Rs 15,828 crore in the cash market. However, domestic institutional investors (DIIs) invested Rs 11,874 crore.

Puneet Singhania, Director at Master Trust Group said, “The Nifty50 experienced a significant breakdown, losing 4.77 per cent this week and closing near 23,600, below the crucial 23,800 support level and the 21week-EMA. This triggered broad-based selling across sectors. The next key support is at 23,200, where prices may find some cushioning. On the upside, strong resistance lies in the 23,800-23,900 zone, and a break above this could drive the index towards 24,300.”

“However, the broader market sentiment remains bearish, with a “sell-on-rise” approach prevailing. Traders should exercise caution, closely monitoring support and resistance levels amid heightened volatility and weak technical signals,” he added.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart, said “The Bank Nifty has found support at its 200-day moving average (200-DMA), while the 100-day moving average (100-DMA) at 51,600 serves as an immediate hurdle. A breakdown below 50,400 could trigger additional selling pressure, potentially pushing the index down to 49,600. Conversely, a breakout above 51,600 may encounter resistance in the range of 51,800–52,000.”

–IANS