Indian equities are expected to start the week on a subdued note, potentially opening flat to slightly lower on Monday. This follows a significant downturn in U.S. markets on Friday, primarily driven by a decline in technology stocks.
Asian markets demonstrated mixed performance this morning. The MSCI Asia Pacific Index snapped its five-day advancing streak, reflecting global uncertainties and investor caution as the year-end holiday season approaches.
Key market influences this week may include monthly auto sales data, PMI figures, Foreign Institutional Investor (FII) flows, and currency fluctuations. Market participants are also closely monitoring insights from the third-quarter earnings reports and anticipating any indications from the forthcoming Union Budget for FY 2025-26.
Economists suggest that the upcoming budget is anticipated to emphasize reforms aimed at boosting consumption, enhancing manufacturing output, and generating employment opportunities.
Last week, the BSE Sensex increased by 657.48 points or 0.84%, while the broader Nifty index gained 225.9 points or 0.95%.
In Asian trading, the U.S. dollar remained strong, with the Japanese yen hovering near five-month lows against the dollar, influenced by rising U.S. Treasury yields.
Oil and gold markets experienced marginal gains in subdued trading, gearing up for a holiday-shortened week.
U.S. markets experienced a downturn on Friday due to a rise in yields on the 10-Year Treasury Note reaching an approximately eight-month high. This prompted profit-taking ahead of the new year and disrupted the anticipated seasonal "Santa Claus" rally. The Dow Jones Industrial Average fell by 0.8%, breaking a five-session winning streak, although it still advanced by 1.4% for the week. The S&P 500 and Nasdaq Composite dropped 1.1% and 1.5% respectively but recorded weekly gains of more than 1.5%.
In Europe, markets closed on a positive note on Friday following the resumption of trading after the Christmas holidays. The pan-European STOXX 600 index increased by 0.7%, with banking stocks rising after France's new Prime Minister, Francois Bayrou, announced that the deferred 2025 budget bill aims for a deficit "slightly above 5 percent" to support growth. Germany's DAX and France's CAC 40 each added 0.7% and 1% respectively, while the U.K.'s FTSE 100 saw a modest rise of 0.2%.
