The week ahead is set to be shaped by a combination of economic indicators and trade-related data. The rupee’s movement, the stance of foreign investors, the progress of the India–US trade agreement, monetary policy decisions by central banks in Europe and Japan, India’s foreign trade performance, and US employment data will all influence market direction. Many of these signals are not particularly encouraging. Although the market recovered strongly after an early dip last week, global cues turned negative by the start of the new week, with Asian markets opening sharply lower.
The latest round of India–US trade talks failed to make any meaningful progress. The United States continues to press India to allow imports of genetically modified soybeans and maize, a move aimed at appeasing American farmers ahead of elections. India, however, remains firmly opposed to genetically modified crops and shows no intention of softening its stance. Even discussions between Prime Minister Narendra Modi and US President Donald Trump last week did not lead to any change in positions.
Retail inflation rose to 0.71% in November, up from 0.25% in October, driven by a mild increase in food prices. The contraction seen earlier eased from 5% to 3.9%. Core inflation, which excludes food and fuel, remained steady at 4.4%. Analysts expect inflationary pressures to rise further in the coming months. Some private estimates suggest December retail inflation could approach 1%, while the Reserve Bank of India projects inflation at around 2.9% during the January–March period. Wholesale price inflation and trade data will be released later today.
In GIFT City derivatives trading, the Nifty closed at 26,011 on Friday night. It moved up to 26,047 in early trade this morning before slipping back to around 26,027, indicating a weak opening for Indian markets.
European markets ended Friday in the red. The European Central Bank and the Bank of England are both scheduled to announce their monetary policy decisions this week, with policy reviews also due in Norway and Sweden. Semiconductor stocks in Europe were particularly weak during the previous session.
In the United States, market movements were mixed. After the recent rate cut, concerns around artificial intelligence investments resurfaced. Oracle’s warning that capital expenditure requirements in the AI space could be significantly higher than expected weighed heavily on technology stocks. As a result, the Nasdaq fell 1.7% over the week, while the S&P 500 slipped 0.6%. The Dow Jones, which has limited exposure to technology stocks, rose 1.1% over the same period.
The S&P technology index declined 2.3% last week. Oracle fell 12.7% and Broadcom dropped 7%. Over the past month, Nvidia has declined nearly 8%, AMD by 14.6%, and Oracle by about 14.75%. Investors are increasingly concerned about the massive investments required for data centres, infrastructure, office facilities, and power supply linked to AI, drawing parallels with the excessive fibre-optic investments made during the early internet boom.
On Friday, the Dow Jones fell 245.96 points, or 0.51%, to close at 48,458.05. The S&P 500 dropped 73.59 points, or 1.07%, to 6,827.41, while the Nasdaq Composite slid 398.69 points, or 1.69%, to 23,195.17. US futures, however, were trading marginally higher this morning. Key US data releases this week include non-farm payrolls and retail sales, followed by consumer price inflation figures later in the week.
Asian markets opened lower today. The Bank of Japan’s monetary policy review is due this week, while China is expected to release November data on retail sales, industrial output, and fixed asset investment. Japan’s Nikkei fell 1.4%, Australia’s ASX declined 0.75%, and South Korea’s Kospi dropped 2.1%. Chinese indices were marginally lower, while Hong Kong’s benchmark fell about 1%.
Indian markets ended last week on a positive note, buoyed by expectations that an India–US trade deal might be nearing. Gains in metals, real estate, consumer durables, oil, tourism, and capital market stocks played a key role, while auto, IT, banking, and financial stocks also advanced. Benchmark indices rose by over half a per cent, with the mid-cap index climbing more than 1%.
Foreign investors, however, continued to sell. They were net sellers of ₹1,114.22 crore in the cash market, while domestic funds made net purchases worth ₹3,868.94 crore. Over the past week, foreign investors pulled out ₹12,941.34 crore from Indian markets, including equities and debt. For the year so far, foreign outflows from Indian equities stand at $184 billion, significantly higher than the $165 billion seen in 2022.
The Sensex touched 85,320 and the Nifty reached 26,057 on Friday before closing slightly lower. The Sensex ended the day up 449.53 points at 85,267.66, while the Nifty gained 148.40 points to close at 26,046.95. Broader markets outperformed, with strong advances in mid-cap and small-cap stocks.
Technically, the Nifty has rebounded sharply from the 25,700 level and reclaimed the 26,000 mark. The zone between 26,050 and 26,300 is expected to act as a strong resistance. A breakout above this range could open the door to levels above 26,500. On the downside, support is expected around 25,970 and 25,900.
On the corporate front, Ashoka Buildcon–Akshaya Infra consortium secured a ₹1,041.44 crore flyover construction contract in Mumbai. Wipro expanded its collaboration with Google Cloud to deploy Gemini Enterprise across operations. Godavari Power and Ispat approved a ₹1,625 crore investment to expand battery energy storage capacity. KEC International won contracts worth ₹1,150 crore, while Bharat Electronics secured new orders worth ₹776 crore. ESAF Small Finance Bank approved the sale of bad loans worth ₹1,700 crore.
Gold and silver witnessed sharp volatility. Gold climbed to $4,354 an ounce before settling at $4,300.70 on Friday and rose again in early trade today. In Kerala, 22-carat gold touched a record ₹98,400 per sovereign before easing slightly. Silver hit a record $64.69 an ounce before correcting. Prices remain volatile, but market sentiment suggests further upside this week.
Industrial metals moved in mixed directions. Copper hit a six-month high amid supply concerns, while tin surged due to shortages. Aluminium, zinc, nickel, and lead ended lower. Analysts believe copper could test new record levels as mine closures in Peru and Indonesia restrict supply.
The dollar index strengthened slightly after recent weakness. The rupee continued to weaken, briefly touching 90.56 against the dollar before closing at 90.42, with the Reserve Bank of India intervening in the market. Crude oil prices edged lower, with Brent trading around $61 a barrel, offering some relief on the inflation front.
Cryptocurrencies remained under pressure over the weekend. Bitcoin slipped below $88,500, while Ether and Solana also traded lower, reflecting continued volatility in digital assets.