• The Indian stock market opened flat on Friday, awaiting the Reserve Bank of India's (RBI) monetary policy committee (MPC) meeting decision.
• Market sentiment has shifted positively, with Foreign Institutional Investors (FIIs) turning buyers in December, influencing retail investors to follow suit.
• The market's performance is influenced by global cues, such as the US Federal Reserve's policies and foreign fund inflows into emerging markets like India.
• The market's future trajectory will be determined by factors including domestic and global economic indicators, RBI policy decisions, and the strategies of FIIs and domestic institutional investors.

The Indian stock market commenced on a flat note on Friday, with investors and traders eagerly awaiting the announcement of the Reserve Bank of India's (RBI) monetary policy committee (MPC) meeting. The market's primary focus was on the decision surrounding the repo and Cash Reserve Ratio (CRR) rates. At approximately 9:23 am, the Sensex was trading at 81,775.54, marking a slight gain of 9.68 points or 0.01 per cent. Concurrently, the Nifty was trading at 24,712.35, having risen by 3.95 points or 0.02 per cent.

Market Trends and Key Players

The market trend remained positive, with 1,500 stocks trading in green on the National Stock Exchange (NSE), while 647 stocks were in red. Market experts have noted a significant shift in the market sentiments, attributing it to Foreign Institutional Investors (FIIs) turning buyers in December. This move is a complete reversal of their sustained selling strategy during the last two months. Encouraged by the FII buying, retail investors, too, have jumped on to the buying bandwagon. This has triggered short-covering leading to sharp intra-day volatility, they added.

The market is keenly watching the policy response of the RBI and the central bank's commentary on the growth and inflation outlook. The Nifty Bank was down 63.45 points or 0.12 per cent at 53,540.10. The Nifty Midcap 100 index was trading at 58,486.70 after gaining 45.15 points or 0.08 per cent. The Nifty Smallcap 100 index was at 19,356.90 after gaining 23.35 points or 0.12 per cent.

Global Influence and Future Outlook

In the Asian markets, the markets of Seoul and Japan were trading in red, while China, Hong Kong, Jakarta and Bangkok were trading in green. The US stock markets closed in red on the previous trading day. Foreign institutional investors (FIIs) bought equities worth Rs 8,539.91 crore on December 5, while domestic institutional investors sold equities worth Rs 2,303.64 crore on the same day.

Historically, the Indian stock market has shown resilience in the face of challenges. Market experts have advised investors to adopt a cautious investment strategy with asset allocation as the underlying principle. They have also suggested that since the market has been resilient amid challenges, it makes sense to remain invested.

The market's performance is also influenced by global cues. For instance, the US Federal Reserve's signalling of the end of its tightening cycle and raised expectations of a rate cut in March 2024 led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India.

The Indian stock market's performance is also closely linked to the country's economic indicators. For instance, India's March Services PMI stood at 61.2 compared to 60.3 previously, while the Composite PMI was at 61.8 versus 60.6 on a month-on-month basis. These figures indicate a robust operating momentum on the ground, driving stock-specific action in the market.