• The Indian stock market is set for a significant week, influenced by global and domestic factors.
• Last week, the market saw a near 3% recovery, marking the fourth consecutive week of gains.
• Foreign Institutional Investors (FIIs) sold Rs 226 crore in the cash market, while Domestic Institutional Investors (DIIs) invested Rs 2,880 crore.
• The US Federal Reserve's interest rate decision and domestic indicators like GDP growth, inflation, and FIIs activity will shape the market outlook.

The Indian stock market is bracing for a significant week ahead, with a blend of global and domestic factors set to shape the market outlook. The performance of US markets and the Federal Reserve's monetary policy decisions will play a pivotal role on the global front. Domestically, economic indicators such as GDP growth, inflation, and Foreign Institutional Investors (FIIs) activity will guide market sentiment.

Last week, the Indian stock markets ended on a high note, marking a significant rebound. Both the Sensex and Nifty saw a near 3% recovery from their recent lows, driven by broad-based buying that lifted more than 40 Nifty stocks. This rally was fueled by improving global sentiment and positive domestic cues.

On Friday, the market witnessed a remarkable recovery after an initial dip, with key sectors like telecom, technology, consumer durables, and IT leading the charge. The Nifty rose 0.37% to 24,768, while the Sensex gained 0.52%, closing at 82,133. This marked the fourth consecutive week of gains for the Indian stock market.

FIIs and DIIs Activity and Market Predictions

Between December 9 and December 13, Foreign Institutional Investors (FIIs) sold Rs 226 crore in the cash market, while Domestic Institutional Investors (DIIs) stepped in with a net investment of Rs 2,880 crore, providing vital support. Puneet Singhania, Director at Master Trust Group, highlighted that the Nifty 50 has adopted a bullish stance after breaking the key resistance level of 24,700 and closing above it for the first time.

Strong support is now seen at 24,100 and 24,300, making these levels crucial for traders. Singhania suggested buying at around 24,300-24,400 with a stop loss at 24,100, with the Nifty aiming for the psychological level of 25,000 in the short term. However, a breach below 24,100 could trigger further downside towards 23,900.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart, said, Banknifty continues to show strong momentum, with 53,800-54,000 as the immediate resistance zone. A breakout above 54,000 could lead to the next resistance area at 54,350-54,500. On the downside, 53,300 serves as immediate support, followed by 52,600 as the next support level.

Global Factors and US Federal Reserve's Role

The US Federal Reserve is scheduled to announce its interest rate decision on December 19. The market consensus leans towards a quarter-point rate cut to a target range of 4.25 per cent to 4.50 per cent. This move aligns with the US Fed's strategy to ease monetary policy as inflationary pressures subside. The minutes from the November 6-7 Fed meeting indicate that policymakers remain optimistic about declining inflation and a robust labour market.

"This optimism supports the potential for further rate cuts, albeit at a measured pace. However, it's essential to keep a close eye on economic indicators and Fed officials' comments for any shifts in expectations," said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.

The benchmark indices remained in a tight range throughout most of the week but closed firmly on the final day despite significant volatility. The blue chips are now about 5.5 per cent below their all-time high levels hit on September 27 after slipping into correction territory in early November.