India’s equity benchmarks are likely to open higher on Monday (December 23, 2024), tracking gains in its regional peers on the back of benign U.S. inflation data.
The GIFT Nifty futures were trading at 23,809.5 as of 08:03 a.m, indicating the benchmark Nifty 50 will open above Friday’s close of 23,587.5. Other Asian shares rallied after data on Friday showed personal consumption expenditures (PCE) price index rose 0.1% in November after an unrevised 0.2% gain in October. The MSCI Asia ex-Japan index was up 1.1%.
While the inflation reading has powered Asian markets, the scaling back of Fed rate cut projections for 2025 remains a concern for emerging markets such as India. The Federal Reserve had cut interest rates as expected last week, but scaled back its forecast to two rate reductions in 2025 from four, citing stubbornly high inflation.
This intensified foreign outflows from Indian equities, with the Nifty logging its worst week since June 2022 with a 4.8% drop.
Fed funds futures implied an about 50% chance of a rate cut in March and in May, though they only have two quarter-point cuts to 3.75-4.0% priced in for all of 2025, compared to prior expectations that rates would bottom out at 3.0% a few months ago.
Foreign institutional investors sold domestic shares worth 35.98 billion rupees ($423.3 million) on Friday, taking their total weekly outflows to $1.86 billion.
“The latest correction in Indian markets has cooled off valuations in large-caps,” said Motilal Oswal Wealth Management.
Stocks to watch
India’s competition watchdog approves Ultratech Cement’s acquisition of India Cements. Drug maker Aurobindo Pharma’s unit gets approval for oncology biosmilar Bevqolva from UK’s drug regulator. Steel stocks like Tata Steel, JSW Steel will be in focus after India’s Directorate General of Trade Remedies (DGTR) initiates safeguard probe on imports of non-alloy and alloy steel flat products.
Published – December 23, 2024 08:37 am IST