Opening flat ahead of the Christmas holiday, domestic markets are expected to see low volume trading on Tuesday. The global market cues are limited and the GIFT Nifty signals a flat opening. However, select individual stocks are likely to see increased activity as the monthly contracts in the F&O segment on the NSE are set to settle on Thursday. With the market closed on Wednesday for Christmas, market participants will have a shortened trading week.
Investors are looking ahead to the Reserve Bank of India’s upcoming monetary policy and the Union Budget 2025 for potential policy measures that could support economic growth and market stability. Trading volumes are expected to be thin in the coming days due to the holiday-shortened week.
Technical analyst Osho Krishnan noted that the Nifty is showing tentativeness and closing below the significant pivot zone of 200 DSMA, with market breadth skewed towards the Bears. Caution is advised, and risk management is crucial in the current market environment.
Emkay Global Research highlighted the shift in domestic savings towards equities, with the share of equities in household savings nearly doubling to about 31% since FY16. This trend is expected to continue, with lower fixed-income yields driving savers towards equities for the foreseeable future. Domestic mutual funds are more exposed to small and mid-cap stocks compared to foreign portfolio investors, leading to potential outperformance in the mid-cap segment.
On the volatility front, India VIX, the market volatility indicator, has inched up slightly to 14.51, signaling caution among traders. While the VIX remains below the critical 15-level, there is room for guarded optimism, according to Samco Securities.
Overall, the market is expected to trade cautiously ahead of the holiday break, with investors keeping an eye on key policy announcements and economic developments. The continued shift towards equities in the household savings portfolio could drive market trends in the coming years, with a focus on small and mid-cap stocks.
