Markets to track global trends, trading activity of investors: Analysts

Global trends and trading activity of foreign investors would largely dictate terms in the equity markets this week amid a lack of major domestic triggers, analysts said.

Markets may face near-term consolidation due to elevated valuations, they noted.

"While the previous week was predominantly shaped by developments in the US Federal Reserve policy, attention will now shift to the Bank of Japan's policy decision on December 19," Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

Additionally, factors such as crude oil prices and macroeconomic data from both the US and China will wield considerable influence on market dynamics, he added.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said due to overbought technical conditions, the benchmarks may consolidate in the near term.

However, that said, the near-term outlook for the markets continues to be in favour of the bulls, he said.

A series of positive news -- September quarter GDP growth rate of 7.6 per cent, manufacturing PMI rising to 56, Brent crude declining to $76 per barrel and FPIs turning buyers -- have helped markets reach record peaks, analysts said.

Last week, the BSE benchmark jumped 1,658.15 points, or 2.37 per cent, while the Nifty climbed 487.25 points, or 2.32 per cent.

The 30-share BSE Sensex jumped 969.55 points or 1.37 per cent to settle at its record closing high of 71,483.75 on Friday.

During the day, it surged 1,091.56 points, or 1.54 per cent, to 71,605.76, its all-time intra-day high level.

The benchmark also scaled the 71,000 mark for the first time on Friday.

The Nifty climbed 273.95 points, or 1.29 per cent, to settle at its new closing high of 21,456.65. During the day, it zoomed 309.6 points, or 1.46 per cent, to hit its record intra-day peak of 21,492.30.

"The market surged to new highs, buoyed by positive indicators from both domestic and global fronts. Robust domestic industrial production and manufacturing PMI, coupled with the RBI's positive remarks on India's GDP forecast, contributed to the bullish trend.

"The ease in US bond yield and expectation of multiple rate cuts by the US Fed in 2024 further fuelled market optimism," Vinod Nair, Head of Research, Geojit Financial Services, said.

Investors expressed confidence that clouds over the US economic growth would dissipate in the second half of 2024, anticipating a soft landing facilitated by normalisation in the monetary policy, Nair added.

"We expect a near-term consolidation in the market due to elevated valuations and concerns over El Nino," he said.