Indian shares set for muted start in thin year-end trade
India's equity benchmarks were poised to open little changed near record highs on Friday in thin year-end trading volumes, with analysts saying further upside dependent on earnings momentum.
The Gift Nifty futures were trading at 26,111 points, as of 8:00 a.m. IST, indicating that the benchmark Nifty 50 would open near Wednesday's close of 26,142.1.
Most markets, including India, were closed on Thursday for the Christmas holiday.
Both the Nifty and Sensex hit record highs in November after 14 months, but have remained muted so far in December, shedding about 0.2% and 0.4%, respectively.
"While the medium-term structural outlook for Indian markets remains constructive, thin liquidity conditions and year-end book squaring are likely to cap sharp directional moves in the near term," said Ponmudi R, chief executive officer at Enrich Money.
Year-end book squaring is a process where financial institutions, such as banks and investment firms, close out or rebalance their positions to tidy up books.
This contributes to muted activity as firms refrain from taking new positions, leading to lower liquidity and fewer trades in the market.
Average daily trading volumes of Nifty 50 stocks in December have been around 250 million shares, compared with about 300 million shares in the previous month, signalling lower activity as the year comes to an end.
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