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Indian markets ended at record highs on Friday, despite of some volatility post RBI policy announcement. The Reserve Bank of India's Monetary Policy Committee decides to keep the repo rate unchanged at 6.5%. Today, markets are likely to get a cautious start amid mixed cues from Asian counterparts. Investors are likely to remain on sidelines ahead of macro-economic data to be out later in the week. Some cautiousness may come as the Reserve Bank of India’s (RBI’s) forward looking surveys showed that households expect some rise in price and inflationary pressures across major product groups for the year ahead. Consumers retained negative sentiments on both the current and future price conditions. Expectations regarding overall prices and inflation over the next three months were more aligned with those of food products and services. However, some respite may come as Union minister Piyush Goyal said India is aiming to achieve the $2 trillion export target by 2030 and in the process it is moving this industry out of the government support to make it self-sustaining and cost competitive. Traders may be taking encouragement as Chief Economic Advisor V Anantha Nageswaran said India’s economic growth can become faster if the much-awaited private capital formation kicks into higher gear. Also, Union Home Minister Amit Shah said India will become a $5 trillion economy by the end of 2025. Some support will come as foreign portfolio investors (FPIs) injected Rs 26,505 crore into the Indian equity markets in the first six trading sessions of this month on expectations of political stability after the BJP stormed to power in three major states and robust economic growth. Besides, India's foreign exchange reserves increased to $604 billion as on December 1, surpassing the $600 billion mark after a gap of about four months. Meanwhile, Governor Shaktikanta Das ruled out loosening interest rates, saying inflation remains top priority as a few months of good data should not lead to complacency, even as the Reserve Bank kept key policy rates unchanged for the fifth consecutive time. Stocks related to agriculture commodities will be in focus as data from agri-export promotion body APEDA showed that export of agri-commodities, including basmati rice, declined to 17.93 lakh tonnes in September this year compared to 27.94 lakh tonnes in the previous month.

The US markets ended higher on Friday after a robust US jobs report fueled investor optimism about a soft landing for the economy. Asian markets are trading mixed on Monday as China's headline inflation fell at the fastest pace in 3 years, keeping deflationary pressures in focus.

Back home, Indian equity benchmarks ended at record closing highs in the volatile session on Friday on the back of positive global cues. Markets made an optimistic start and stayed in green for most part of the day as sentiments got a boost with Union minister Rajeev Chandrasekhar stating that the digital economy will contribute 20 per cent of India's gross domestic product (GDP) by 2026. Chandrasekhar asserted that India has now become the fastest growing digital economy in the world. Buying further crept in after the Monetary Policy Committee of the Reserve Bank of India (RBI) in its December review meeting unanimously decided to keep the policy repo rate unchanged at 6.5 per cent, thus maintaining status quo for the fifth straight time. It also raised FY24 GDP projection to 7% from 6.5% earlier while leaving inflation projection for FY24 unchanged at 5.4%. However, benchmark indices erased gains and traded marginally in red in late afternoon deals, as traders turned cautious amid a private report stating that India's retail inflation likely picked up in November due to higher food prices after declining for three months, bringing it closer to the upper end of the Reserve Bank of India's (RBI) 2 percent-6 percent target range. Some concern also came with another report stating that India's fuel consumption in November fell after hitting a four month peak in the previous month, hit by reduced travel in the world's third biggest oil consumer as a festive boost fizzled out. But, selling proved short-lived as markets regained some traction to end higher as traders found solace with Finance Minister Nirmala Sitharaman’s statement that India continues to maintain the momentum of the fastest-growing major economy, with all sectors contributing significantly in economic activities. Adding to the optimism, Fitch Ratings said India's expanding consumer market and vast labour force can make it an alternative destination to China as part of countries' supply chain diversification. Finally, the BSE Sensex rose 303.91 points or 0.44% to 69,825.60 and the CNX Nifty was up by 68.25 points or 0.33% to 20,969.40.

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