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Indian markets fell sharply on Monday as weak Asian and European cues coupled with nervousness over falling rupee and renewed foreign fund outflows prompted investors to reduce equity exposure. Today, markets are likely to get gap-down opening on the year’s last trading session amid weak global cues. The benchmark 10-year US Treasury yield's recent push above the 4.5 per cent mark after the Federal Reserve on December 18 signaled it would take a slower interest rate cut path has fueled concerns about elevated stock market valuations. There are no major triggers for the stock markets, domestic as well as globally. Investors will be eyeing India’s infrastructure output data for the month of November, and the US’ House Price Index data for the month of October to be released today, for more directional cues. There will be some cautiousness as FIIs/FPIs net sold stocks worth Rs 1,893.16 crore. Traders will be concerned as the data released by the Finance Ministry showed that India's external debt rose to $ 711.8 billion as of September this year, up 4.3 per cent over June 2024. However, some support may come later in the day as the new RBI Governor Sanjay Malhotra said that prospects of the Indian economy are expected to improve on the back of high consumer and business confidence in 2025. Meanwhile, the Central Board of Direct Taxes (CBDT) has announced an extension of the deadline for taxpayers participating in the Vivad Se Vishwas scheme. Initially set for December 31, 2024, the new deadline is now January 31, 2025. There will be some buzz in banking stocks as the Reserve Bank said the asset quality of banks improved further, and their gross non-performing assets (GNPA) or bad loans ratio declined to a 12-year low of 2.6 per cent in September 2024 on the back of falling slippages and steady credit demand. The RBI also flagged concern over a sharp rise in write-offs, especially among private sector banks (PVBs), which could be partly masking worsening asset quality in unsecured lending segment and dilution in underwriting standards. IT stocks will be in focus with report that India’s information technology (IT) services sector is likely to see steady revenue growth of 7-9 per cent in the next financial year (FY26), led by a gradual pick-up in relevant spending - mainly by the banking, financial services, and insurance (BFSI) and gen-AI sectors - in the US and parts of Europe. There will be some reaction in defence stocks as Defence Minister Rajnath Singh said that India's defence exports have crossed a record Rs 21,000 crore from Rs 2,000 crore a decade ago. Singh said a target has been set to achieve defence exports of Rs 50,000 crore by 2029. Meanwhile, shares of Unimech Aerospace and Manufacturing IPO will list on the bourses, while Indo Farm Equipment IPO will open for subscription today.

The US markets ended lower on Monday as the recent bout of elevated US Treasury yields prompted profit-taking at the end of a strong year for equities. Asian markets are trading mixed on Tuesday amid a thin trade. Most major global markets are shut on account of New Year’s Eve. China’s November factory activity growth missed analysts’ expectations.

Back home, Indian equity benchmarks ended over half percent lower on Monday amid persistent foreign fund outflows and weak global cues. Foreign institutional investors (FIIs) offloaded Rs 1,323.29 crore in the capital markets on net basis on December 27, according to exchange data. Markets made a negative start as traders were concerned with data released by the Reserve Bank of India (RBI) showing that India’s foreign exchange reserves fell by $8.4 billion to $644 billion in the week ended December 20. However, markets erased opening losses and traded marginally higher in late morning deals, as traders took support with report that following the lackluster growth numbers in the second quarter (Q2FY25), the street believe the upcoming Union Budget for 2025-26 should focus on reforms that will stimulate consumption, manufacturing and spur employment. Some support also came as the Reserve Bank of India (RBI) latest data has showed that India's current account deficit (CAD) moderated marginally to $11.2 billion or 1.2 per cent of Gross Domestic Product (GDP) year-on-year in the July-September quarter (Q2) of 2024-25. Traders took a note of private report that Indian economy is likely to grow at 6.5-6.8 per cent this fiscal and slightly higher between 6.7-7.3 per cent in FY2026, boosted by domestic consumption. But buying proved short-lived as key gauges once again fell into red terrain in late afternoon deals as some pessimism remained among traders with private report stating that vegetables and spices saw a steep increase in spending across both rural and urban areas during August 2023 to July 2024, compared to the previous year, driven largely by inflation. Overall, food expenditure grew at a faster rate than non-food items. Investors were looking forward to the Government Budget Value and Infrastructure Output data which going to be out on December 31. Meanwhile, Commerce ministry in its notifications has said that India has initiated investigations into alleged dumping of two Chinese products -- a chemical used in rubber industry and nylon filament yarn. The ministry's investigation arm, Directorate General of Trade Remedies (DGTR), is probing the dumping of nylon filament yarn from China and Vietnam; and TDQ (trimethyl dihydroquinoline). While Century Enka, Gujarat Polyfilms, and Oriilon India have filed an application for the initiation of anti-dumping investigation on the yarn; NOCIL has submitted a similar plea for TDQ. Finally, the BSE Sensex fell 450.94 points or 0.57% to 78,248.13, and the CNX Nifty was down by 168.50 points or 0.71% to 23,644.90.

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