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Indian markets, in a highly volatile session, made a sharp recovery from the day's low and ended strong led by auto, bank, telecom and FMCG names on Friday. Today, markets are likely to get weak start tracking mixed cues from global peers. Also, sharp rise in crude oil prices on Friday may dampen sentiments in the markets. The rally was fueled by expectations that potential new sanctions on Russia and Iran could limit supply, alongside optimism that anticipated interest rate cuts in Europe and the US might stimulate fuel demand. All eyes now turn to critical domestic indicators, with November's Wholesale Price Index (WPI) inflation and December's flash figures for Manufacturing and Services PMI for more direction on the Dalal Street. There will be some cautiousness as the Reserve Bank of India (RBI) data revealed that India’s foreign exchange reserves dropped by $3.235 billion to $654.857 billion, a five-month low, for the week ended December 6. However, foreign fund inflows likely to aid domestic sentiments. Foreign investors have made a strong comeback to Indian equities with a net investment of Rs 22,766 crore in the first two weeks of December driven by expectations of rate cut by the US Federal Reserve. Besides, FIIs bought shares worth Rs 2,335.32 crore on December 13. Traders may take note of report that CareEdge Ratings expects the central government to continue on the path of fiscal consolidation and projects India’s GDP growth to moderate but remain healthy at 6.5 per cent in the current financial year. There will be some buzz in tourism sector stocks as World Travel and Tourism Council (WTTC) President and CEO Julia Simpson said the Indian tourism sector is expected to double in size to $523 billion in the next 10 years from the present size of $ 256 billion. Auto stocks will be in focus as industry body SIAM said passenger vehicle dispatches from companies to dealerships rose 4 per cent year on year to 3,47,522 units in November with demand momentum sustaining post festive period in October. The overall passenger vehicle dispatches stood at 3,33,833 units in November last year. There will be some reaction in coal sector stocks with a private report that the country's coal import rose by 4.2 per cent to 162.45 million tonnes (MT) in the April-October period of the current financial year compared to 155.87 MT in the year-ago period. Banking stocks will be in limelight as the Finance Ministry stated the gross non-performing assets (NPA) ratio for scheduled commercial banks (SCBs) witnessed a significant reduction to 2.67 percent in June 2024 from 11.18 percent in March 2018.

The US markets ended mostly in red on Friday as traders look ahead to Federal Reserve meeting. Asian markets are trading mixed on Monday as investors turned their focus to key central bank decisions scheduled for the week including the Bank of Japan, and the People’s Bank of China (PBOC). 

Back home, Indian equity benchmarks staged a sharp recovery from the day's lows and ended higher on Friday led by gains in Telecom, TECK and Consumer Durables stocks and encouraging domestic inflation data. Markets made a negative start and extended losses amid foreign fund outflows. Foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 3,560 crore on December 12. Traders overlooked the finance ministry’s statement that gross non-performing assets (NPAs) of public sector banks (PSBs) have declined to a decade low of 3.12 per cent at the end of September 2024 from a peak of 14.98 per cent in March 2018 on the back of measures like the 4Rs -- recognition, recapitalisation, resolution, and reform -- taken by the government. However, key gauges staged a remarkable comeback in the second half of the trading session and ended with strong gains, as moderating inflation and uptick in IIP growth numbers enthused investors to resort to value buying. The government data showed India’s retail inflation has declined to 5.48 per cent in November as compared to 6.21 per cent in October. This decline is primarily attributed to a drop in food prices, particularly vegetables which have helped reduce the overall inflation rate. This cooling of prices provides some relief to consumers who have been facing higher costs in recent months. Besides, India's industrial output, measures by the Index of Industrial Production (IIP) rose 3.5 per cent in October 2024, up from 3.1 per cent the previous month. Some solace also came as Ministry of Commerce & Industry in its latest release showed that India has achieved a remarkable milestone in its economic journey, with gross foreign direct investment (FDI) inflows reaching an impressive $1 trillion since April 2000, bolstered by a nearly 26% rise in FDI to $42.1 billion during the first half of the current fiscal year (H1 FY25) as against $33.5 billion in H1 FY24. In late afternoon session, markets continued to trade higher as investors continued to hunt for fundamentally strong stocks. Finally, the BSE Sensex rose 843.16 points or 1.04% to 82,133.12, and the CNX Nifty was up by 219.60 points or 0.89% to 24,768.30.

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