Stock markets are poised for a calm opening on Tuesday following the significant decline in the Sensex and Nifty, marking their largest drop in over two months. Concerns among investors are mounting due to global uncertainties, especially in anticipation of the US Federal Reserve’s interest rate decision. The weakening rupee and substantial sell-off by foreign investors are contributing to the market pressure.
Nifty futures were trading at 25,964.5 at 8:03 am, indicating a potential opening close to Monday’s closing level of 25,960.55. Investor sentiment has soured due to increasing caution ahead of the upcoming Fed meeting. Ajit Mishra, Senior Vice President – Research at Religare Broking Ltd, noted that concerns revolve around the potential impact of a tighter global monetary policy on emerging markets, exacerbated by the rupee’s weakness and continuous FII outflows.
Foreign investors offloaded stocks worth Rs 655.59 crore on Monday, with December witnessing an outflow of Rs 11,059.21 crore from Indian equities, intensifying selling pressures. In the US, ongoing trade negotiations with India and potential tariffs on Indian rice are causing unease. President Donald Trump’s announcement of a support package for American farmers and tariff threats on fertilizers from Canada are heightening trade tensions.
Asian markets are also feeling the strain, with the MSCI’s Asia Pacific shares outside Japan declining by 0.3%. Market participants are treading cautiously ahead of the Fed’s policy meeting, which is expected to result in an interest rate cut. However, US banks foresee fewer cuts in the future due to persistent inflation and the robust American economy.
Analysts are closely monitoring Nifty’s key levels following Monday’s decline. Bajaj Broking highlighted that a breach below 25,890 could lead to a further drop to the range of 25,750–25,700. Conversely, sustaining above 26,200 might indicate a trading range between 26,200 and 25,900 until clarity emerges from the Fed decision. Mishra cautioned that a break below 25,800 could deepen the downtrend, potentially sliding to 25,500–25,650.
Amidst the current uncertainties, a cautious approach focusing on defensives, quality names, and strong rate-sensitive sectors is recommended. Traders are expected to remain vigilant with a narrow market range anticipated unless significant global developments occur. Monitoring the rupee’s performance, FII flows, and key support levels at 25,800 and 26,200 will be crucial in determining the market’s trajectory.