US Fed decision, FIIs trading activity likely to steer markets this week

The US Fed's interest rate decision will be the major factor dictating trends in the domestic equity market this week, with global movements and foreign investor activity also influencing sentiment, according to analysts.

Stock markets ended the last week on a subdued note, with benchmark indices Sensex and Nifty closing flat.

"This week, markets will closely track India's CPI print on December 12...Globally, the spotlight will be on the US Federal Reserve's interest rate decision, which could drive risk sentiment across emerging markets already navigating currency pressures," Ajit Mishra- SVP, Research, Religare Broking Ltd, said.

The movement of the rupee, which breached 90 to a dollar last week, will also be tracked by investors.

Investors' attention now shifts firmly to the upcoming US Federal Open Market Committee (FOMC) meeting scheduled for December 9-10, 2025, Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd, said.

"Alongside the FOMC decision, key US economic data will remain on investors' radar. The US JOLTs Job Openings data due on December 9 and the Employment Cost Index (q/q), scheduled for December 10, will provide fresh insights into the health of the US labour market and wage pressures.

"Movements in the US dollar index and Treasury bond yields will be critical indicators, as any sharp shift could impact risk appetite across global equity and debt markets," Gour added.

Last week, the BSE benchmark eked out a marginal gain of 5.7 points, while the NSE Nifty dipped 16.5 points.

"The spotlight this week will firmly be on the US Federal Reserve's monetary policy decision, a key event that global investors are watching closely given its potential to shape worldwide risk sentiment.

"Beyond the rate action itself, investors will be keenly tracking the Fed's commentary and guidance on the future path of interest rates -- an element that may prove even more influential for market direction in the weeks ahead," Ponmudi R, CEO - Enrich Money, an online trading and wealth tech firm, said.

With India's economic growth remaining resilient despite tariff pressures and global headwinds, the Indian equity market is well-positioned to benefit if global fund flows begin to rotate back into emerging markets, he added.

"In this context, the Fed's messaging will be pivotal in shaping near-term sentiment and market direction for India," Ponmudi R said.