Indian stock market indices, the Nifty 50 and the Sensex, are expected to start on a slightly cautious note on December 8, following mixed cues from global markets.

Global and Domestic Cues

• Global Market Trends: The trends on Gift Nifty suggest a muted start for the Indian benchmark index. Gift Nifty was trading around the 26,322 level, a discount of nearly 11 points from the Nifty futures' previous close. Positive cues from European indices, including DAX, STOXX 50, CAC 40 and FTSE 100, could provide a constructive backdrop, particularly for banking, large-cap, and rate-sensitive sectors.
• RBI's Rate Cut: On Friday, Indian equities experienced a sharp rise, fueled by the Reserve Bank of India's (RBI) monetary policy decision to cut the repo rate by 25 basis points. This rate cut, the fourth of the year, boosted market sentiment.
• FII and DII Activity: Consistent Foreign Institutional Investor (FII) outflows may limit sharp upside, while strong Domestic Institutional Investor (DII) buying continues to absorb selling pressure, helping the market maintain resilience.

Friday's Market Performance

On Friday, the BSE Sensex settled at 85,712.37, gaining 447.05 points or 0.52%, while the Nifty 50 ended at 26,186.45, up 152.70 points or 0.59%.

• Sectoral Performance: Sectoral performance was broadly positive, with notable strength seen in Nifty PSU Bank, IT, Auto, and Metal indices. However, Media, Pharma, and Consumer Durables emerged as key laggards, witnessing mild profit-booking.
• Broader Market: The Nifty Midcap 100 moved in line with the benchmark, closing 0.49% higher, whereas the Nifty Smallcap 100 came under pressure and ended 0.57% lower, indicating selective participation in the rally.

Key Levels to Watch

• Nifty 50: Immediate support lies within the 25,900-26,000 zone, coinciding with the 21-day EMA, while deeper support is situated near 25,600, close to the 55-day EMA. A decisive breakout above 26,350 could push Nifty toward 26,600. Near-term support levels are at 26,082/26,012, and resistance levels are at 26,310/26,380.
• Sensex: For positional traders, 85,000 and 84,700 would act as key support zones. On the higher side, 85,900 would serve as an immediate resistance level, and a successful breakout above 85,900 could push the index up to 86,500.
• Bank Nifty: The Bank Nifty sees support at 59,300-59,000 levels and resistance at 60,000-60,300 levels. The 59,200 – 59,100 area remains a strong support zone against any short-term pullback. Immediate support lies at 59,000, with a broader support band at 58,900 – 59,000. On the upside, resistance is positioned near the psychological 60,000 mark, and a decisive close above this zone could open the door toward 60,600.

Rupee and FII Activity

The rupee weakening below 90 against the US dollar raised concerns over inflation and import costs. The local currency has depreciated by 5% so far this year, the worst among Asian peers. Persistent foreign institutional investor (FII) selling also dampened confidence.

Analyst Outlook

• Amol Athawale, VP Technical Research, Kotak Securities, noted that as long as the Sensex is trading above the 85,000 and 84,700 levels, the bullish sentiment is likely to continue.
• Mayank Jain, Market Analyst, Share.Market, said that the next major resistance for Sensex stands at 86,000 – 86,200. Support is seen around 85,200 – 85,000, with the 85,000 strike carrying the highest put OI, reinforcing it as a crucial support level.

Overall, the Indian stock market is expected to be influenced by a combination of domestic and global factors. While the RBI's rate cut provides a positive boost, concerns about the rupee's depreciation and FII outflows may create some headwinds. Investors should closely monitor key support and resistance levels and remain cautious in their trading approach.