Indian stock markets are bracing for a cautious trading session on December 10, 2025, as investors await the outcome of the US Federal Reserve's policy meeting. Both the Nifty 50 and Sensex are expected to open lower, mirroring mixed cues from global markets.
Global Cues and US Fed Meeting:
The primary driver of market sentiment is the US Federal Reserve's Federal Open Market Committee (FOMC) meeting, scheduled for December 9-10. The Fed is widely expected to announce its third consecutive interest rate cut, with an anticipated 25-basis-point reduction. However, the market's reaction will hinge not only on the rate change itself but also on the Fed's forward guidance regarding future monetary policy. A cautious tone or signals of potential volatility could trigger short-term caution in the Indian market, even if the long-term outlook remains positive.
According to Akshat Garg, Head - Research & Product at Choice Wealth, the real market driver will be Fed Chairman Powell's message on inflation and growth, rather than the rate move itself. Ross Maxwell, Global Strategy Operations Lead at VT Markets, noted that the Fed's commentary guides market expectations and can significantly influence Indian indices.
Conversely, a dovish stance by the Fed could boost global risk appetite, encouraging foreign institutional investors (FIIs) to increase allocations to emerging markets like India. However, if the Fed hints at prolonged tight monetary policy, US assets may become more attractive, potentially triggering FII outflows from Indian equities and weakening the rupee.
Market Performance and Predictions:
On Tuesday, December 9, the Indian stock market closed lower, with the Sensex declining 436.41 points (0.51%) to close at 84,666.28, and the Nifty 50 settling 120.90 points (0.47%) lower at 25,839.65. The trends on Gift Nifty also indicate a negative start for the Indian benchmark index. The Gift Nifty was trading around 25,902 level, a discount of nearly 58 points from the Nifty futures' previous close.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, suggested that Sensex is holding a lower high formation on daily and intraday charts, which supports further weakness from the current levels. He added that 84,400 would act as a key support zone for day traders.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said that the underlying trend of Nifty remains weak. However, any sustainable bounce back from near the crucial support of 25700 could possibly open more upside towards 26100-26200 levels in the near term. Nifty has immediate support is placed at 25700.
FII and DII Activity:
Foreign institutional investors (FIIs) have been persistent sellers, reducing exposure amid global volatility. On December 9, FIIs sold equities worth ₹3,760.10 crore, while domestic institutional investors (DIIs) supported the market with net purchases of ₹6,224.90 crore.
Rupee and Other Factors:
The Indian rupee also weakened, softening by 10 paise to Rs 90.15 in early trade on Tuesday, due to steady demand for dollars from corporates, importers, and FPIs. Uncertainty surrounding a potential India-US trade agreement has also contributed to the weakening of the rupee and FII outflows.
Overall Market Sentiment:
Overall, the Indian stock market is expected to exhibit caution on December 10, 2025, as investors await the US Fed's policy decision. The market's direction will be influenced by the Fed's rate decision, forward guidance, FII flows, and movements in the rupee.
