The Indian stock market is expected to open strongly on Friday, December 12, 2025, buoyed by positive global cues following the US Federal Reserve's recent interest rate cut and encouraging performances in US markets. Here's a breakdown of the key factors influencing market sentiment overnight:

1. Gift Nifty Signals Positive Start:

• The Gift Nifty, an indicator of how the Indian stock market might perform, is trading near its record high. It was trading around 26,134, up 108 points or 0.4% from the previous close of Nifty futures, suggesting a robust start for domestic markets.
• Gift Nifty helps traders understand the direction of the Nifty 50 before the Indian stock market opens. It replaced the SGX Nifty and is now traded at the GIFT City in India.

2. US Markets Rally After Fed Rate Cut:

• US stock markets closed higher on Wednesday after the Federal Reserve announced a widely expected 25-basis-point rate cut.
• The Dow Jones Industrial Average gained 497.46 points (1.05%) to close at 48,057.75. The S&P 500 rose by 46.17 points (0.67%), ending at 6,886.68, and the Nasdaq Composite increased by 77.67 points (0.33%), finishing at 23,654.16.
• On December 11, 2025, US equities finished higher, closing near the day's best levels following Powell's press conference. The S&P 500 briefly exceeded 6900.

3. Asian Markets Follow Wall Street's Lead:

• Asian markets also traded higher in response to the Fed's decision, reinforcing the positive sentiment for Indian stock markets.
• Indices in Asia were mixed.

4. Gold Prices Climb:

• Gold prices climbed in anticipation of the US Federal Reserve's interest rate decision. Spot gold was trading 0.3% higher at $4,242.39 per ounce. US gold futures gained 1.1% to reach $4,271.30.
• Gold prices often act as a safe-haven asset for investors, typically increasing when stock markets struggle during economic uncertainty or market instability.
• Investment in gold has trumped most asset classes regarding compounded annual returns over the long term.

5. Domestic Market Performance:

• The Indian stock market snapped its three-day losing streak on Thursday, December 11, 2025, after the US Federal Reserve cut interest rates by 25 basis points. The Sensex climbed 427 points to 84,818.13, up 0.51%, while the Nifty 50 gained 141 points to settle at 25,898.55, rising 0.55%.
• However, Indian equities had extended their losing streak for a third straight session on Wednesday, December 10. The Sensex initially climbed 354 points but closed in the red, slumping by 275.01 points (0.32%) to close at 84,391.27. The Nifty 50 moved down by 81.65 points (0.32%) to settle at 25,758.

6. Expert Opinions:

• Vinod Nair, Head of Research at Geojit Investments Limited, noted that domestic markets rebounded broadly following the Fed's expected rate cut amid high US inflation. He added that the decline in US 10-year yields indicates a moderation in future Foreign Institutional Investor (FII) outflows, which bolstered sentiment.
• The auto sector is expected to perform well due to anticipated stronger demand, while IT is gaining traction on the prospect of increased spending.

7. Other Factors:

• Brent crude surged by 0.4% to $62.48/barrel, while US West Texas Intermediate (WTI) crude was trading 0.6% higher at $58.79/barrel.
• Increased activity in the primary market, with IPO listings, may impact the liquidity of secondary markets.

8. Cautionary Note:

• Investors should remain cautious, considering factors such as global economic cues and the US Federal Reserve's policy decision.
• Uncertainty over the US-India trade deal and persistent FII outflows could also influence market movement.

9. Impact of Fed Rate Cut:

• The Federal Reserve's decision to cut interest rates by 25 basis points and indicate one more reduction next year has boosted market sentiment.
• Market participants will react to the US Federal Reserve policy meeting in today's trading session.