Dalal Street week ahead: Auto sales, FOMC minutes, manufacturing PMI among 10 key factors to watch

Dalal Street Week Ahead

The market snapped three-week losing streak, closing higher for the truncated week ended December 26. Stronger domestic demand, a favourable liquidity outlook, and hope for continuation of Fed policy easing in 2026 supported market sentiment, however, the market could not sustain all its Santa rally gains as there was pressure at higher levels due to limited progress in US–India trade talks and consistent FII outflow.

Meanwhile, gold advanced on safe-haven demand, with futures rising 3.77 percent during the week to end at record closing high of $4,552.7 an ounce while the Brent crude oil futures traded near the lower Bollinger bands, ending 0.28 percent higher at $60.64 a barrel, though experts feel US steps to tighten pressure on Venezuelan oil shipments could exert upward pressure in the near term.

The domestic equity markets are expected to be cautious amid rangebound trading with focus on auto sales, FOMC minutes and manufacturing PMI numbers. The monthly F&O expiry-led volatility can't be ruled out in initial part of the week, experts said.

The Nifty 50 rose 76 points (0.3 percent) for the week to 26,042, and the BSE Sensex gained 112 points (0.13 percent) to 85,041, while the Nifty Midcap 100 index ended flat and the Nifty Smallcap 100 index rallied 1.75 percent.

"Looking ahead, market sentiment is likely to stay cautious as investors brace for the upcoming earnings season while remaining attuned to global developments and currency movements," Vinod Nair, Head of Research at Geojit Investments said.

According to him, key drivers will include progress in India–US trade talks, rupee stability, FII trends, and movements in commodity prices. "With year-end trading volumes expected to remain subdued, price action could be largely contained," he said.

Siddhartha Khemka - Head of Research, Wealth Management at Motilal Oswal Financial Services also expects Indian equities to trade in a narrow range amid lack of triggers, tracking the macro indicators and institutional flows.

Here are 10 key factors to watch out for next week:

FOMC Minutes

The market participants will focus on the minutes of US Federal Reserve monetary policy meeting held on December 9-10. The central bank slashed the federal funds rate by 25 bps to 3.5-3.75 percent range in the said meeting, after the 25-bp reduction each in September and October. Globally, the markets of all asset classes will look for cues with respect to further rate cut path, jobs data, inflation and economic outlook from the minutes.

Global Economic Data

The focus will also be on the US weekly jobs data, and monthly pending home sales numbers.

Apart from this, manufacturing PMI data from the US, Europe, China and other nations will also be watched next week.

New Fed Chair Announcement

Globally, in the coming weeks, the market will also keep an eye on the appointment of new US Federal Reserve Chair as US President Donald Trump already said he would be declaring the name of new successor to Powell in early 2026. The decision is expected to shape the monetary policy outlook including whether the new chair will continue rate cut path or not.

The term of current Fed Chair Jerome Powell will end in May.

Domestic Economic Data

Back home, the industrial and manufacturing production numbers for November month will be released on December 29, followed by the RBI's market borrowing auctions on December 30.

This follows the fiscal deficit for November and external debt data for September 2025 quarter which scheduled on December 31.

On the final working day of the week i.e. January 2, the focus will be on the manufacturing PMI data for December month, bank loan & deposit growth for fortnight ended December 12, and foreign exchange reserves for week ended December 26.

The preliminary estimates indicated that the manufacturing PMI dropped to 55.7 in December, compared to 56.6 in November.

Auto Sales

Auto stocks - Tata Motor, Tata Motors Passenger Vehicle, Mahindra & Mahindra, Eicher Motors, Ashok Leyland, Maruti Suzuki, Bajaj Auto, Hero MotoCorp, Hyundai Motor India, TVS Motor, Escorts etc - will also be in focus as automobile companies will release their December sales volume numbers in later part of next week.

According to analysts, the growth across segments in December could be in double-digit compared to corresponding month last year. "Sales volumes are likely to be driven by continued positive customer sentiments spurred by better affordability (courtesy GST cuts), new products, interest rate cuts and adequate finance availability despite some pressure on rural sentiments due to a drop in retail crop prices," Nuvama Institutional Equities said.

FII Flow

The focus will also be on the Foreign Institutional Investors (FIIs) mood, though the activity may be low due to new year holiday week with many countries globally celebrating New Year's Day as a public holiday. FIIs were net sellers for the latest week to the tune of Rs 4,291 crore, taking their total net selling to over Rs 24,000 crore in current month, higher than Rs 17,500 crore selling in previous month.

However, Domestic Institutional Investors (DIIs) continued to compensate the FII outflow by wide margin even in the latest week as they net bought more than Rs 12,000 crore worth shares during the week, taking the total net purchases to over Rs 64,000 crore for December, as per provisional data.

Improvement in fundamentals are likely to attract net FII inflows in 2026. Robust GDP growth and prospects of improvement in corporate earnings in 2026 augur well for positive FII flows in 2026, said VK Vijayakumar, Chief Investment Strategist of Geojit Investments.

The sustained selling by FIIs have contributed significantly to the sharp depreciation in rupee which depreciated 0.22 percent for the last week to 89.75 against the US dollar, 0.46 percent for current month, and 4.93 percent for 2025. In previous week, it touched a record low of 91.08.

Meanwhile, the US dollar index remained below 100 mark for the fifth consecutive week, falling 0.67 percent for the latest week to 98.05 and trading below all key moving averages and even the midline of Bollinger bands. It was pressured by market speculation that President Trump may favour appointing a more dovish Federal Reserve Chair. This outlook, viewed as bearish for the greenback.

IPO Action

The activity at the IPO desk will be muted next week with only one IPO getting launched which is from the SME segment. Gurugram-based diagnostic chain Modern Diagnostic & Research Centre will open its Rs 37 crore Initial Public offering (IPO) on December 31 with price band of Rs 85-90 per share, while E to E Transportation Infrastructure, which provides system integration and engineering solutions for the railway sector, will close its Rs 84-crore public issue on January 2.

Meanwhile, total 11 new companies will be available for trading on the bourses next week with Gujarat Kidney & Super Speciality from the mainboard segment listing on December 30.

In the SME segment, Dachepalli Publishers, Shyam Dhani Industries, Sundrex Oil Company, and EPW India will also list on December 30, while the trading in Dhara Rail Projects, Admach Systems, Nanta Tech, Bai Kakaji Polymers, and Apollo Techno Industries shares will commence on December 31. E to E Transportation Infrastructure will also commence trading next week on January 2.

Technical View

Technically, the Nifty 50 has formed a Gravestone Doji–like pattern on the weekly charts, which is generally considered a bearish reversal pattern; however, the movement in the following week will be watched for confirmation. On the levels front, 26,200–26,250 is expected to be a crucial hurdle zone for the index, as sustaining above it could open the door for the 26,350–26,500 zone. However, falling decisively below the 26,000–25,950 zone could provide support to bears for a downward move toward 25,700, experts said. The momentum and technical indicators suggest a cautious outlook, with confirmation needed from upcoming price action.

F&O Cues

The monthly options data also indicated that the Nifty 50 may trade in the 25,900-26,300 range in the short term.

The maximum Call open interest was seen at the 26,200 strike, followed by the 26,100 and 26,300 strikes, with the maximum Call writing at the 26,100, 26,050 and 26,200 strikes. On the Put side, the 26,000 strike holds the maximum Put open interest, followed by the 25,800 and 25,900 strikes, with the maximum Put writing at the 26,050, 25,950 and 25,900 strikes.

Meanwhile, the India VIX, the fear index, ended at the record closing low of 9.15, down 3.91 percent for the week, giving comfort for bulls and also signalling the possibility of sharp market move.

Corporate Action

Here are key corporate actions taking place in the coming week: