Both benchmark share indices had their longest winning streak of seven straight weeks, owing to fresh foreign inflows and expectations that the US Federal Reserve may cut rates as early as March next year.

Foreign investors have purchased Indian equities worth $5.1 billion so far in December, the highest monthly equity inflows since July.

The US central bank kept its key interest rates unchanged at 5.25-5.50 percent at the FOMC meeting last week but signalled that it may adopt a more accommodative monetary policy stance next year by cutting rates.

The US stocks extended their winning streak also for the seventh consecutive week, the longest since 2017.

Indian Markets Last Week

Stock indices recorded their longest winning streak of seven weeks in a row. Both benchmark indices surged last week on increased expectations that the US Federal Reserve may start cutting its key rates by March 2024. IT and metal shares led to a surge in the stock market last week.

Yields fell substantially by over 10 basis points, their highest drop in seven months, after the dovish stance of the US Fed last week. Yields dropped further on Friday due to strong demand at the weekly government bond auction.

The rupee gained 0.4 percent in a week for the first time since August 25 on massive dollar inflows and a rebound in stock markets to new record highs. Few large foreign banks sold dollars on behalf of their clients to square off speculative bets.

Global Markets Last Week:

US stocks rose for the seventh week in a row, posting their longest stretch since 2017. On Friday, the surge was muted after the US Fed New York President said that the central bank is focused on getting inflation down to targeted 2 percent and that rate cut expectations were premature.

Treasury yields fell by 34 basis points last week, their largest fall since March 2020, after the US Fed Chair signalled a change in its monetary policy stance next year. On Friday, yields rose for shorter tenure treasuries after the US Fed officials lowered hopes that interest rates would be cut soon, likely in the first quarter of 2024.

The US dollar posted its worst weekly decline in five months, even after Friday's advances. European central banks' tougher stance and anticipation of rate cuts by the US Fed led to the dollar falling. Market expectations had shifted due to remarks made by the US Fed Chair Jerome Powell, which implied that monetary policy tightening may come to a stop soon.

Corporate Bonds

Secondary Market

Yields fell slightly for short-term bonds mirroring a fall in the government and the US treasuries last week after the US Fed officials' unexpected projection of rate cuts of around 75 basis points in 2024. Yields on longer tenure bonds were steady.

Outlook For This Week

Stock markets may consolidate their gains this week and will take fresh cues from global stock market movements and crude oil prices. Government bond yields may open flat and the rupee may give up the previous week's gains in the early trades on Monday.

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