Opening Bell - Morning Commentary
US Markets Drift Lower in Choppy Session; Fed Minutes Signal Caution
The S&P 500 and Nasdaq closed marginally lower Tuesday amid choppy trading, as gains in communication services stocks were offset by weakness in technology and financials, with the latter also dragging down the Dow.
After the previous session's decline, stocks drifted without clear direction throughout Tuesday's trading day, with major averages oscillating around the unchanged line.
Communication services shares led the S&P 500's gainers, driven by Meta Platforms' 1.1% advance. The technology giant announced its acquisition of Chinese-founded artificial intelligence start-up Manus, accelerating its integration of advanced AI capabilities across platforms including Facebook and Instagram.
Minutes from the Federal Reserve's December meeting revealed a deeply nuanced debate preceded the decision to cut interest rates, underscoring the central bank's careful assessment of economic risks. Even some policymakers who voted for the rate reduction acknowledged "the decision was finely balanced or that they could have supported keeping the target range unchanged," the minutes released Tuesday showed. With the Fed's next meeting scheduled for January 27-28, investors currently expect the central bank to hold rates steady.
Government data released Tuesday showed U.S. home prices rose in October at their slowest annual pace in over 13 years—a potential sign of improving affordability in the beleaguered housing market.
Indian rupee snapped its five-day losing streak, appreciating 18 paise to close at 89.79 against the dollar. The recovery came after the RBI reference rate, aided by year-end settlements and rebalancing flows. Gains were further supported by thin liquidity conditions and steady dollar supply from banks.
Despite the minor decline yesterday, Nifty’s close above the 50-DEMA at 25,837 keeps the short-term bullish structure intact. Metals, PSU Banks, and Auto led the gainers.
The highly volatile December series concluded yesterday with modest gains. In the stock futures segment, the January series opens with record-high open interest of 1,618 crore shares, surpassing the 1,576 crore shares recorded at the start of November 2025.
For Bank Nifty, the January series begins with sharply lower open interest of 12.47 lakh shares—the lowest level since January 2021—indicating substantial short covering.
At the start of the January series, FIIs' long-to-short ratio in index futures stands at 0.10, down from 0.18 in the previous series. This means 91% of total FII positions in index futures remain on the short side. Such a low ratio signals oversold positioning and raises the possibility of near-term short covering, which would bode well for the markets.
On the upside, Nifty needs to clear the 26,100 – 26,150 resistance zone to regain its bullish momentum and open the path for higher levels.
Indian markets are expected to open on a subdued note amid the absence of compelling global cues.