Lots of things where trader will busy this week..

After the December 10 rout, the market gained strength immediately on December 11 and remained positive for the remainder of the trading sessions to end last week a percent higher after outcome of the recently held state elections (which was a setback to the government) and appointment of a new Reserve Bank of India (RBI) governor.
Favourable macros like stable crude oil prices and positive global cues on easing trade tensions also boosted market sentiment, though global markets corrected on December 14 after China's economic data raised growth concerns.
The Nifty rallied from around 10,333.85, the weekly low, to over 10,800 during last week, partly driven by short covering.

"The market is giving an impression that it had factored in the election outcome. Softening consumer (CPI) inflation at 2.33 percent (November), pick-up in industrial production to 8.1 percent in October and the likelihood of a change in RBI's stance from 'calibrated tightening' to 'neutral' will add optimism to market participants," Vinod Nair, Head of Research at Geojit Financial Services, said.

On the global front, Nair feels trade deal optimism, signs of a slow pace in Federal Reserve rate hike and decline in crude oil prices will calm the market nerves to some extent.
The broader markets outperformed frontline indices with the BSE Midcap and Smallcap indices rising 3.23 percent and 2.82 percent, respectively.
"In case of midcap and smallcap indices, it seems like a repeat of a shallow rally of mid-2018," Sahil Kapoor, Chief Market Strategist, Edelweiss Investment Research, said.
He feels mid- and smallcap stocks are undergoing a realignment of valuations. "At this juncture, they would continue to face multiple earnings de-rating. Improvement in earnings may lead to a new equilibrium for mid- and smallcap stocks."
The Nifty Bank (up 0.87 percent) outperformed, with an expectation of an ease in liquidity and relaxation in the prompt correction action (PCA) framework. Automobile, FMCG, infrastructure, IT, metal and realty among others gained 1-4.5 percent.
Trading volume is expected to reduce for the next couple of weeks, especially after the Federal Reserve policy meeting and due to the Christmas and New Year vacation.

See following things that will keep traders busy this week:

Federal Reserve meet

After pricing in weak economic data out of China, globally markets will look ahead to Federal Open Market Committee's two-day policy meeting that will start from December 18.
Analysts largely expect the Fed to raise its benchmark interest rate by 25 bps to between 2.25 percent and 2.5 percent, but are cautious about rate hikes in 2019, considering the potential slowdown in economic growth.
Fed Chairman Jerome Powell's commentary, policy statement and indication from its interest rate projection would be closely watched.
"After the last Fed meeting, the market was pricing in two rate hikes, while dots plot (a statistical chart consisting of data points) suggested three rate hikes for 2019. Since then, the market has sharply repriced its rate hike expectation of up to two rate hikes as growth in GDP and EPS for 2018 was sharply revised lower for 2019 as fiscal stimulus is likely to fade out in 2019," Amit Gupta of ICICIdirect told Moneycontrol.
He said a dovish dot plot could help revive the convergence trend between emerging markets and developed markets, it added.

Crude Oil
Crude oil prices corrected last week, amid expectations of lower fuel demand in China after weak economic data and concerns about whether OPEC's planned output cut (of 1.2 million barrel per day) would suffice to curtail oversupply.
Brent crude futures, the international benchmark for oil prices, slipped 2.25 percent to end last week at $60.28 a barrel. Prices have been around this level since the start of December.
"Crude oil prices may continue to remain rangebound. Russia's pledge to cut production and Saudi Arabia's plan to lower exports to the US have lifted optimism that the global supply glut could be curbed," Ravindra V Rao, Head - Commodity Research & Advisory at Anand Rathi Commodities, said.
He said the market will keenly monitor how the shifting demand-supply scenarios are being played out in coming sessions. Overall, the outlook for crude oil is mixed, he added.
Any fall or stability in prices is likely to support the Indian economy as well as equity markets, so crude price movement will be closely watched.
 

Rupee
The rupee depreciated for the second consecutive week, down 109 paise, or 1.54 percent, to end at 71.89 against the dollar as demand for the greenback remained strong ahead of this week's Fed meet.
Unexpected resignation of RBI Governor Urjit Patel along with changing political equations due to the outcome of the state assembly elections also weighed on the rupee.
The dollar strengthened against major currencies and the US Dollar index remained above the crucial resistance of 97.
"Any dovish assessment in the backdrop of declining US economic data could see liquidation in long dollar positions," Gupta said. He expects the rupee to remain in the 71.30–72.50 range for the next few session, while outcome of the Fed monetary policy meeting may provide cues for EM currencies, including the rupee.
 

FII and DII flows
Foreign institutional investors, so far in December, have continued to remain net buyers in equities to the tune of around Rs 3,000 crore, after buying Rs 10,563 crore in November.
The consistent flow continued to support the market from last month.
In the Indian F&O segment, fresh long creation was seen by FIIs in index futures to the tune of $122 million. However, buying in index options picked up recently as the Nifty neared 10,800. Last week, their total index option buying aggregated $600 million, Gupta said.
However, flows from domestic institutional investors slowed down compared to FIIs, as they net bought around Rs 2,000 crore worth of shares in November and December.
 

Technical outlook
The Nifty smartly bounced back from its weekly lows of 10,333 touched on December 11 to close the week above 10,800 levels, forming a strong bullish candle on the weekly scale.
As the benchmark index finished off the week on an ambiguous note, consolidation is expected to continue in coming sessions. Experts said the index is likely to face resistance around 10,800-10,900 levels.
"Now it has to continue to hold above 10,700 to extend its move towards the crucial hurdle of 10,880-10,929. On the downside, support exists at 10,650, then 10,600 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
He said the index has been flirting near its 50 day exponential moving average (DEMA) and requires to surpass its crucial hurdle zone to commence the next move in the market.
At the same time, Nifty VIX closed lower around 15.16 for the first time since October. "This indicates subdued volatility in coming sessions with no major price movement," Shabbir Kayyumi, Head-Technical & Derivative Research at Narnolia Financial Advisors, said.
 

F&O outlook
Maximum call open interest (OI) was seen at 11,000 strike, followed by 10,900 and 10,800 strikes. Maximum put OI was seen at the 10,500 strike, followed by 10,700 and 10,600 strikes. Call writing was seen at 10,800, followed 11,000 and 10,900 strikes, while put writing was seen at 10,800, 10,700 and 10,400 strikes.
The option band signifies a trading range in between 10,650 and 10,929 zones, experts said.
"Volatility index corrected sharply by 18.45 percent last week to 15 levels while put-call ratio moved up from 1.30 to 1.53 levels. Decline in volatility with a surge in PCR suggests that supports are shifting higher and a small follow up move could drive the upmove," Taparia said.
Gupta sees immediate support for the index at 10,700, where positions of put writers are increasing.
At the other end, OI in the 11,000 call strike has remained flat near 66,000 contracts, which indicates that the Nifty is forming a higher base and a further upmove can be seen towards expiry, he added.