World Bank chief economist Kaushik Basu's comment that the institution might revise its India GDP forecast of 7.5% for FY2016 next month could dampen sentiments at the stock exchanges on the last trading Monday of the year.

The bank had retained its 7.5% forecast in October, but could be prompted to revise it after the Narendra Modi government lowered its GDP growth forecast to 7-7.5% in the mid-year economic review on 18 December, from the 8-8.5% projected in Budget 2015.

Indian stock markets otherwise do not have any fresh trigger for the last four trading days of calendar 2015, having factored in headwinds like the US Fed interest rate hike, falling exports, weakening rupee and drastic fall in crude oil prices globally, resulting in a better fiscal position for the government.

The S&P BSE Sensex actually rose 309 points on 17 December, a day after the US Federal Reserve hiked interest rate by 25 basis points, contrary to expectations that the hike would trigger a sell-off by financial institutional investors (FIIs), pulling down Sensex.

Pipavav Defence and Offshore Engineering is likely to see active trading after it was confirmed that Anil Ambani Group's Reliance Defence signed a $10-billion deal with Russian United Shipbuilding Company to build frigates for the Indian Navy. The deal was signed during Prime Minister Narendra Modi's visit to Russia last Thursday.

The frigates will be built at Pipavav Defence's shipbuilding yard in Gujarat at an estimated cost of Rs 30,000 crore. Besides, the deal also envisages modernisation of Indian Navy ships of Russian origin. The deal spans a period of 10 years.

Pipavav Defence had soared almost 20% on 24 December to close at Rs 100.25 on the BSE.

The commencement of the third-quarter earnings season is the next big trigger for stock markets. Infosys will be the first to declare its third-quarter results on 14 January, 2016.

It is pertinent here that both Wipro and TCS had said the Chennai floods that wreaked havoc and disrupted their operations would impact their third-quarter revenues.

Pharma stocks have been on a roll of late, with the latest debutants Alkem Laboratories and Dr Lal PathLabs gaining 31% and 50%, respectively, on listing on 23 December. The stocks rallied on the next day as well, and could see a similar trend on Monday, unless investors book profit.

Having said that, the markets could still surprise with a rally on Monday and in the next three days, as if taking a cue from Modi's surprise visit to Lahore where he met his Pakistani counterpart Nawaz Sharif at his Raiwind mansion on the city's outskirts.

Of course, it also depends on whether FIIs continue with their selling spree or resort to value-buying.

The Sensex closed at 25,638.71 on 24 December while the NSE Nifty ended at 7,861.05.

The Sensex has swung from 27,887.9 on 2 January, 2015, to touch a 52-week high of 30,024 on 4 March and low of 24,833 on 8 September.

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