Weekly Market Summary 22-26 dec 2025 | Scrolls

by Karnivesh, 2025

WEEKLY MARKET RESEARCH REPORT 22-26 Dec 2025.pdf

Download PDF • 1.81MB

The final full trading week of December 2025 told a quiet but important story about Indian equity markets. At first glance, the numbers looked uneventful—benchmarks drifted marginally lower, volatility stayed unusually compressed, and participation thinned as the holiday season set in. But beneath this calm surface, the market revealed how structurally different it has become compared to previous cycles.

Despite foreign portfolio investors selling ₹3,833 crore during the week, Indian markets held their ground with surprising resilience. The Nifty declined just 0.44%, and the Sensex slipped 0.59%. A few years ago, such sustained foreign selling would have triggered sharper corrections. This time, domestic institutional investors absorbed the pressure decisively, deploying over ₹12,000 crore in net buying. Monthly SIP inflows nearing ₹30,000 crore and steady allocations from insurance and pension funds provided a strong domestic liquidity cushion. The message was clear: Indian markets are no longer hostage to foreign flows alone.

Macroeconomic fundamentals continued to support this stability. India’s Q2 FY26 GDP growth of 8.2% the highest in six quarters reinforced its position as one of the fastest-growing major economies globally. Inflation remained exceptionally benign, with CPI at just 0.71% and WPI in deflationary territory. This gave the Reserve Bank of India ample room to maintain an accommodative stance after cutting the repo rate to 5.25%, with markets increasingly pricing in further easing in 2026. Meanwhile, foreign exchange reserves of over $686 billion ensured comfort on the external front, even as the rupee stayed weak on a year-to-date basis.

Equity markets, however, were not uniformly optimistic. What stood out was a clear sectoral rotation underway. Investors moved away from crowded growth trades particularly IT services and private banks and rotated into value-oriented, domestically driven sectors. Metals, capital goods, PSU banks, and infrastructure linked stocks outperformed as expectations around government capex,

infrastructure spending, and economic recovery strengthened. Coal India, NMDC, and capital goods names emerged as leaders, while IT stocks faced profit-booking after a brief early-week rally. Private banks continued to struggle with concerns around margin compression and deposit growth, even as PSU banks found favor on valuation comfort and policy support.

Market sentiment remained calm to the point of complacency. India VIX hovered below 10, a level historically associated with low-risk perception and tight trading ranges. Breadth data, however, hinted at selective participation rather than broad-based enthusiasm. Gains were concentrated in a handful of stocks and sectors, while mid-caps and several large-cap defensives saw profit-taking. Thin holiday volumes further muted price action, making the week more about positioning than conviction.

Globally, the backdrop was mixed but manageable. The US economy showed resilience, inflation expectations softened, and recent Fed easing helped stabilize risk sentiment. Crude oil prices stayed range-bound around $60–62 per barrel, easing inflation worries for India but signaling cautious global demand. Gold continued to trade near record highs, reflecting a steady undercurrent of risk aversion as investors positioned defensively ahead of 2026.

As markets head into the final trading days of 2025 and the opening of the new year, the tone is one of consolidation rather than exuberance. Domestic investors appear confident in India’s long-term growth story, steadily accumulating quality names on dips. Foreign investors, on the other hand, remain cautious—driven not by macro weakness, but by valuation discipline, currency considerations, and relative opportunities elsewhere.

In essence, this was not a week of fear or euphoria, but a week of transition. The Indian equity market is entering 2026 on a stronger structural footing supported by domestic capital, stable macro fundamentals, and disciplined participation. The next decisive move is likely to emerge only after volumes normalize, corporate earnings provide clarity, and policy direction becomes sharper in the new year. Until then, the market seems content to pause, recalibrate, and quietly prepare for the next phase of its journey.

.