The final full trading week of 2025 begins with a mix of optimism and caution for Indian equity investors. A holiday-shortened schedule due to Christmas, coupled with key domestic and international data points, is set to define market sentiment.
Holiday-Thinned Trading and Domestic Catalysts
This week will see only four trading days as Indian stock markets remain closed on Thursday, December 25, for Christmas. Market experts anticipate subdued trading activity and lower volumes due to the festive break. Ajit Mishra, SVP of Research at Religare Broking Ltd, highlighted that domestic investors will track infrastructure output data, updates on bank loan and deposit growth, and foreign exchange reserves. Movement in the Indian rupee and crude oil prices will also be crucial variables influencing market direction.
The previous week ended on a volatile note. The BSE Sensex fell 338.3 points or 0.39% over the week, while the Nifty 50 declined by 80.55 points or 0.30%. However, a strong recovery on Friday saw the Sensex surge 447.55 points to close at 84,929.36 and the Nifty gain 150.85 points to end at 25,966.40. Mishra noted that this late-week rebound was driven by value buying and renewed interest from foreign portfolio investors (FPIs).
Global Cues and Foreign Investor Sentiment in Focus
The behavior of foreign institutional investors (FIIs/FPIs) remains a central theme. Ponmudi R, CEO of Enrich Money, pointed out that while strong domestic liquidity has provided a buffer, the re-emergence of sustained foreign fund inflows is seen as a key catalyst for the market's next upward move. He emphasized that global cues, especially the performance of major markets like the US, will be closely monitored.
The durability of any market momentum will hinge on key global macroeconomic indicators. Upcoming US GDP and core Personal Consumption Expenditure (PCE) data are particularly critical, as they will offer fresh insights into the health of the US economy amidst evolving inflation-growth dynamics.
Expert Views: Range-Bound with a Positive Bias
Market analysts expect a generally sideways movement with a positive inclination. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd, stated that markets are likely to trade in a range with a positive bias this week. This outlook is supported by improving FII participation, evidenced by buying over two consecutive sessions, and a marginal recovery of the Indian rupee against the US dollar.
Khemka added that investor focus is gradually shifting towards the upcoming third-quarter corporate earnings season. Other international data releases, including UK GDP and US consumer confidence figures, will also be on the radar during this holiday-impacted week.
In summary, the Indian stock market enters a festive week with cautious optimism, balancing domestic resilience against global macroeconomic signals and the rhythm of foreign investor flows.
