Sensex and Nifty Retreat From Early Gains in Thin Year-End Trade
Indian equity benchmarks Sensex and Nifty slipped into the red after giving up early gains in thin year-end trading, as investors stayed cautious amid weak global cues, persistent foreign fund outflows and pressure on the rupee. With the calendar year nearing its close, market participation remained subdued, making indices vulnerable to intraday swings.
In early trade, the Sensex touched an intraday high of 85,250, rising 209 points or 0.24 percent, while the Nifty climbed to 26,106.80, up 64.5 points or 0.24 percent. However, the optimism did not last long as selling emerged across sectors, dragging the benchmarks lower as the session progressed.
By around 11:30 a.m., the Sensex had fallen nearly 500 points from the day’s high to 84,763.91, down 277.55 points or 0.33 percent. The Nifty slipped below the key 26,000 mark to 25,966.95, losing 75.35 points or 0.29 percent.
Market Breadth Turns Negative as Heavyweights Weigh on Indices
Market breadth weakened notably, reflecting broad-based selling pressure. Around 1,424 stocks advanced, while 2,319 declined and 171 remained unchanged, indicating a clear tilt towards caution.
Among Nifty50 stocks, Adani Ports and Special Economic Zone, Power Grid Corporation of India and Shriram Finance were among the top laggards, declining up to 2 percent. In contrast, Tata Steel and JSW Steel gained up to 3 percent as metal stocks benefited from firm international metal prices. Despite these gains, losses in heavyweight stocks kept the indices under pressure.
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Thin Year-End Trading Volumes Limit Market Momentum
Low trading volumes remained a key factor behind the muted market movement. With many institutional investors avoiding aggressive positions during the holiday season, liquidity in the market stayed thin.
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Average daily trading volume on the Nifty50 in December stood at around 250 million shares
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This compares with nearly 300 million shares recorded in November
“With the holiday season and calendar-year close, trading volumes remain thin due to subdued year-end participation, keeping markets muted,” said Aakash Shah, research analyst at Choice Broking, in comments to Reuters.
Persistent FII Selling Continues to Pressure Domestic Equities
Foreign Institutional Investors (FIIs) continued to sell Indian equities, adding to the cautious sentiment. On Friday, FIIs sold shares worth ₹317.56 crore, marking the fourth consecutive session of net outflows.
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Sustained foreign selling has capped any meaningful upside in indices
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Large-cap stocks have been particularly affected due to higher FII ownership
The ongoing FII outflows have made domestic investors wary, especially in the absence of strong global or domestic triggers.
Rising Crude Oil Prices Rekindle Inflation Worries
Crude oil prices moved higher, adding another layer of concern for Indian markets. Brent crude rose 1.04 percent to $61.27 per barrel.
Higher crude prices tend to:
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Increase India’s import bill
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Add to inflationary pressures
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Impact fiscal and current account dynamics
These factors often weigh on equity markets, particularly on rate-sensitive and consumption-driven sectors.
Weak Global Cues Keep Investors on the Defensive
Global market cues remained subdued, offering little support to domestic equities. US markets ended flat on Friday, while US futures traded on a muted note during Asian hours on Monday. Asian markets also reflected caution, with Japan’s Nikkei 225 trading lower.
“A strong rebound in the market needs a trigger like a US-India trade deal with favourable tariffs for India. There is no clarity yet on when this will happen,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
He added that the market may remain in a consolidation phase in the near term, during which investors can selectively accumulate high-quality stocks.
Rupee Weakness Adds to Cautious Market Sentiment
The Indian rupee depreciated further against the US dollar, slipping 5 paise to 89.95 in early trade amid foreign fund outflows and weak domestic equities. On Friday, the rupee had already declined by 19 paise.
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A weaker rupee raises imported inflation risks
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It also impacts companies with high foreign currency exposure
Currency weakness, combined with FII selling, kept investor sentiment restrained.
Technical View Highlights Key Levels to Watch on Nifty
From a technical standpoint, the Nifty is trading close to its 20-day simple moving average, making near-term levels crucial for direction.
“An early pullback is possible, but a move above 26,127–26,150 is needed to confirm strength. Failure to hold above 26,050–26,077 could lead to further downside towards 25,935–25,850,” said Anand James, Chief Market Strategist at Geojit Investments Limited.
Overall, the sharp intraday reversal in Sensex and Nifty reflects a mix of seasonal caution, global uncertainty and domestic headwinds. While long-term investors may view the consolidation as an opportunity, near-term market direction is likely to remain range-bound unless a strong trigger emerges.
