With just two trading sessions remaining in 2025, the Indian stock markets are experiencing a lull, as the anticipated Santa rally failed to materialize. Investors are exhibiting caution in the absence of significant global or domestic catalysts. While the Nifty 50 is poised to conclude the year with a respectable near 10% gain, the broader market sentiment suggests consolidation rather than aggressive upward movement.

Market Performance and Analysis

The BSE Sensex ended down 0.41% at 84,695.5 on December 29, marking its fourth consecutive session of declines. The Nifty 50 followed suit, dropping 0.38% to close at 25,942.10. This downturn was largely attributed to selling pressure in IT, realty, pharma, and auto stocks. Foreign fund outflows and muted year-end trading volumes further dampened investor appetite.

Analysts observe that the market entered December with valuations already reflecting positive expectations, leaving limited room for substantial gains without fresh impetus. The lack of progress on a US-India trade deal and the absence of major policy announcements have contributed to this consolidation.

Trading Strategies for the Final Sessions

Given the current market conditions, experts recommend a selective, stock-specific approach for the remaining trading days of the year. With trading volumes expected to remain light, investors should focus on sectors demonstrating relative strength and maintain prudent position sizes.

• Monitor Technical Levels: Keep a close watch on key support levels. For Nifty 50, immediate support is seen near 26,000, while resistance remains around 26,200. A decisive break below 25,800 could invite short-term selling pressure.
• Be Selective: Focus on fundamentally strong companies and sectors with positive momentum. Sectors like metals have shown relative outperformance, supported by global commodity strength.
• Manage Risk: Given the potential for intraday volatility due to monthly expiry, maintain disciplined stop-loss levels to protect capital.
• Consider a "Buy on Dips" Strategy: With the broader structure remaining intact, utilize minor dips as opportunities to accumulate quality stocks.

Factors Influencing Market Sentiment

Several factors are expected to influence market sentiment in the final sessions:

• Global Cues: Monitor global market trends and any significant economic data releases.
• FII Activity: Keep an eye on foreign institutional investor activity. While FIIs have been net sellers for a while, any signs of renewed buying interest could provide a boost.
• Rupee Movement: Track the movement of the Indian rupee against the US dollar. A stable rupee can reduce worries about external pressure.
• Domestic Institutional Support: DIIs have been providing stability to the market by buying on declines. Continued support from DIIs can cushion the market against sharp corrections.

Looking Ahead to 2026

While the Santa rally may have fizzled out in 2025, some analysts anticipate a potential rally in early 2026. Experts suggest that 2026 could be a better year for the Indian stock market, supported by healthy earnings growth, economic expansion, and the possibility of an India-US trade deal. As the market enters a consolidation phase, focusing on value over speculation and staying informed will be crucial for investors.