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Informist, Tuesday, Dec. 16, 2025

 

By Simran Rede

 

MUMBAI – The benchmark Nifty 50 index is expected to face difficulty rising above the psychologically important level of 26000 points in the near term after falling sharply Tuesday. Traders closed their long positions in the options chain of the 50-stock index, indicating more weakness Wednesday.

 

The fall of the rupee to a record closing low, uncertainty over the long-awaited trade deal between India and the US, and the persistent outflow of foreign investments have combined to dampen market sentiment. The rupee closed at 91.0275 per dollar, down sharply from 90.7300 Monday. So far in December, foreign portfolio investors have net sold equities worth over INR 172 billion, significantly higher than the INR 37.65 billion worth of Indian equities sold in November, according to the data on National Securities Depository Ltd.

 

Foreign institutional investors continue to keep 80-90% of their total positions in index futures short. However, domestic investors have provided the market a cushion and prevented it from falling more sharply as they continue to be net buyers. Foreign investors are expected to flock back to Indian equities only if corporate earnings and wage growth in the country improve, a research analyst at a domestic brokerage said.

 

"With QT (quantitative tightening) ending and further cuts likely, improving liquidity and a softer dollar could revive FPI inflows into India by late-2025 / early-2026," ICICI Direct said in a research report. "Low or falling US rates have historically driven FPI inflows into India as global capital seeks higher returns," the broking firm said.

 

The earnings downgrades are said to have slowed and the December quarter earnings of Indian companies are seen to be improving, given positive triggers such as interest rate cuts and the cuts in goods and services tax rates. The rise in the Nifty 50 to 29200-32000 points in 2026 is likely to be led by earnings growth, some brokerages said in their annual outlook on the equity market.

 

The next positive trigger for the market will come from any positive development in the trade deal talks between India and the US, said analysts. The chief negotiators from India and the US have concluded their discussions on the proposed Bilateral Trade Agreement, a commerce ministry official told Informist. The remaining issues now require intervention at the ministerial level, the official added.

 

In the derivatives chain of the Nifty 50, traders aggressively wrote call options at the 26000 strike and shifted their positions to the 25900 strike, anticipating a further fall in the market, a technical and derivatives analyst at a domestic brokerage said. The Nifty 50 settled at 25860.10 points Tuesday, down 167.20 points or 0.6%. The index is expected to find immediate support at 25750 points Wednesday and may face resistance at 25900 points, according to a technical analyst at a domestic brokerage. If the 50-stock index manages to reach 26000 points, it will be seen as a good selling opportunity, the analyst added.

 

The highest addition of open interest was seen in call contracts at strike prices between 26000 and 27000 points expiring Dec. 23, up around 8 million each. Premiums on call contracts between 25900 and 26300 strike prices declined 33-67%. The maximum addition of open interest was at the 26000 call option and the highest concentration was at the 27000 call contract.

 

On the put side, premiums on out-of-the-money contracts rose, again indicating the possibility of a near-term fall in the index. Premiums on 25700-25400 put contracts expiring next week increased 26-73%. The maximum addition of open interest and the highest concentration were seen at the 25000 put contract.

 

--Nifty 50 December closed at 25932.00, down 176.70 points; 71.90-point premium to the spot index
--Nifty 50 January closed at 26099.00, down 169.70 points; 238.90-point premium to the spot index
--Nifty 50 February closed at 26250.00, down 157.30 points; 389.90-point premium to the spot index

 

Vedanta, Axis Bank, HDFC Bank, Eternal, Infosys, Reliance Industries, ICICI Bank, BSE, Bharti Airtel, State Bank of India, InterGlobe Aviation, Vodafone Idea, Multi Commodity Exchange, Titan, PB Fintech, Bajaj Finance, Hindustan Zinc, Dixon Technologies (India), Tata Steel, and Kotak Mahindra Bank were the most actively traded underlying stocks Tuesday.  End

 

Edited by Rajeev Pai

 

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