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Informist, Tuesday, Dec. 16, 2025

  

By Arya S. Biju 

 

MUMBAI – Domestic benchmark indices are expected to see further downside Wednesday after closing in the red for two sessions in a row. A weak rupee, selling by foreign investors, and uncertainty over the India-US trade deal are expected to further dampen the market sentiment in the coming sessions, analysts said.

 

Meanwhile, expectations of an earnings growth recovery and comfortable economic conditions support the long-term bullish outlook for the market. "The prospective macroeconomic equilibrium and its realisation path are uncertain. However, a stable global environment, with the US Federal Reserve rates expected to remain stable for most of 2026, alongside accommodative domestic monetary policy, provides a supportive backdrop for the Indian economy," Amit Modani, senior fund manager – fixed income at Shriram AMC, said in a note, while detailing his 2026 outlook.   
        
Tuesday, the rupee ended at a record closing low of 91.0275 a dollar. The Indian unit breached the psychologically crucial 91-per-dollar mark just 10 sessions after it had first fallen below 90. Absence of the Reserve Bank of India's intervention, delay in the India–US trade deal, and continued outflows by foreign institutional funds from domestic equities weighed on the currency, Jateen Trivedi, vice-president research analyst-commodity and currency at LKP Securities said in a note. He expects the rupee to trade in the 90.50–91.25 per dollar range in the near term. 

   

The decline of the rupee Tuesday was despite some analysts not expecting sharp weakness in the currency on a better-than-expected trade deficit in November. India's merchandise trade deficit narrowed to a five-month low of $24.53 billion in November from a record high in October, data from the commerce ministry showed Monday. 

 

On the trade deal front, the chief negotiators from India and the US Tuesday 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, including the commerce minister and the prime minister. Earlier this week, Commerce Secretary Rajesh Agrawal had said that the government is "very close" to securing a "framework" deal with the US, but he did not give a timeline for the deal. Earlier, market participants had expected the US-India trade deal to be signed by November. 

 

Foreign institutional investors continued to be net sellers in December, selling close to $2.7 billion in the first two weeks alone, and is already among the largest monthly outflows this year, Anindya Banerjee, head of currency and commodity research at Kotak Securities said in a note. On Monday, foreign investors sold Indian equities worth INR 14.68 billion while domestic investors continued to be net buyers and bought stocks worth INR 17.92 billion.

      

Tuesday, traders aggressively wrote call options at 26000 strike and have shifted their positions to 25900 levels anticipating a further fall in the market, said Sundar Kewat, technical and derivatives analyst at Ashika group. "The Nifty (50) is currently trading below its 20-day moving average, which is currently at 26029 level....so this is not a good sign for Nifty (50) and we could see a dip to 25500 level in short term," Kewat added.  End

 

Edited by Deepshikha Bhardwaj

 

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