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Informist, Friday, Dec. 19, 2025

 

By Arya S. Biju

 

MUMBAI – The benchmark equity indices are expected to consolidate next week with a positive bias amid improving visibility of a recovery in earnings growth and easing macroeconomic conditions. However, near-term volatility is expected to continue amid concern over rupee depreciation and the delay in the long-awaited India-US trade deal, according to analysts.  

 

After a year of muted performance, analysts expect slightly better returns from domestic equities on hopes of an earnings growth recovery, improved domestic consumption demand on the back of cuts in goods and services and income tax rates, and conclusion of the trade deal with the US. Vinit Bolinjkar, head of research at Ventura Securities, expects the Nifty 50 to give 10-12% returns in 2026, compared with nearly 10% so far this year.

 

"While (the India-US) trade negotiations and currency depreciation remain risks, domestic macro fundamentals are strong," Ritesh Taksali, chief investment officer at Edelweiss Life Insurance, said in a note detailing the outlook for 2026. "Retail inflation is trending below the RBI's (Reserve Bank of India's) target (range), policy settings are supportive, and real (interest) rates remain conducive to investment. As consumption recovers and (government and private) capex (capital expenditure) gathers momentum, earnings growth is expected to broaden, creating an attractive environment for long-term equity accumulation."

 

The domestic currency saw marginal recovery in the past three sessions after hitting a fresh record low earlier in the week. The recovery came on likely intervention by the RBI. The rupee's weakness against the dollar had been one of the primary reasons for the recent decline in the stock market, according to analysts. Both the Nifty 50 and the BSE Sensex had fallen nearly 1% in the first four sessions of the week before closing Friday's session in positive territory. So far this year, the rupee has depreciated over 4% against the dollar. While some expect the domestic currency to depreciate at a similar rate in the coming years, some others expect it to fall by 6–7%.

 

Friday, the Nifty 50 settled at 25966.40, up 150.85 points or 0.5%. The BSE Sensex closed at 84929.36, up 447.55 points or 0.5%. Both indices snapped a four-day losing run, mirroring a rise in their Asian and US peers after lower-than-expected US inflation print fuelled expectations of a softer policy stance by the US Federal Reserve. However, they ended lower on a weekly basis as the weak rupee and the delayed India-US trade deal continued to exert pressure at higher levels.

 

Next week, the Nifty 50 is seen finding support at 25700 points and encountering resistance at 26200-26300 points, said Ajit Mishra, senior vice-president of research at Religare Broking. Mishra expects the index to hit a fresh high in the coming week, if "nothing goes wrong on the global front". The market is expected to maintain a cautiously positive bias while remaining highly sensitive to global cues, Vinod Nair, head of research at Geojit Investments, said in a note.

 

The Bank of Japan Friday raised its key interest rate by 25 basis points to 0.75% and indicated that it may continue to raise rates at upcoming meetings. This has given rise to concern of unwinding of yen-carry trades, which may lead to a fall in equity markets across the world. At the same time, some analysts said a sudden fall in the market is unlikely and the unwinding may happen at a slow pace. "While some effects are rather possible, the quantum of yen carry trade is already lower than (in) the past decades," according to Ionic Wealth by Angel One.  End

 

Edited by Rajeev Pai

 

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