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Informist, Monday, Dec. 22, 2025

By Arya S. Biju

MUMBAI – Benchmark equity indices are seen extending gains for the third straight session Tuesday after losing almost 1% in the four sessions before that. While uncertainty over the long-awaited India-US trade deal timeline remains an overhang, the recent slight recovery in the domestic currency against the dollar and foreign investors turning net buyers of Indian equities in the recent sessions are seen supporting the market, analysts said. Some technical analysts also expect indices to hit fresh record highs in the near term. Meanwhile, Tuesday's session is expected to remain volatile on the expiry of the weekly derivatives contract of the Nifty 50. 

The Indian rupee had appreciated nearly 2% against the dollar in the three sessions before Monday after hitting a fresh record low earlier last week. The Indian unit, however, depreciated against the dollar Monday as banks persistently bought the dollar on behalf of oil marketing companies, which rushed to stock up on the commodity after reports said that the US was still in pursuit of a third oil tanker near Venezuela, dealers at the foreign exchange market said.

So far in the year, the Indian rupee has fallen nearly 5% against the dollar. "Every year rupee on an average depreciates 2-4% (against the dollar). But once this (India-US) trade deal is going to get signed, I believe we are going to get some relief in terms of this rupee depreciation," a research analyst working with a global brokerage said. The analyst expects the rupee to depreciate in a similar range of 2-4% in 2026 as well. "stepping into 2026, I believe every year in terms of the next first three months, we will see some kind of depreciation in the Rupee. And that part is going to play out," he added. 

The analyst sees the signing of the trade deal between India and the US as the next major trigger for the market in the near term. "...it (trade deal) is already getting delayed from what we have anticipated earlier. But it is a matter of time only, it may come in the next 1 month, 3 months...once it (trade deal) is there, the sentiment will improve significantly both in terms of the DIIs (domestic institutional investors) and FIIs (foreign institutional investors)," the analyst said. 

Foreign investors were net buyers of Indian equities for three days in a row Friday after being net sellers for most of December. On Friday, they bought shares worth INR 18.31 billion and domestic investors bought stocks worth INR 57.23 billion. "Foreign institutional investors have been sellers of Indian equities to the tune of US$17.8 billion in CY25 as this liquidity found its way into other global equity markets like China, Japan, Europe and USA," ICICI Direct said in a strategy report for 2026 Monday. Consequently, Indian equity markets delivered mediocre returns compared wih global peers with 12-61% returns and emerging market with 23% returns, the brokerage added.

However, going forward, analysts expect the Nifty 50 to give 10-15% returns in 2026 compared with the 11% returns it gave so far this year. Expectations of an earnings growth recovery, a solid domestic macroeconomic environment, and conclusion of the trade deal with the US are seen as some of the positive catalysts for the market in 2026, analysts said. "...we are expecting earnings to revive for the entire FY27 and FY28. So, that is one of the major factors (positive triggers for the equity market in 2026). It was not there earlier, and it is going to play out," the analyst at the global brokerage said. 

"Indian macros are on a solid foundation, be it the inflation scenario (averaging at 2.1%), low interest rates (125 bps cut already done), strong government spending (60% of the capex target met by Oct 25), rationalisation of income tax (no tax till INR 1.2 million of income), GST rates rationalisation (abolishing 12% and 28% tax rates), which will lead to consumption boost and will have a positive rub-off on investment cycle in the medium term," ICICI Direct said in the report. Further, with the domestic equities underperforming global equities and other asset classes such as precious metals in 2025 and corporate earnings on the cusp of revival, we are positive on domestic equity markets, the brokerage added. It expects the domestic equity market to deliver healthy double-digit returns over the next 12 months.

After its recent decline, technical analysts expect the benchmark indices to hit a fresh record high in the coming sessions. "Overall, markets are headed towards an all-time high," said Nandish Shah, senior technical and derivative analyst at HDFC Securities. The view remains positive until the Nifty 50 closes below 25900 points, Shah added. He expects the 50-stock index to find support at 26050 points and resistance at 26210 points. 

"Benchmark Nifty index witnessed a bullish breakout above 26060 spot levels from Double Bottom formation on daily charts with a gap-up open setting up targets around its previous all-time highs i.e. 26325 spot levels in immediate near term," Vipin Kumaar, derivatives and technical analyst at Globe Capital Market, said. He expects the Nifty 50 to find support at around 26050-25980 spot levels and resistance around 26250–26325 points.

On Tuesday, investors will watch out for the release of the US Consumer Confidence Index. Volatility in crude oil prices will be monitored by the Street amid potential interruptions from a US blockade of Venezuelan vessels as the market anticipates updates regarding a potential peace agreement between Russia and Ukraine. Oil prices continued their rise Monday following reports of the seizure of a Venezuelan oil tanker by the US over the weekend.   End

Edited by Akul Nishant Akhoury

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