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Informist, Wednesday, Dec. 24, 2025

 

By Arya S. Biju

 

MUMBAI – Benchmark equity indices are expected to move in a thin range Friday amid a lack of triggers and reduced trading activity in a holiday-shortened week. Indian equity markets will remain closed on Thursday on account of Christmas.

 

However, after their recent consolidation, analysts expect a rebound in benchmark indices next week. Although caution remains around valuations and there is uncertainty over the timeline of the long-awaited India-US trade deal and flows from foreign investors, the near-term sentiment remains constructive, keeping the seasonal year-end rally intact, analysts said. 

 

Most analysts expect the Indian equity market to perform better in 2026 on expectations of a recovery in earnings growth, easing domestic macroeconomic conditions, and on anticipation of a positive India-US trade deal. "I think 2026 is going to be a slightly better year than 2025... The returns will be better," Alok Churiwala, managing director of Churiwala Securities said. He expects Nifty 50 to give around 15% returns in the coming year, compared to the 11% returns seen so far this year. "Finally, valuations today are neither cheap nor are they very expensive. But for valuations to move further higher, earnings growth will have to be delivered by corporate India", Churiwala added. 

 

The earnings of Nifty 50 companies are expected to rise 12% on year in 2025-26 (Apr-Mar) and 15% in FY27, Motilal Oswal Financial Services said in a strategy report. "...revisions in either direction should not be too sharp from here, barring possibly for the net profit of Nifty-50 FY26 PAT," it said. The brokerage expects strong earnings growth for Indian companies next year amid supportive fiscal and monetary measures. These measures helped slow the pace of downgrades in earnings estimates this year and even led to upgrades in estimates over the past few months, the brokerage said.

 

Motilal Oswal is overweight on diversified financials, automobiles, capital goods, information technology services, and telecommunication stocks. On the other hand, it is underweight on energy, staples, metal, and utility companies, the report said.

 

Further, ICICI Securities in a report said that it expects the country's top four information technology companies--Tata Consultancy Services, Infosys, HCL Technologies, and Wipro--to report a 0.3-2.2% sequential growth in revenue in constant currency terms for the December quarter. It expects the revenue growth to be driven by resilient performance in the banking, financial services, and insurance vertical and a ramp-up of large deal wins. However, this growth is expected to be partially offset by the impact of furloughs and lower working days, ICICI Securities said. After its largely subdued performance in 2025, analysts now expect the sector to see some improvement in its earnings in the coming year.

 

On Wednesday, the Nifty IT index closed 0.5% lower, extending losses for the second straight session. The Nifty IT index is trading at a 20% premium compared to Nifty 50, despite a low earnings growth estimate of 6–8% as against the 14–15% for Nifty 50 companies over FY25–FY27, ICICI Securities said. The brokerage remains cautious on the sector and prefers TCS among large-caps based on its superior operating metrics and valuation comfort. 

 

Wednesday, the domestic currency closed lower against the dollar despite the RBI's announcement of a fresh round of liquidity measures through open-market operations and a foreign exchange buy-sell swap, under which it will inject close to INR 3 trillion liquidity into the banking system. These measures failed to ignite market enthusiasm as they did little to bridge the widening gap between dollar supply and demand ahead of year-end, Dilip Parmar, senior research analyst at HDFC Securities, said in a note.

 

"...we've seen the worst for the Indian rupee," Churiwala said adding that he now expects the domestic currency to settle at 88.5-89 level in 2026. "I think the rupee depreciation will stop with RBI having announced certain measures. I don't expect rupee to depreciate any further. From here on, it will only stabilise," Churiwala said. 

 

While there was optimism that foreign investors would return to Indian equities, they turned net sellers again on Tuesday, after having been net buyers of Indian stocks for the three sessions before Monday. They net sold stocks worth INR 17.95 billion on Tuesday. Meanwhile, domestic investors continued to be net buyers of Indian equities and bought stocks worth INR 38.12 billion on Tuesday. 

 

Friday, the Nifty 50 is seen finding immediate support at 26100-26050 points and immediate resistance at 26200–26300 points. Further support is seen at 26000 levels and resistance is seen at 26350–26400 levels. Investors will watch out for the US jobless claims data to be released later in the day.   End

 

Edited by Deepshikha Bhardwaj

 

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