Market outlook for next week (22-Dec to 26-Dec)

24 Dec 2025 , 02:22 PM

SECTORAL STORY FOR WEEK TO DECEMBER 19, 2025

The week to December 19, 2025 saw Nifty and Sensex close in the negative, as the volatile rupee continued to weigh on markets. During the week, FPIs bought equities worth $419 Million. Rupee touched a low as ₹91.10/$, before recovering sharply on RBI intervention.

Sectoral Index	Weekly Returns	Index (19-Dec)	Index (12-Dec)
Nifty PSU Banks	1.33%	8,357.30	8,247.80
Nifty IT	1.09%	38,691.60	38,274.75
Nifty FMCG	0.53%	54,781.35	54,490.80
Nifty Consumer Durables	0.51%	37,017.80	36,830.45
Nifty Oil & Gas	0.27%	11,959.25	11,927.00
Nifty India Digital	0.11%	9,609.35	9,599.05
Nifty MNC	0.07%	30,185.90	30,163.50
Nifty Chemicals	0.06%	28,565.75	28,547.70
Nifty Infrastructure	0.06%	9,557.20	9,551.55
Nifty Metals	-0.15%	10,521.10	10,536.45
Nifty Realty	-0.19%	884.90	886.55
Nifty Mobility	-0.21%	22,947.50	22,995.90
Nifty Healthcare	-0.29%	14,711.35	14,753.85
Nifty Capital Markets	-0.40%	4,639.55	4,658.30
Nifty CPSE	-0.42%	6,206.40	6,232.60
Nifty Banks	-0.54%	59,069.20	59,389.95
Nifty India Defence	-0.57%	7,524.45	7,567.85
Nifty Automobiles	-0.59%	27,657.25	27,820.85
Nifty Non-Banks	-0.61%	31,702.20	31,897.30
Nifty Private Banks	-1.36%	28,411.50	28,802.35

Data Source: NSE

For the week, 9 sectors gave positive returns, while 11 gave negative returns. However, 17 out of 20 sectors moved less than 1% during the week, showing lack of participation. PSU Banks, IT, FMCG, and Consumer Durables saw gains; while Private Banks, NBFCs, Autos, and Defence were under stress. Only 2 sectors gained over 1%; and just 1 sector lost over 1%.

PSU banks gained on quick privatization hopes, while IT moved in sync with a weak rupee. With a bounce in WPI inflation, consumer facing stocks are expecting better pricing power. On the downside, Private Banks and NBFCs were under pressure due to NIM compression concerns in Q3. Defence has continued to be under pressure since the Dubai crash.

Average returns of the 20 sectors stood at -0.06%. The top 5 sectors delivered 0.75% returns, while top 10 sectors gave returns of 0.39%. Bottom 10 sectors delivered -0.52%, showing a rather flattish market. Here is a quick recap of the week gone by.

WEEK THAT WAS; THE GOOD, THE BAD, THE UGLY

On the positive side, the trade deficit for November narrowed sharply to $24.5 Billion from over $41.5 Billion in the previous month. However, it still means that the current account deficit (CAD) for Q3 is going to be much higher than Q1 and Q2 combined. Manufacturing WPI continued to taper to 1.33%, while the rupee showed a smart late recovery.

On the downside, the RBI MPC minutes clearly indicated that further rate cuts would only be data driven, suggesting limited possibility. Also, high real rates remain a challenge for Indian financial markets. In the US, the unemployment spiked to 4.6%, so there could be another rate cut by the Fed in January, putting further policy pressure on the RBI.

STOCK MARKET TRIGGERS FOR COMING WEEK TO DECEMBER 26, 2025

Here are key triggers that will influence stock markets next week.

• The big focus for the markets in the coming week will be how the 25-bps hike in the Japanese rates will impact the carry trade. This is the highest Japanese rate level since 1995. Carry trades still fund a significant portion of EM trades in assets.
  
• With the rupee showing a sharp recovery on Friday to ₹89.5/$ levels, the markets will be looking at the RBI for intervention signals in the coming week. That will be the key to rupee movement, as NDF selling is putting a lot of pressure on the INR.
  
• The core sector data for November will be critical as there are concerns that a slowdown in government capex spending is hitting growth momentum. More so, due to tepid nominal growth! Markets will look for signals of a recovery in core sector growth.
  
• The US markets will see two critical data points this week pertaining to October PCE inflation and the first estimate of Q3 GDP. This data will have to be looked at in conjunction with the spike in the unemployment rate to 4.6%.
  
• Key global data points. Personal Spending, Building Permits, IIP, Atlanta Fed GDP, Jobless Claims, Crude Oil Stocks, Durable Goods Orders (US). CFTC Positions (EU); Core CPI, BOJ Minutes (Japan); Current Account, GDP (UK); and PBOC Loan Rates (China).

What does this mean for Nifty and Sensex levels in the coming week to December 26, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX LEVELS

VIX fell from 10.11 levels to 9.68; even touching a low of 8.86 for the week. Global macros stabilized and domestic and global risk factors have been moderating.

• Nifty closed at 26,172 Spot. Nifty has immediate support at 26,087 and major support at 25,954. Immediate resistance is at 26,219 and later at 26,352. Nifty remains a Long Trade, unless it breaks below 25,922 with volumes. Shorts only below that!
  
• Sensex closed at 85,567 Spot. Sensex has immediate support at 85,275 and major support at 84,820. Immediate resistance is at 85,731 and later at 86,186. Sensex remains a Long Trade, till it breaks below 84,765 with volumes. Shorts only below that!

The big question next week is over the Indian rupee. Can it stay below the psychological ₹90/$ mark, or will pressures come home to roost.