Indian equity benchmarks, the Sensex and Nifty, began Thursday's trading session on a negative note, extending losses from the previous day. The early decline was primarily driven by sustained selling activity from Foreign Institutional Investors (FIIs) and a lack of positive triggers from global markets.
FIIs Exit, DIIs Provide Support
The market sentiment was weighed down by data showing that Foreign Institutional Investors (FIIs) offloaded Indian equities worth Rs 1,721.26 crore on Wednesday, December 25, 2025. This persistent selling pressure from foreign funds has been a key concern for market participants in recent sessions.
However, providing a crucial counterbalance, Domestic Institutional Investors (DIIs) were net buyers, purchasing stocks worth Rs 2,381.34 crore on the same day, according to provisional data available on the stock exchanges. This significant buying by domestic institutions helped cushion the market's fall and highlights the ongoing tussle between foreign and domestic money flows.
Market Performance and Contributing Factors
Both the 30-share BSE Sensex and the broader Nifty 50 index traded in the red during the initial hour of trade. The weakness was broad-based, with several heavyweight sectors, including banking and IT, facing selling pressure.
Analysts point to a combination of factors for the subdued opening:
- Sustained FII Outflows: The continued selling by foreign investors reflects a cautious stance, possibly due to global risk-off sentiment and elevated valuations in the Indian market.
- Weak Global Cues: Lackluster trends in other major Asian markets and on Wall Street overnight failed to provide any positive momentum for local traders.
- Year-End Profit Booking: With the calendar year drawing to a close, some investors are seen locking in gains, leading to increased volatility.
Outlook and Key Levels to Watch
The immediate trend for the market remains cautious. Traders will closely monitor the FII and DII activity data in the coming days to gauge the direction of institutional flows. The support from DIIs has been a silver lining, preventing a steeper decline.
Market experts suggest that for a sustained recovery, the Nifty needs to hold above key support levels and witness a reversal in FII selling patterns. Global factors, including movement in the US dollar and crude oil prices, will also influence trading sentiment. Investors are advised to focus on stock-specific actions and sectors that are showing relative strength amid the volatility.
