Indian equity benchmarks kicked off the trading session on Friday, December 26, 2025, on a subdued note, quelling expectations of a year-end festive surge often termed the 'Santa rally'. The weak opening was attributed to persistent foreign fund selling and lacklustre momentum as the year draws to a close.
Market Opening: A Tepid Start
The BSE Sensex opened at 85,225.28, marking a decline of 183.42 points or 0.21 per cent. Similarly, the Nifty 50 index began the day at 26,121.25, down by 20.85 points or 0.08 per cent. Market analysts pointed to continuous selling by Foreign Portfolio Investors (FPIs) and typically thin trading volumes during the holiday season as the primary reasons for the soft start.
Commenting on the market sentiment, banking and market expert Ajay Bagga stated that Indian markets were indicating a weak beginning. He highlighted that FPIs have been net sellers for the last three consecutive trading days. With year-end volumes expected to remain low, the prevailing weak momentum suggests the traditional Santa rally is absent this season.
Catalysts for 2026: Budget, Trade Deals, and Earnings
Despite the current sluggishness, experts are looking ahead to significant potential triggers in the new year. The focus is now shifting towards three major catalysts expected to influence market direction in 2026.
The Union Budget for 2026 is anticipated to be a primary driver. Experts foresee a pre-Budget rally in sectors like industrials, railways, and defence as expectations build. Following the Budget, further negotiations on Free Trade Agreements (FTAs) with major economic partners like the European Union and the United States will be closely watched by investors.
The third key trigger will be the Q3 earnings season starting in mid-January 2026. Markets are expected to start pricing in an anticipated uptick in corporate earnings ahead of the actual results.
Resilience Amidst Challenges and Technical View
It is noteworthy that Indian markets have demonstrated resilience in the fourth quarter of calendar year 2025. During this period, Indian equities have largely kept pace with both emerging and developed markets, even despite a sharp depreciation of the Indian Rupee in December.
Providing a technical perspective, Ponmudi R, CEO of Enrich Money, noted that on the daily chart, the Nifty is in a consolidation phase within a broader uptrend. The index continues to hold firmly above the 20-day Exponential Moving Average (EMA) at 26,073 and the crucial psychological level of 26,000. This, he said, keeps the short-term structure constructive, with the pattern of higher highs and higher lows since mid-year indicating the broader bullish trend remains intact.
On the fund flow front, data for December 24 showed FPIs were net sellers to the tune of ₹1,721.3 crore in the cash market. However, domestic institutional investors (DIIs) provided a counterbalance with net purchases worth ₹2,381.3 crore.
In the broader market, most indices traded in negative territory. The Nifty Smallcap 100 was the sole gainer, rising 0.17 per cent. Sectorally, the Nifty Media, Metal, and Pharma indices opened in the green, while Nifty IT, FMCG, Auto, and PSU Bank indices were flat to negative.
As markets wind down a year characterised by slow momentum, the hope for a stronger performance rests on the anticipated triggers of 2026. Experts believe the combined impact of the Budget, trade pacts, and earnings could set the stage for a robust first quarter in the new calendar year.
