The Indian equity market extended its losing streak on Monday, December 29, closing lower for the third consecutive session. The benchmark indices succumbed to pressure from sustained foreign portfolio investor (FPI) selling and thin year-end liquidity, with no fresh positive triggers to lift investor sentiment.
Market Ends in the Red as Metals, Broader Indices Slide
The trading day began with limited losses, but the decline intensified in the second half. A sharp sell-off in metal stocks, triggered by a crash in global precious metal prices, dragged the indices further down. The Nifty 50 index fell 0.40% to close at 25,938. Similarly, the Sensex dropped 0.41%, ending the day at 84,695.
The weakness was broad-based. The Nifty Midcap 100 index declined by 0.6%, reflecting the bearish mood across mid-sized companies. However, in a contrasting move, the Nifty Smallcap 100 index managed to edge higher, gaining 0.78%.
Sectoral performance painted a bleak picture. All major sectoral indices, except one, closed in negative territory. The consumer durables sector was the worst performer, falling 1%. It was followed by the realty and IT sectors, which dropped 0.84% and 0.77%, respectively. The media sector was the sole gainer, rising 0.62%.
Record FPI Exodus and Key Stocks Under Pressure
The selling pressure was significantly fueled by relentless outflows from foreign portfolio investors. Data reveals that FPI selling in the Indian secondary market has reached a staggering ₹2,31,990 crore in 2025. This marks the highest annual outflow ever recorded. Out of the last twelve months, FPIs were net buyers in only four: March, April, May, and June.
Several factors have contributed to this massive foreign capital flight. Analysts point to delays in a trade deal with the US, persistent weakness in the Indian rupee, and stretched market valuations. Additionally, India's relatively lower exposure to the global artificial intelligence (AI) investment boom, coupled with a recovery in other Asian markets offering cheaper valuations, has made foreign investors redirect their funds.
Amid this downturn, several stocks emerged as top losers for the day. Notable names included IRFC, RVNL, Dixon Technologies, Hindustan Zinc, Anant Raj, and Praj Industries. These stocks bore the brunt of the market-wide selling pressure.
Outlook and Market Sentiment
The combination of record FPI outflows, lack of domestic liquidity at year-end, and a global risk-off environment has kept market sentiment subdued. The absence of fresh positive catalysts means the market is likely to remain volatile in the near term. Investors are advised to watch for developments on the global trade front and domestic economic indicators for future direction.
The continued selling by foreign investors, despite India's strong long-term growth story, underscores the impact of global macroeconomic factors and comparative valuations on short-term capital flows. The market will be looking for a reversal in this trend or strong domestic institutional buying to provide stability.
