Market outlook: FII trend, monthly expiry among top factors to track this week
Indian markets are poised for a volatile week ahead, influenced by the December F&O expiry and crucial domestic data releases. Foreign institutional investors continue their selling spree, while global cues and currency movements also demand attention. Experts advise a cautious, stock-specific approach with disciplined risk management as the year concludes.
Markets wrapped up the holiday-shortened week with modest gains, continuing their ongoing consolidation trend. Despite a strong start, benchmark indices remained largely range-bound in the latter half, weighed down by mixed global cues and subdued year-end trading volumes. The Nifty closed at 26,042.30, while the Sensex ended at 85,041, indicating a cautious yet steady market tone.
Investor sentiment was influenced by a mix of domestic macroeconomic data and international developments. India finalised a comprehensive Free Trade Agreement (FTA) with New Zealand, marking a step forward in its Indo-Pacific outreach and export diversification efforts. However, growth across the eight core infrastructure sectors decelerated sharply to 1.8% in November, signalling a short-term slowdown in industrial activity.
Foreign Institutional Investors (FIIs) resumed their selling streak after a brief pause last week, while stable currency trends, record-setting bullion prices, and thin holiday participation added to the lacklustre trading backdrop.
Here are the top xx factors that could influence market movement as trading resumes this week:
1. Monthly expiry: The upcoming week marks the transition into calendar year 2026 and is likely to witness heightened volatility due to the December F&O expiry.
2. Domestic data: Key domestic data points to track include Industrial Production data for November, government budget value figures, external debt statistics, and the final HSBC Manufacturing PMI reading.
3. Macroeconomic cues: Globally, markets will closely monitor US macroeconomic cues, including the FOMC minutes and updates on the Federal Reserve’s balance sheet.
4. Technical movements: The Nifty index continues to consolidate near record highs, indicating a healthy pause within the broader uptrend. Immediate support is placed in the 25,500–25,700 zone, while resistance is seen near 26,200 initially. A sustained breakout could open the path toward the 26,500–26,700 zone.
“With liquidity conditions remaining muted and key macro cues awaited, markets are likely to stay range-bound in the near term. Investors may continue to adopt a buy-on-dips strategy, focusing on large-cap stocks and select cyclicals offering relative value and stability,” said Ajit Mishra, SVP- Research at Religare Broking.
“Traders are advised to remain stock-specific, trail stop-losses on profitable positions, and avoid aggressive leverage amid expected volatility around the expiry and data releases. A balanced approach with disciplined risk management remains crucial as markets enter the New Year,” he added.