Namaste, and welcome to this final Weekend Review of the year. As we move toward the New Year, this review focuses on understanding where the market actually stands, not where we wish it to be.
This week, the market ended in consolidation with a slight positive bias. However, the price action made one thing clear: there is no real strength on either side.
Market Performance and Key Levels
The Nifty saw a sell-off of approximately 0.38%. Bulls managed to strongly defend the 26,000 level, but when the index moved above 26,200, bullish strength faded quickly. This shows that while support exists at lower levels, bulls currently lack conviction at higher levels. A strong positive trigger is required for any meaningful upside, and that trigger did not come this week.
Global Triggers and US GDP Impact
The US GDP numbers came in far better than expected, and consumer spending showed strong improvement. On the surface, this looks positive, but not for India. When the US economy strengthens, global capital prefers US markets. Emerging markets like India become less attractive, and FII inflows slow down.
Interest Rate Expectations and Policy Noise
Strong economic data reduces expectations of interest rate cuts. Another Federal Reserve policy outcome in January may not include any rate cuts. Mixed policy statements from US authorities are creating uncertainty rather than clarity.
India–US Tariff Deal Status
There were no updates on the India–US tariff deal. No deal means no confidence boost, no fresh trigger, and no reason for the markets to re-rate positively.
RBI Liquidity Announcement and Market Reaction
The RBI announced liquidity infusion of up to two lakh crore rupees. The market did not react positively because this move was already expected and priced in.
Year-End Market Range Expectation
Earlier analysis suggested that the market is likely to close the year between 25,700 and 26,300 due to the lack of positive news flow and inflows. That view remains unchanged.
Small Caps vs Large Caps Performance
The Small Cap index closed about 1.26% higher this week, while Nifty and Sensex remained mostly flat. This indicates selective participation rather than broad-based confidence.
India VIX and Volatility Risk
India VIX closed at 9.15, a historically unprecedented closing level. This suggests extremely low volatility expectations.
For investors, this is not a concern. For traders, especially option traders, this environment is risky. Buyers have already been losing money, and a sudden spike in volatility could lead to heavy losses for option sellers.
Gold and Silver Movement
Silver gained nearly 12% on a weekly basis, forming a historically rare candle. Gold gained around 3.84% for the week. Strong commodity returns typically slow equity inflows and reduce risk appetite.
Indian Rupee and RBI Intervention
The Indian rupee moved from around 91 to near 89.82 due to significant RBI intervention through a dollar swap of around 60 billion dollars. Such intervention is not sustainable long term. Stable currency movement requires foreign capital inflows.
Role of the Union Budget
The return of FII flows largely depends on the Union Budget to be presented on February 1st. Without meaningful policy and tax reforms, neither the rupee nor equity markets will strengthen sustainably.
Short-Term Market Outlook and Option Data
Resistance stands near 26,200, while support lies between 25,900 and 26,000 based on option chain and open interest data. The year-end expiry is likely to trade within a range of plus or minus 160 points.
FII Positioning and Market Sentiment
FIIs have been reducing their short positions gradually while continuing to sell in the cash market. This does not indicate panic. Some selling may be related to exits from recent IPO investments.
Annual FII Selling Trend
FIIs have been net sellers in most months this year. Selling pressure has reduced since October. December selling is expected to close around 25,000 crore rupees, indicating a downward trajectory in selling pressure.
Final Conclusion
The market is not weak, but it is directionless. Without strong policy triggers, consolidation remains the most probable outcome. If meaningful reforms emerge from the upcoming budget, FII flows could return, the rupee could stabilize, and the market may move toward higher levels in the future.
This was the final Weekend Review of the year. No hype, no false optimism—only facts and probabilities.
