CHENNAI: Indian equity markets closed lower on Friday, December 26, as investors chose to lock in gains amid thin year-end trading volumes and a lack of strong domestic or global triggers. The session remained subdued throughout the day, with benchmarks oscillating in a narrow range before slipping into negative territory toward the close.
The BSE Sensex ended the session down by about 367 points, or over four-tenths of a percent, settling near the 85,040 level. The NSE Nifty 50 also finished lower, shedding close to 100 points to end just above 26,040, slipping below key short-term support levels. Broader markets underperformed the frontline indices, with midcap and smallcap stocks witnessing relatively sharper selling pressure, reflecting cautious investor sentiment beyond index heavyweights.
Market participants largely attributed the weakness to profit booking following the recent rally that had taken indices to record highs earlier in the month. With the year drawing to a close and trading activity typically thinning during the holiday period, investors appeared reluctant to take fresh positions. The absence of major economic data releases and corporate developments further contributed to the lacklustre tone.
Sectorally, financial and information technology stocks weighed on the benchmarks. Banking and non-banking finance stocks saw mild but widespread selling as investors pared exposure at elevated valuations. IT stocks also ended lower, tracking muted global tech cues and cautious outlooks amid mixed signals from overseas markets. FMCG and select defensive stocks offered limited support but were not strong enough to offset losses in heavyweight sectors.
From a global perspective, cues remained mixed in a holiday-truncated environment across major markets, offering little direction to domestic equities. Currency movements were also closely watched, with the rupee trading in a narrow range against the US dollar, adding to the overall cautious tone.
"Overall, Indian equity markets traded with a cautious, mildly negative bias as thin year-end volumes, the absence of strong global triggers, and continued foreign investor outflows kept sentiment restrained. Investors engaged in selective profit booking across sectors such as IT, real estate, and energy, while resilience in select few banking and metal stocks helped limit broader downside. Notably, the railway sector outperformed, reflecting investor confidence in sustained government capital expenditure, strong order inflows, and long-term visibility on infrastructure spending," said brokerage Enrich Money's CEO R Ponmudi.
Technically, the inability of the Nifty to hold above recent support zones suggested a near-term consolidation phase. Analysts noted that while the broader trend remains constructive, the market could see further range-bound movement in the absence of fresh triggers. Trading volumes were lower than average, reinforcing the view that price action during this period may not reflect strong directional conviction.
Overall, Friday’s decline appeared more corrective than structural, driven by seasonal factors and profit-taking rather than any fundamental shift in outlook. As markets head into the final days of the year, investors are expected to remain selective, focusing on risk management while awaiting clearer signals from global markets and upcoming macroeconomic cues in the new year.