CHENNAI: Indian equity markets ended lower on Monday (December 29), as cautious year-end sentiment, profit booking and weak global cues combined to extend the recent corrective phase. Benchmark indices slipped steadily through the session after a flat start, with selling pressure intensifying in heavyweight stocks and rate-sensitive sectors.
The BSE Sensex closed at 84,695.54, down 345.91 points, while the NSE Nifty 50 settled below the psychologically important 26,000 mark at 25,942.10, a decline of 100.20 points. This marked the fourth straight session of losses for both indices, reflecting sustained caution among investors as trading volumes remained thin ahead of the year-end holidays.
Market breadth was weak, with declines outpacing advances across the broader market. Mid-cap and small-cap stocks also ended in the red, indicating that the pressure was not limited to frontline indices. Selling was particularly visible in information technology, automobile, pharmaceutical and real estate stocks, which weighed heavily on overall sentiment. IT shares came under pressure amid concerns over global demand visibility and currency movements, while auto and realty stocks saw profit booking after recent gains.
In contrast, select pockets of strength were visible in defensive and consumption-oriented stocks. FMCG shares showed resilience as investors sought stability, while some PSU bank and media stocks managed modest gains, helping limit deeper losses. However, these gains were insufficient to offset the broader weakness seen across cyclical and growth-oriented segments.
Heavyweight stocks played a key role in dragging the indices lower. Shares of major IT companies, infrastructure players and power utilities declined, reflecting a combination of valuation concerns and risk-off positioning. On the other hand, a few large consumer names and metal stocks provided limited support as investors selectively accumulated stocks perceived to be relatively insulated from near-term volatility.
"While Indian equity markets closed lower, the broader structure continues to reflect a consolidation-driven phase rather than a structural breakdown. Strong liquidity support from domestic investors, coupled with resilient domestic macro fundamentals, is providing downside protection even as global uncertainties around interest rates and geopolitics continue to restrain aggressive risk-taking," says R Ponmudi, CEO, Enrich Money, a leading Chennai-based brokerage.
The Nifty 50 slipped below the psychological 26,000 mark and its 20-day EMA, extending losses by nearly 100 points amid heightened volatility ahead of the monthly F&O expiry. The index formed bearish candlestick structures, reflecting near-term selling pressure, although it continues to hover around key short-term moving averages for now. Importantly, Nifty has filled the earlier gap between 25,960 and 26,080 (formed on December 22), which reduces immediate gap-related risk and brings price action back into a consolidation framework, adds Ponmudi.
The rupee traded with a mildly negative bias against the US dollar, adding to investor caution, though currency movements were not sharp enough to trigger panic selling. Volatility indicators edged higher during the session, suggesting rising nervousness as markets head into the final trading days of the year with limited triggers to drive fresh buying.
From a broader perspective, the market’s decline appeared to be driven more by technical and positioning factors than by any major negative domestic development. The Nifty’s inability to hold above the 26,000 level triggered some stop-loss selling, reinforcing short-term weakness. With many institutional investors winding down activity for the year, liquidity remained thin, amplifying price movements even on modest selling.
Global cues also offered little support. Overseas markets were mixed, and the absence of strong directional signals from global equities kept domestic investors on the sidelines. Concerns around global interest rate trajectories and growth prospects continued to linger, encouraging a defensive stance.
Looking ahead, market participants are expected to remain cautious in the near term, with indices likely to stay range-bound until fresh triggers emerge. The start of the December quarter earnings season in January, along with key macroeconomic data and global developments, is expected to set the tone for early 2026. Until then, analysts believe volatility could persist, with investors focusing on stock-specific opportunities rather than broad-based directional bets.
Overall, the December 29 session reflected a typical year-end market mood marked by low participation, profit booking and heightened sensitivity to technical levels. While the broader trend remains constructive over the medium term, the short-term outlook suggests continued consolidation as markets seek stability after the recent pullback.