Indian markets are likely to open slightly negative on Monday. Those who are expecting a Santa Claus rally may be disappointed, as Gift Nifty signals a flat-to-negative opening. With Tuesday being the monthly settlement day for F&O contracts on the NSE, analysts expect the market to remain volatile, especially in the mid- and small-cap space.
Asia mixed cues
Asian markets are delivering mixed cues, with Japan’s Nikkei 225 trading marginally lower by around 0.30%, while South Korea’s KOSPI is outperforming, up nearly 1.5%. The divergence underscores selective risk-taking rather than a broad-based directional move across the region.
Year-end caution
Ponmudi R, CEO of Enrich Money, said: As markets enter the final trading week of 2025, volumes are expected to remain subdued amid holiday-driven positioning. “While persistent FII outflows and ongoing global macro uncertainties continue to restrain aggressive upside, resilient domestic fundamentals and steady local flows are providing downside support. In the near term, participants are likely to stay cautious, with focus shifting to upcoming IIP data and global cues for the next directional trigger. Until greater clarity emerges, consolidation with stock-specific action is likely to remain the dominant theme,” he added.
Marketmen also believe in a bounce-back macro-economic activity.
Growth outlook improves
ICRA projects India’s real GDP growth at 7.4% for FY2026, up from 6.5% in FY2025. However, Growth is expected to dip below 7.0% in H2 FY2026 from 8.0% in H1, due to an unfavourable base effect, export slowdown, and reduced government capex momentum, it warned. Strong festive demand post-GST rate cuts, rural recovery, and seasonal uptick in mining and construction activity supported H1 growth, the rating major said.
FIIs resume selling
After remaining buyers for a week or so, foreign institutional investors again turned sellers of Indian bourses.
As the year 2025 draws to a close, FII selling in India is on track to set a new record in FII outflows. Up to December 27, FIIs have sold equity for Rs 22,130 crore through the exchanges. This takes the total FII selling in CY 2025 to Rs 2,31,990 crore. “FIIs have bought/invested equity for Rs 7,3583 crores through the primary market, taking the total net sell figure for 2025, so far, to Rs 1,58,407 crores. This is the worst selling by FIIs since they started investing in India,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
“In 2024 also, FIIs have been selling through the exchanges. They sold equity for Rs 1,21,210 crore. However, for the year as a whole, the net FII inflow was positive since they had invested Rs 1,21,637 crore through the primary market. But for 2025, the net sell figure is a massive Rs 158407 crores,” he said, explaining the data. “Improvement in fundamentals are likely to attract net FII inflows in 2026. Robust GDP growth and prospects of improvement in corporate earnings in 2026 augur well for positive FII flows in 2026,” he hoped.
Derivatives signal caution
Derivative trading also indicates a cautious market mood. Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities, said: “The derivatives data reflects a cautious and guarded market stance.” Call writers have added fresh positions at at-the-money and nearby strikes, reinforcing overhead resistance and limiting upside attempts. “Meanwhile, put writers have reduced exposure and rolled positions to lower strikes, indicating expectations of continued consolidation rather than an immediate breakout.”