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Below the Quote on Weekly Note Dec 6th by Mr. Ajit Mishra- SVP, Research Religare Broking Ltd

Market Summary

Markets ended the week on a flat note as early weakness from profit-booking, persistent FII outflows, and a record-low rupee offset the support from strong macro data and the RBI’s 25 bps repo rate cut to 5.25%. A late rebound on the final trading day helped the Nifty pare losses and close at 26,186, while the Sensex held steady at 85,712.

Key Market Drivers

The RBI’s dovish policy shift was the key highlight of the week, with the rate cut aimed at strengthening India’s growth momentum, which stood at a robust 8.2% in Q2 FY26 on the back of resilient manufacturing and services activity. However, industrial output softened significantly, with IIP growth dropping to 0.4% in October—a 14-month low—while the manufacturing PMI eased yet remained comfortably in expansion territory.

Despite supportive domestic cues, sentiment was weighed down by persistent FII selling of nearly ?10,400 crore in equities and the rupee’s slide past 90, even as global markets traded mixed amid expectations of U.S. Fed easing.

Sectoral Snapshot

Sectoral performance was varied. IT led the gains, supported by a softer rupee and improved global risk appetite, while metals and autos also ended higher. In contrast, energy, realty, and FMCG sectors saw notable declines. Banking and financials remained resilient post-RBI’s rate cut, though broader gains were capped by rupee weakness and foreign outflows.

Broader markets underperformed, with Midcap and Smallcap indices correcting in the range of 0.7% to 1.8% as investors turned selective amid elevated valuations and currency-led volatility.

Key Events to Watch

In the coming week, markets will closely track India’s CPI print on December 12, following October’s record-low inflation reading of 0.25%, along with data on loan growth, deposit growth, and forex reserves. Globally, the spotlight will be on the U.S. Federal Reserve’s interest rate decision, which could drive risk sentiment across emerging markets already navigating currency pressures.

Technical Outlook

Nifty: The Nifty has rebounded from the crucial support zone near the 20-DEMA, which aligns with the rising channel’s trendline around the 25,900–26,000 region. This validates the ongoing positive structure, and we expect the uptrend to extend towards 26,300–26,500 in the near term.

Bank Nifty: The index saw volatile swings during the week but recovered after retesting the 20-DEMA support near 59,000, which remains the key level to watch, followed by 58,200. On the upside, the index is likely to move gradually towards the trendline hurdle at 60,500, a breakout above which could open room for a move towards the 61,800 zone.

Broader Indices: Market breadth remains mixed. Midcaps continue to display relative strength, while smallcaps are drifting lower and remain vulnerable to further correction. Institutional demand continues to dictate sector leadership.

Strategy Ahead

Investors should maintain a balanced approach with a preference for large caps and sectors poised to benefit from the rate cut—particularly financials, autos, and domestic cyclicals. Export-oriented and IT names may continue to find support from the weaker rupee. Caution is advisable in rupee-sensitive and import-heavy pockets until currency volatility stabilizes. Traders can continue with a “buy on dips” around the key supports, with strategy focused on stock-specific opportunities while keeping position sizes moderate ahead of the key FOMC meeting

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