End of 2025: Markets Await a Trigger

The domestic equity market spent the past fortnight moving sideways, as investors refrained from aggressive positioning in the absence of a decisive trigger that could reignite momentum. Both the BSE Sensex and the Nifty 50 ended the period lower by about one per cent, underscoring a cautious undertone across Dalal Street. The broader market mirrored this muted sentiment, with Mid-Cap and Small-Cap indices also closing marginally in the red, suggesting restrained risk appetite among investors. Sectoral performance broadly reflected the market’s lack of direction.[EasyDNNnews:PaidContentStart]

Most sectoral indices traded with a negative bias, with the notable exceptions of metals and information technology, which emerged as relative outperformers during the period. Metal stocks continued to draw sustained investor interest, supported by firm global commodity prices and improving margin visibility. Steady demand from infrastructure projects and manufacturing activity has strengthened confidence in the sector’s medium-term earnings outlook. Market participants increasingly view metals as a structural investment theme for 2026, with several long-term portfolios gradually increasing exposure.

Precious metals also remained in the spotlight, as gold and silver touched new highs in both domestic and international markets. Heightened safe-haven demand amid global uncertainties and supportive monetary conditions pushed prices higher, while silver benefited additionally from its growing industrial usage. The information technology sector showed early signs of a revival, with the IT index climbing to a five-month high on improving technical indicators. Analysts believe the sector could be entering a valuation recovery phase, aided by its consistent contribution to benchmark earnings and the potential long-term upside from increased adoption of artificial intelligence-led solutions.

As 2025 wraps up, Dalal Street remained muted, with select sectors like metals and IT gaining ground. Foreign outflows moderated, domestic inflows persisted, yet the market continues to search for a fresh catalyst.

In contrast, Banking stocks remained under pressure, with the BSE Bankex emerging as the weakest-performing sectoral index during the fortnight. The Reserve Bank of India’s decision to cut the repo rate by 25 basis points and maintain an accommodative stance weighed on sentiment, as lower interest rates may compress net interest margins in the near term. While funding costs are expected to ease gradually, lending yields tend to adjust faster, impacting profitability. The Bank of Japan’s interest rate decision is expected to put pressure on the U.S. dollar, potentially offering temporary relief from foreign institutional investor selling in Indian equities.

Although foreign institutional investors remained net sellers, outflows moderated to around ₹9,500 crore. Domestic institutional investors, however, continued to provide strong support, with inflows exceeding ₹32,000 crore. The rupee briefly slipped past the 91-per-dollar mark before recovering sharply, aided by timely intervention from the Reserve Bank of India. As the year nears its end, 2025 is shaping up as a relatively subdued year for Indian equities compared to global peers. What do you think will 2026 bring fresh optimism and the bulls back to Dalal Street? Stay tuned for further updates!