Holiday Season May Dampen Stock Market's Vigor: A Look at the Week Ahead

As December progresses, investors are eyeing the stock market with a mix of anticipation and prudence. Several factors, including the flow of foreign funds, fluctuations in currency values, and forthcoming global economic figures, are expected to shape market sentiment in the coming days.

It's worth noting that the trading week will be shortened due to the Christmas holiday on Thursday, December 25th, making it the last complete week of 2025. One expert, as reported by PTI, anticipates that the festive season could lead to reduced trading volumes.

According to Ajit Mishra, SVP of Research at Religare Broking Ltd., the market will be keeping a close watch on infrastructure output figures, alongside updates concerning bank loan and deposit growth, plus foreign exchange reserves. Movements in currency exchange rates and crude oil prices will also be significant variables.

Ponmudi R, CEO of Enrich Money, noted that robust domestic liquidity is providing a cushion against substantial market downturns. The return of foreign investment inflows is being seen as a possible trigger for the market's next surge, bolstering overall risk appetite. He added that the performance of major international markets, particularly in the U.S., will be carefully monitored for clues about market direction. The sustainability of any upward momentum will largely hinge on crucial global macroeconomic indicators, notably the impending U.S. GDP figures and core personal consumption expenditure (PCE) data. These are anticipated to offer greater clarity on the health of the U.S. economy, amidst evolving inflation and growth dynamics.

In terms of last week's performance, the BSE benchmark experienced a decline of 338.3 points (0.39 percent), while the Nifty fell by 80.55 points (0.30 percent). That said, the reality is a bit more complicated. on Friday, the Sensex jumped by 447.55 points (0.53 percent) to close at 84,929.36, and the Nifty climbed 150.85 points (0.58 percent) to finish at 25,966.40. Mishra pointed out that while selling pressure dominated for most of last week, a recovery on the final trading day – spurred by value buying and renewed interest from foreign portfolio investors – helped limit the overall losses.

Siddhartha Khemka, Head of Research – Wealth Management at Motilal Oswal Financial Services Ltd, anticipates that the markets will trade within a range with a slight upward bias this week. This outlook is based on signs of increased participation from Foreign Institutional Investors (FIIs), who engaged in buying activity during two consecutive trading sessions, offering some respite after weeks of consistent selling, and a marginal recovery in the Indian Rupee against the US Dollar. He also observed that trading activity in several global markets is likely to be subdued due to the Christmas and New Year holidays. Important macroeconomic data releases to watch this week include GDP figures from the US and UK, along with US consumer confidence data. Khemka concludes that the market is likely to remain range-bound, with investors gradually shifting their attention to the upcoming Q3 corporate earnings season.