Weekly-update-week-ending-Fri-5-Dec-2025

Weekly update — week ending Fri, 5 Dec 2025

Nifty 50 traded roughly around 26,186 by Friday’s close (intraday swings through the week: ~25,890–26,200), with the index finishing the week largely flat-to-mildly positive following a late-week RBI policy step that buoyed sentiment.
FII’s remained net sellers across the first days of December, though selling moderated on Friday; domestic mutual funds/DIIs continued to buy on all days of the week.
The prior week (ending 28 Nov) saw volatility driven by global growth cues and mixed corporate results; domestic indices ended that week broadly flat after profit-taking in mid-/small-caps. The market had entered Dec with low headline inflation prints and expectations of easier RBI policy.

Drivers

RBI monetary easing & liquidity steps — the Reserve Bank announced a 25 bps repo rate cut (to 5.25%) plus scheduled Open Market Operations/open-market bond purchases and a $5bn three-year FX swap, which injected a constructive growth/liquidity narrative and supported risk assets.
Very low headline inflation — retail inflation has fallen sharply through recent months, giving the central bank room to cut; that underpins the dovish policy tone.
Domestic flows (DIIs) — continued DII buying helped absorb FII selling on several sessions keeping markets from a deeper correction.

Risks

FII outflows / global risk sentiment — continued FII selling or a reversal in global risk appetite (US Fed surprises, weak global growth data) could re-ignite pressure.
Currency / rupee weakness — FX moves around the RBI swaps and global dollar dynamics can affect exporters and bond yields.
Earnings disappointment in key large-caps — with results season ongoing, any negative surprises from banking, IT or infra names would dent the index.

RBI actions (5 Dec 2025): repo rate cut of 25 bps to 5.25%, announced bond purchases (~₹1 trillion planned) and a $5bn three-year FX swap to provide rupee liquidity and bolster bond markets.
Inflation: headline CPI has been unusually low in recent months (well below the 4% target), which opened the door to the RBI cut this week.
Global context: US macro and Fed expectations (markets pricing in higher chance of rate cuts) are helping risk appetite; any surprise US data could flip that quickly.

Earnings backdrop: Fundamentals will continue to steer sectoral leadership.
Valuation & growth: With lower rates, discounted cash flow inputs improve for long-duration growth companies. Need to monitor corporate guidance through the results season.
Events: The much awaited Indo-US trade deal can be a game changer

Index technicals: Nifty trading around ~26,000 — The rate cut provided a short-term bullish impulse on Friday, but the overall tone remains neutral-to-cautiously-bullish until confirmed by reduced FII selling.
Breadth: mixed — large-cap banks and financials showed leadership on a few sessions while mid-/small-caps lagged; need to watch whether breadth improves in the coming sessions to validate a sustained rally.
With indices reaching the top of the upper end Bollinger Band, one can expect a correction this week unless some good news that is long overdue regarding the US-India trade deal comes favorably – that can trigger a strong upward move.

What to watch

FII flows & global data — continued monitoring of daily FII net flows; any uptick in global risk-off (US data, geopolitics) could prompt outflows.
Earnings / corporate news — bank earnings, large-cap results and commentary on margins/loan growth will continue to define sector rotations.
Tactical constructive on rate-sensitive & quality cyclical names — if you’re neutral-to-bullish, consider selective exposure to banks, NBFCs, and select consumer/auto names that benefit from lower rates.
Keep hedges / stop-losses — given FII flow risk and global sensitivity, maintain risk controls and watch intra-day liquidity in smaller names.