No Santa Rally for Dalal Street as Nifty, Sensex Open Lower

Mumbai, December 26:
Indian equity benchmark indices opened lower on Friday, indicating the absence of a traditional Santa rally as weak momentum and continued foreign fund outflows weighed on market sentiment.

The Nifty 50 opened at 26,121.25, down 20.85 points or 0.08 per cent, while the BSE Sensex started the session at 85,225.28, slipping 183.42 points or 0.21 per cent.

Foreign Selling, Low Volumes Drag Markets

Market experts attributed the subdued opening to persistent selling by foreign portfolio investors (FPIs) and thin year-end trading volumes. Weak global cues also added pressure on domestic equities.

Banking and market expert Ajay Bagga said Indian markets were pointing to a weak start as FPIs continued to remain net sellers for the third consecutive session. He added that low trading activity at the year-end had further reduced momentum, ruling out the possibility of a Santa rally.

Budget, FTAs and Earnings in Focus

Experts believe market attention will now shift to major catalysts expected in 2026. These include the Union Budget 2026, further free trade agreement (FTA) discussions with the European Union and the United States, and the upcoming earnings season in mid-January.

Ajay Bagga noted that the Budget could trigger a pre-Budget rally in sectors such as industrials, railways, and defence. He also said earnings are likely to show improvement, which may support markets in the coming months.

Markets Show Resilience in Q4

Despite current weakness, Indian equities have shown resilience in the fourth quarter of calendar year 2025. Markets have largely kept pace with both emerging and developed markets, even as the rupee faced sharp depreciation in December.

Experts expect the combined impact of the Budget, trade talks, and earnings growth to drive stronger momentum in the first quarter of CY2026.

Fund Flows and Market Breadth

On December 24, FPIs sold shares worth Rs 1,721.3 crore in the cash market. However, domestic institutional investors (DIIs) offset some pressure by purchasing shares worth Rs 2,381.3 crore.

Ponmudi R, CEO of Enrich Money, said the Nifty remained in a consolidation phase within a broader uptrend. He highlighted that the index continues to trade above key support levels, keeping the short-term structure positive.

In the broader market, most indices traded lower. The Nifty Smallcap 1000 gained 0.17 per cent, while the Nifty 100 slipped 0.06 per cent and the Nifty Midcap 100 fell 0.04 per cent.

Sectoral Performance

Among sectors, Nifty Media, Metal, and Pharma indices opened in the green. In contrast, Nifty IT, FMCG, auto, and PSU bank indices traded flat to negative in early trade.

Markets are now ending the year on a cautious note, with hopes of stronger momentum in early 2026.