Domestic markets are likely to open on flat note on Monday amid FPI selling and weak global market sentiment. Weakening of rupee is adding pressure to the stock markets. After RBI’s rate cut, the focus has now shifted to US Fed’s meet outcome which is scheduled to be out on December 10. It is widely expected that the Federal Reserve will cut its interest rates in the last meeting of this year. However, the focus will be on the post meet announcements by the Fed Chair Jerome Powell.
Gift Nifty at 26,325 indicates a flattish opening for market. Asian stocks are mostly negative in early deal on Monday.
Key events to watch this week include: India’s CPI print on December 12, following October’s record-low inflation reading of 0.25 per cent, along with data on loan growth, deposit growth, and forex reserves.
‘Balanced approach’
Ajit Mishra- SVP, Research, Religare Broking Ltd. said: 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,” he added.
Emkay Global Research, in its strategy report, noted that the RBI’s 25 bps repo rate cut and ₹1.45 lakh crore (0.55 per cent of NDTL) liquidity infusion triggered a 6–10 bps rally in short-end bonds. This addresses stress in long-term bonds and domestic liquidity, making it a positive for equities. “We remain constructive on Indian equities; the best way to play this is through NBFCs, small & mid-sized banks, and autos,” the report said.
FPI selling
Meanwhile, the unabated selling by foreign portfolio investors is causing anxious moments for analysts and experts.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said December has begun with sustained selling by FIIs on all days of the first week. In the first week ending on 5th December, FIIs have sold equity for ₹10,401 crore in the cash market. This sell figure has been completely eclipsed by the sustained strong buying by DIIs who bought equity for ₹19,783 crore during this period. The fundamental reasons behind the FII selling and DII buying are different. FIIs are selling now primarily because of the sharp depreciation of the rupee by around 5 percent this year, he said.
“It is normal for FIIs to sell and take the money out during times of currency depreciation. On the other hand, DIIs have been investing systematically assisted by continuous fund flows, and recently they have been buoyed up by the robust GDP growth numbers and expectations of uptick in corporate earnings, going forward,” he added.
The 25 bps rate cut by the RBI and the proposed huge liquidity infusion have further improved sentiments in favour of the bulls. The decision to give further monetary stimulus to the economy even when the economy is firing on all cylinders reflects a courageous pro-growth central bank.
With pro-growth fiscal and monetary policies, growth regaining momentum and indications of accelerating earnings growth, DIIs will continue to buy. But the trends suggest that at higher levels FIIs will again sell since they feel that valuations are on the higher side and they can sell and invest the money in cheaper markets. In this tug of war between FIIs and DIIs, there will be days of sharp movements in the markets, in response to news and events. For instance, if there is a fair trade deal between India and the US, that can buoy up the sentiments in both equity and currency markets, he opined.
Cues fromF&O trading
However, trading in derivative segment signals a neutral view with positive bias said analysts.
The derivatives setup reflects a constructive shift in market sentiment, with put writers aggressively adding positions across at-the-money (ATM) and near-term strikes, said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.
Conversely, call writers have unwound partial exposure and migrated to higher strikes, indicating expectations of continued buy-on-dips behaviour, he added.
The Put-Call Ratio (PCR) rebounded to 1.19 from 0.80, signalling a sharp rise in bullish positioning and renewed optimism, with put writers regaining dominance at lower levels, he further said.
Published on December 8, 2025
