Holiday cheer may brighten up markets

Unnerved by the heightened volatility and depreciation in the rupee amid the delay in the India-US trade deal, continued outflows of FIIs and “suspect” macroeconomic data; the equity market ended lower for the second consecutive week.

The Sensex fell 338.3 points or 0.39 per cent at 84,929.36, while the Nifty shed 80.55 points or 0.30 per cent at 25,966.40. In the broader market, both the BSE Mid-cap Index and the BSE Small-cap index ended flat. Among sectors, weakness was evident in Banking, Media, Auto and Defence. However, select PSU Banks and IT stocks witnessed renewed buying interest.

After long spell of selling, FIIs turned net buyers for the last three consecutive sessions of the week. Expectedly DIIs continued their purchases buying equities worth Rs 12,061.92 crore. During the week, the Indian rupee has touched a record low of 91.08 but made a strong rebound from the lows and ended higher by 77 paise at 89.65 by the end of the week.

One notable feature of markets in last week was the persistent buying in the shares of Indian IT companies. This has been attributed to softer US inflation boosting Fed rate cut hopes, Accenture’s better-than-expected Q1 results and weak rupee. Passage of Insurance sector reforms and the Nuclear Power bill, opening long-term opportunities in both the insurance and energy space showcase GOI intentions on reforms.

With consultations on the contours of Union Budget 2026 in advanced stage, expectations of a big bang budget in the backdrop of changing global trade rules is on cards. Real GDP is expected to grow at approximately 7.3 per cent (RBI’s forecast) in the current fiscal year.

Inflation has eased substantially, and the Centre appears on track to meet its fiscal deficit target of 4.4 per cent of GDP in FY26. However, it must be observed that the net household financial savings dropped to 5.2 per cent of GDP in FY2024, down from 7.2 per cent in FY2023, the lowest in decades, even as household debt has risen.

The private capex, despite strong corporate balance sheets, remains patchy and still leans heavily on public investment. For a country with global-power ambitions, the uncomfortable truth is that the macro aggregates appear fine, but the gap between what India wants to do and what its institutions can reliably deliver is, if anything, widening. Hopefully Union Budget 2026 will address these concerns.

With the delayed data on the job market and inflation offering little clarity about the state of the US economy heading into 2026, US equity market is stuck in a holding pattern—and some investors are pinning their hopes on holiday cheer. Jitters about the future of artificial intelligence continued to weigh on tech stocks.

The odds of fresh all-time-highs before the new year could hinge on a so-called Santa Claus rally—a period around the end of the year when markets often get a boost.

You’re an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.

FUTURES & OPTIONS / SECTOR WATCH

In the absence of major market moving triggers, benchmark indices largely moved sideways over the past week. The Nifty ended with a marginal decline of 0.31 per cent, while the Bank Nifty underperformed, closing the week with a loss of over half a per cent.

In the options segment, the highest Call open interest for Nifty was observed at the 26,000 and 26,200 strike levels whereas notable Put open interest was concentrated at the 25,900 and 25,800 strikes. For Bank Nifty, significant Call open interest was seen at the 59,500 strike with substantial Put open interest at the 59,000 strike.

Implied volatility (IV) for Nifty’s Call options settled at 9.26 per cent while Put options concluded at 10.58 per cent. The India VIX, a key indicator of market volatility ended the week at 9.70 per cent.

The Put-Call Ratio Open Interest (PCR OI) stood at 1.06 for the week. Last week Nifty movement indicates that it has formed good base between 25,750 and 25800.

Expect December futures to rally from current levels. However, as the year-end approaches, lower market participation may limit further momentum. The index is currently trading below its rollover zone and is therefore still viewed as a ‘sell on rise’ until it sustains above the 26,050–26,100 range. At present, for the Nifty, major resistance is placed near 26,400 and support around 25,700.

Stocks looking good are Federal Bank, Glenmark Pharma, Godrej Consumer, HDFC AMC, L&T, Polycab and Shriram Finance. Stocks looking weak are Coforge, Cholamandalam Finance, Jubilant Food, Jindal Steel, Mankind Pharma, OFSS and SAIL.

(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)

STOCK PICKS

KEI Industries Limited

The company is a manufacturer of wires and cable, segments include Cables and Wires, Stainless Steel Wire, and Engineering, Procurement and Construction (EPC) Projects.

Cables and Wires segment is engaged in the manufacturing, sale and marketing of all ranges of power cables, such as low tension (LT), high tension (HT) and extra-high voltage (EHV), control and instrumentation cables, specialty cables, elastomeric/rubber cables, flexible and house wires, and winding wires.

Stainless Steel Wire segment comprises manufacturing, sale and job work related to stainless steel wire.

EPC Projects segment comprises the design, engineering, supply, erection, testing and commissioning of high-voltage and extra-high-voltage underground cabling projects from 33 kilovolts (kV) to 400 kV, substations (AIS & GIS) on a turnkey basis up to 400 KV and conversion of overhead line to underground line for complete town including HT and LT distribution system, among others.

In addition to its core W&C offerings, KEI provides end-to-end Engineering, Procurement, and Construction (EPC) solutions.

These include Gas-Insulated Substations (GIS), Air-Insulated Substations (AIS), Overhead and Underground Power Transmission and Distribution Systems, and turnkey substation projects. KEI is well-positioned to capitalize on robust demand for wires and cables, driven by government initiatives in electrification, renewable energy, and T&D expansion.

Increased focus on rooftop solar, EV charging infrastructure, 5G-driven telecom upgrades, and data centers further boosts demand for specialized cables, offering significant growth opportunities.

Certifications in Europe and the USA, alongside an expanded network of dealers, enhance export potential and retail revenue, aligning with infrastructure development, urbanization, and the ‘China plus one’ strategy. Buy on declines for price target of Rs6,000 in medium term.