Indian equities ended marginally lower on Wednesday, 3 December 2025, but the headline indices’ small moves hid a much deeper churn beneath the surface.
The Sensex slipped about 31 points (‑0.04%) to around 85,107, while the Nifty 50 fell 46 points (‑0.18%) to 25,986, marking the fourth straight session of losses and the first Nifty close below 26,000 since late November. [1]
Broader markets were hit harder: the BSE Midcap index fell roughly 1% and the Smallcap index about 0.4–0.7%, wiping out around ₹2.75–2.76 lakh crore of BSE market capitalisation, which now stands near ₹469.7 lakh crore. [2]
At the same time, the rupee finally broke the psychologically crucial 90-per-dollar mark, PSU banks slumped after a negative policy clarification, and investors braced for a knife‑edge RBI monetary policy decision on 5 December.
Below is a detailed breakdown of what moved the Indian stock market today, the key themes driving sentiment, and what analysts are forecasting next.
Sensex and Nifty Today: Flat Close, 4‑Day Slide
Despite a late-session recovery, both benchmark indices finished modestly in the red:
- Sensex: ~85,106.8 (‑31.46 points, ‑0.04%)
- Nifty 50: 25,986 (‑46.20 points, ‑0.18%) [3]
Trading was choppy. Indices spent most of the day in negative territory before some fag‑end buying narrowed the losses but couldn’t push the benchmarks back into the green. [4]
Key patterns from today’s session:
- Breadth was weak: On the NSE, around 1,052 stocks advanced while 2,074 declined, an advance‑decline ratio of roughly 1:2, highlighting broad-based selling pressure. [5]
- More new lows than highs: Roughly 28 stocks hit 52‑week highs versus around 228 hitting 52‑week lows, underscoring how fragile the broader market has become beneath headline indices. [6]
- Volatility still muted: The India VIX slipped slightly to around 11.2, suggesting the market is consolidating rather than experiencing a panic‑style sell‑off. [7]
Analysts at Geojit and others characterised today as part of an ongoing consolidation near record levels, with weakness driven more by currency pressure and foreign outflows than by domestic growth worries. [8]
PSU Banks Hit Hard After FDI Clarification; IT and Private Banks Cushion the Fall
Sector performance told the real story of the day.
PSU banks: From darlings to biggest drag
Public sector banks were the epicentre of the sell‑off:
- The Nifty PSU Bank index fell a little over 3%, making it the worst-performing major sector index. [9]
- Indian Bank plunged up to ~7%, while PNB and Canara Bank lost more than 4% each. Other PSU lenders such as Bank of India, Bank of Baroda, Union Bank and Bank of Maharashtra dropped between ~1.5–4%. [10]
Trigger:
The Ministry of Finance clarified in Parliament that there is no proposal to raise the FDI limit in public sector banks from 20% to 49%, quashing a key medium‑term re‑rating hope for the segment. [11]
Commentary from SBI Securities and other brokerages noted that:
- The FDI denial coincided with a weaker rupee and fading expectations of an immediate RBI rate cut, amplifying profit‑taking in PSU banks, which had rallied up to 20% over the past three months. [12]
IT outperforms as weak rupee helps exporters
In sharp contrast, IT stocks bucked the trend:
- The Nifty IT index rose about 0.7–0.8%, emerging as the day’s best-performing sector. [13]
- On the Nifty 50, Wipro, TCS, Infosys, ICICI Bank, HDFC Bank and Axis Bank were among the top gainers, many rising more than 1%. [14]
A sharply weaker rupee tends to boost earnings for IT exporters, as a large share of their revenue is dollar‑denominated. Analysts also pointed out that IT stocks had underperformed earlier in the year, giving them some catch‑up room now that global rate-cut expectations for 2026 are firming. [15]
Other sector moves
According to Mint, Moneycontrol and other market trackers: [16]
- Nifty Auto fell about 1.2%, the worst performer after PSU banks.
- Oil & gas, metals, power, capital goods and consumer durables lost around 0.5–1.5%. [17]
- Media, telecom and private banks eked out small gains (0.2–0.6%), helping limit the damage at the headline index level. [18]
Stock‑Level Highlights: Max Healthcare, BEL, Adani Enterprises Slide; Wipro, TCS Lead Gains
Across the Nifty 50 pack:
- 37 of the 50 stocks ended lower, underscoring broad‑based caution. [19]
Top gainers
Data from ET Now and Mint show that the best performers on Nifty 50 today included: [20]
- Wipro – up around 1.6–1.8%
- Hindalco Industries – up roughly 1.2–1.5%
- TCS – up about 1.4%
- ICICI Bank & HDFC Bank – both gaining ~1–1.4%
- Infosys & Axis Bank – also in the green
Many of these names overlap with Nomura’s preferred India picks in its latest strategy note, which sees further upside for large private banks, quality IT and select consumption and manufacturing names. [21]
Top losers
On the losing side, healthcare, consumer and PSU-linked names dominated: [22]
- Max Healthcare – down nearly 2.9%
- Bharat Electronics (BEL) – down about 2.2%
- Adani Enterprises and Tata Consumer Products – both dropped more than 2%
- Shriram Finance, Mahindra & Mahindra, InterGlobe Aviation (IndiGo) – fell around 1.8–1.9%
Beyond Nifty, more stocks hit new 52‑week lows than highs, particularly in mid‑ and small‑cap pockets, reflecting stress from expensive valuations and sustained FII selling. [23]
Rupee Breaches 90 vs Dollar: A New Overhang for Equities
The currency market was arguably the bigger story than the equity market today.
According to ET Now, Fortune India and Mint: [24]
- The rupee opened weaker and slipped past 90 per US dollar for the first time, hitting an intraday low around ₹90.15–90.28 before stabilising near ₹90.02–90.24.
- Year‑to‑date, the rupee has fallen about 5.3%, putting it on track for its sharpest annual decline since 2022 and making it Asia’s worst‑performing currency so far in 2025.
Key factors behind the slide:
- Persistent FII outflows from Indian equities and muted FDI/ECB flows are creating sustained dollar demand. [25]
- Punitive US tariffs and the lack of an India–US trade deal are hurting export competitiveness and dampening foreign investor appetite. [26]
- A widening current account deficit (around 1.3% of GDP in Q2 FY26) and high gold/oil import bills are putting further pressure on the external balance. [27]
- The RBI is seen intervening only to curb excess volatility, not to defend any particular level, allowing the rupee to adjust more freely. [28]
Technical currency strategists cited by Mint now see USD/INR trading broadly in an 88.9–90.2 range in the near term, with strong support near 88.8–89.0 and potential upside targets toward 91.5 if pressure persists. [29]
For equities, a weaker rupee is a two‑edged sword:
- Positive for IT and other exporters’ earnings.
- Negative for import‑heavy sectors (autos, oil & gas, consumer durables) and for foreign investors’ returns in dollar terms, which may reinforce FII selling. [30]
FII Selling vs DII Buying: Liquidity Tug of War
Provisional exchange data and Moneycontrol’s breakdown show that today’s flows once again highlighted the “desi vs videshi” money divide: [31]
- FIIs/FPIs net sold about ₹3,207 crore of equities on 3 December.
- Domestic institutional investors (DIIs) net bought roughly ₹4,730 crore, more than offsetting the foreign selling in rupee terms.
Under the hood:
- FIIs bought shares worth about ₹11,135 crore but sold around ₹14,312 crore, leading to net outflows.
- DIIs purchased roughly ₹17,188 crore and sold around ₹12,458 crore, continuing their role as the primary shock absorber. [32]
Year to date in 2025:
- FIIs have been net sellers of around ₹2.6–2.7 lakh crore, even as benchmarks remain near record highs. [33]
- DIIs have net bought more than ₹7 lakh crore, a record, effectively underwriting the market and limiting drawdowns despite global risk‑off phases. [34]
This structural shift towards domestic ownership is a recurring theme in market commentary: local mutual funds, insurers and pension money are increasingly seen as long‑term “anchors”, while FIIs are trading more tactically, especially in large liquid bluechips. [35]
RBI MPC Meeting Begins: Markets Split on December 5 Rate Call
The RBI’s three‑day Monetary Policy Committee (MPC) meeting kicked off today (3–5 December), and it is clearly the next big catalyst for both the rupee and equities. [36]
The macro backdrop is unusually stark:
- GDP growth (Q2 FY26): around 8.2%, a six‑quarter high and above the RBI’s earlier projections. [37]
- Headline CPI inflation (October 2025): in the neighbourhood of 0.25–0.3%, far below the RBI’s 4% target and even below the lower bound of its tolerance band. [38]
This mix of very strong growth and ultra‑low inflation has split economists and strategists:
What consensus says
- A Reuters poll of economists suggests the majority expect a 25 bps cut, taking the repo rate from 5.50% to 5.25%, with rates then likely on hold through 2026. [39]
- ET Now reports that about 80% of surveyed economists see a cut, while roughly 20% expect the RBI to stay on hold. [40]
- Emkay Global argues the data now present the “strongest case yet” for an immediate cut, given inflation’s collapse towards 2% on their forecasts. [41]
The case for a pause
On the other side:
- ICRA and other macro houses highlight that growth has consistently surprised to the upside, with H1 FY26 GDP around 8%, while some activity indicators (like IIP) are softening only gradually. [42]
- A record‑weak rupee, concerns over US tariffs and global trade tensions, and the risk that a cut could worsen FII outflows are cited as reasons for caution. [43]
What a cut or pause could mean for stocks
Moneycontrol, ET and independent strategists outline the likely market reactions in different scenarios: [44]
- If the RBI cuts 25 bps:
- Short‑term positive for rate‑sensitive sectors – banks (especially private/retail‑focused), NBFCs, autos and real estate.
- May pressure the rupee further, but markets could initially cheer the growth‑supportive signal.
- If the RBI holds at 5.50%:
- Could be read as prudence given rupee stress and external risks.
- Might be neutral to mildly negative for equities in the very short term, particularly PSU banks that had been pricing in more aggressive easing, but supportive for the rupee.
Medium‑term, ING’s latest Asia outlook expects the RBI to deliver a cumulative 50 bps of additional cuts in 2026, assuming inflation stays below 5% and growth cools from current break‑neck levels—especially if an India–US trade deal materialises and stabilises the rupee. [45]
Primary Market Buzz: Meesho IPO Day 1 Off to a Strong Start
While the secondary market consolidates, IPO activity remains vibrant, with Meesho’s much‑watched issue grabbing investor attention today.
According to LiveMint’s Day 1 coverage: [46]
- The Meesho IPO opened today and was fully subscribed on Day 1, with overall subscription around 2.3x by late afternoon.
- Breakdown of early demand:
- QIBs: roughly 38% subscribed
- Non‑institutional investors (NIIs): about 1.3–1.4x
- Retail: more than 3x
- The company raised about ₹2,439 crore from anchor investors on Tuesday, attracting heavy interest from both global (e.g., Government of Singapore, BlackRock, Tiger Global) and domestic institutions (major mutual funds).
- At the upper price band of ₹111, Meesho’s post‑issue valuation is around ₹50,000 crore, roughly 5–5.5x FY25 sales, which is at a discount to several listed peers in consumer internet and value retail.
- Grey-market premium (GMP) around ₹49–50 is signalling potential listing gains of over 40% if sentiment holds.
Brokerage views today were broadly “Subscribe” or “Subscribe with Caution”, pointing to Meesho’s deep Tier‑2/3 penetration, asset‑light marketplace model and improving free cash flow, but flagging ongoing net losses and competitive intensity as key risks. [47]
This strong primary market appetite is one reason strategists say the market can correct without collapsing: foreign money may be leaving the secondary market, but both foreign and domestic capital are still eager to own India’s new‑age stories via IPOs. [48]
Strategists’ Nifty Targets and 2026 Outlook
Despite today’s softness, many global houses remain constructive on India’s medium‑term equity story.
Nomura’s 2026 Nifty target
In an update referenced on ET’s liveblog: [49]
- Nomura has set a 2026 Nifty 50 target of 29,300, implying about 13% upside from Tuesday’s close.
- Their preferred picks include ICICI Bank, Infosys, Bajaj Finance, Mahindra & Mahindra, Axis Bank, Titan, UltraTech Cement, Godrej Consumer, CG Power, Dr Reddy’s, Dixon, Sona Comstar, eClerx and others—a mix of financials, IT, consumption and industrial growth proxies.
Macro‑strategic backdrop
ING and other macro‑research firms frame India as:
- One of Asia’s fastest‑growing economies in 2026,
- With a high probability (70%+) of an India–US trade deal, which could steady the rupee, narrow the current account deficit and support renewed FII inflows into both equity and debt. [50]
Put together, the medium‑term narrative remains:
“Short‑term noise from currency and FII flows; structurally, India still screens as one of the most attractive large emerging markets, provided policy remains broadly reform‑oriented and macro stability is preserved.”
(Paraphrasing across multiple strategist notes.) [51]
Short‑Term Technical View for Nifty (for 4 December)
Technical analysts were busy marking out the near‑term battle zones after today’s close.
From ET Now, Mint and Moneycontrol’s technical round‑ups: [52]
- Pattern: Nifty has formed a small red candle with wicks on both sides on the daily chart, signalling indecisionafter intraday volatility.
- Short‑term trend: Analysts note a bearish divergence on the daily chart and a break below a rising trendline, suggesting short‑term weakness, though the index still holds above its 20‑day moving average.
- Support zones:
- Immediate support is seen in the 25,800–25,850 region, with additional reference around 25,840–25,900.
- Resistance zones:
- Initial resistance is pegged around 26,100–26,150, with a more important hurdle near 26,325.
The consensus technical message:
- As long as Nifty holds above the 25,800–25,850 band, the broader uptrend is considered intact, but
- Repeated failure near 26,100–26,300 could keep the index in a range‑bound to mildly negative mode until the RBI policy outcome and rupee trajectory provide clearer cues.
What Today’s Moves Mean for Investors
Putting all of this together, 3 December 2025 on Dalal Street can be summarised as:
- A shallow index dip masking deeper underlying stress
- Headline indices were almost flat, but breadth, midcaps/smallcaps and PSU banks signalled more meaningful risk‑off under the hood. [53]
- Currency risk has moved centre‑stage
- With the rupee now comfortably beyond 90 per dollar, global and domestic allocators alike are recalibrating expectations for returns, hedging costs and potential RBI action. [54]
- Policy is at a crossroads
- An RBI rate cut on Friday would likely boost rate‑sensitives in the short term but might worsen rupee concerns; a pause would reassure currency markets but could disappoint those betting on cheaper money. [55]
- Domestic money remains the shock absorber
- As long as DII inflows stay robust, intermittent FII selling and global jitters may cause corrections rather than sustained bear markets. [56]
- Stock and sector selection matter more than ever
- Today’s divergence—PSU banks cracking while IT and quality private banks gained—highlights why investors are increasingly focusing on balance sheets, FX sensitivity and policy exposure, rather than just index‑level direction. [57]
A quick word of caution
All views above reflect today’s data and published commentary as of 3 December 2025 and may change quickly as new information emerges (especially Friday’s RBI decision). This article is for information and general analysis onlyand is not investment advice. For portfolio decisions, it’s important to consider your own risk profile and, where appropriate, consult a qualified adviser.
References
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