As of Sunday, 7 December 2025, Dalal Street is entering one of the most event-heavy weeks of the year. The RBI’s December 2025 Monetary Policy Committee (MPC) meeting, a sharply weaker rupee near ₹90 per US dollar, a blockbuster ICICI Prudential AMC IPO, and a crucial US Fed meeting are all set to shape the direction of the Nifty 50 and Sensex in the days ahead. [1]
On Friday, 5 December, the Sensex closed at 85,712.37 and the Nifty 50 at 26,186.45, both rebounding smartly after the RBI delivered a widely anticipated rate cut and announced a large liquidity injection plan. [2] Technical indicators remain constructive, with analysts flagging resistance around Nifty 26,350 and near-term upside potential toward 26,600 if key triggers play out positively. [3]
Here is a deep dive into the seven big market triggers that investors will track this week.
1. RBI MPC December 2025: 25 bps rate cut and a powerful liquidity signal
The biggest backdrop for markets this week is the RBI’s December 2025 MPC decision, announced on 5 December. The central bank: [4]
- Cut the repo rate by 25 basis points to 5.25%, taking the cumulative easing in 2025 to 125 bps.
- Retained a “neutral” stance, signalling it remains data-dependent rather than locking into an aggressive easing cycle. [5]
- Announced a large liquidity infusion via open market purchases of government bonds up to ₹1 lakh crore, along with a US$5 billion buy–sell swap in the forex market — together amounting to roughly ₹1.45 lakh crore of potential systemic liquidity. [6]
Alongside the rate cut, the RBI sharply revised down its CPI inflation projection for FY26 to around 2% (from 2.6%), citing exceptionally soft food prices and broad-based disinflation. It simultaneously raised its FY26 real GDP growth forecast to 7.3%, after reporting a strong 8.2% year-on-year GDP expansion in Q2 FY26, the best in six quarters. [7]
For borrowers, the move sets the stage for cheaper EMIs over the coming months, especially for floating-rate home and auto loans linked directly to the repo rate. For banks, it implies pressure on lending yields over time and a gradual softening of deposit and fixed deposit (FD) rates as the new policy filters through the system. [8]
Crucially for equity markets, the RBI has signalled that India remains in a “Goldilocks” phase of strong growth and low inflation, giving it room to support activity while maintaining macro stability. This combination is the core bullish narrative underlining the “buy on dips” bias many analysts are emphasising for the week ahead. [9]
2. Market setup: Nifty and Sensex head into the week near highs
The immediate market reaction to the policy was positive:
- On Friday, Sensex gained about 447 points (0.52%) to 85,712.37,
- Nifty 50 rose 153 points (0.59%) to 26,186.45,
- The BSE Midcap index edged up 0.21%, while the Smallcap index slipped 0.67%, highlighting some profit-taking at the broader end of the market. [10]
Despite a flat week overall, the strong closing session reassured traders that the market’s underlying uptrend is intact. Technical analysts note: [11]
- Relative Strength Index (RSI) on the Nifty is around 63, reflecting healthy buying momentum.
- MACD remains in positive territory, supporting a continuation of the trend.
- Key resistance stands near 26,350, and a clear breakout could take the Nifty towards 26,600.
This positioning means macro surprises — whether on inflation, global rates or the rupee — will likely determine whether indices break out to new highs or consolidate around current levels.
3. Domestic macro watch: CPI print on 12 December
The next big domestic data point after the RBI policy is India’s CPI inflation print, due on 12 December. [12]
Markets will be watching whether the upcoming number validates the RBI’s ultra-dovish inflation narrative:
- October CPI fell to a record-low 0.25% year-on-year, far below the lower bound of the RBI’s 2–6% target band. [13]
- The central bank now projects headline inflation at just 2% for the current fiscal, with Q3 FY26 inflation at 0.6% and Q4 at 2.9%, rising towards 4% in the first half of next year. [14]
If November inflation (reported in the December 12 release) remains exceptionally low, it will:
- Reinforce expectations of a benign rate environment for longer,
- Support further downward pressure on bond yields,
- And keep the case for one more 25 bps cut in 2026 alive in the eyes of some economists, even though the RBI itself has refrained from pre-committing. [15]
Equity investors will link this directly to rate-sensitive sectors such as banks, NBFCs, autos and real estate, which tend to benefit the most from a lower cost of money.
4. Rupee trajectory: near ₹90 and firmly in the spotlight
The rupee’s path will be one of the most closely watched variables this week.
On Friday, the currency closed around 89.95 to the US dollar, giving up early gains after the RBI’s rate cut. forex traders expect the easing bias to exert some pressure on the rupee, even as the central bank’s liquidity and swap operations help smooth volatility. [16]
An accompanying Economic Times analysis noted that the rupee’s recent slide past the ₹90 level has amplified concerns about imported inflation, higher commodity costs and pressure on the current account, despite India’s otherwise solid growth profile. [17]
The RBI has responded on several fronts:
- It has emphasised that the current account deficit is manageable at about 1% of GDP, supported by robust services exports and strong remittance inflows. [18]
- It has reiterated that it does not target a specific rupee level, instead focusing on maintaining orderly movement. [19]
- Its ₹1 lakh crore OMO programme and US$5 billion swap give it scope to lean against excessive rupee weakness without draining domestic liquidity. [20]
For the equity market, rupee moves cut both ways:
- Export-oriented IT and pharma companies often gain from a weaker rupee.
- Import-heavy sectors—such as oil marketing, airlines, and certain consumer names—face margin pressure if currency depreciation persists.
- Sustained depreciation can keep foreign investors cautious, especially if they fear further FX losses on top of stretched valuations.
How the rupee trades against the backdrop of the US Fed meeting and RBI’s easing stance will therefore be a major sentiment driver.
5. Global cues: US Fed FOMC meeting on 9–10 December
Globally, the US Federal Reserve’s Federal Open Market Committee (FOMC) meeting on 9–10 December is the marquee event. [21]
Key points investors are tracking:
- The Fed is widely expected to consider another 25 bps cut, following its October reduction.
- The CME FedWatch tool shows market-implied odds of roughly 86% for an additional quarter-point cut in December. [22]
- Recent US data, including 0.3% monthly gains in consumer spending and the PCE price index, suggest moderate growth with inflation still contained around 2.8% year-on-year. [23]
Major US indices closed higher on Friday on optimism about a continued easing cycle: [24]
- The Nasdaq Composite advanced modestly,
- The Dow Jones Industrial Average and S&P 500 also posted small gains,
- Overall, Wall Street sentiment remains constructive as long as the Fed avoids hawkish surprises.
For India, a dovish Fed outcome could:
- Support risk assets globally,
- Ease pressure on emerging market currencies like the rupee,
- Encourage renewed foreign portfolio flows into Indian equities and bonds.
A more conservative or hawkish tone, in contrast, could strengthen the dollar and re-ignite volatility across EM assets.
6. Trade and geopolitics: India–Russia deals and India–US trade talks
Beyond pure macro data, geopolitics and trade diplomacy are increasingly influential for markets.
According to Livemint’s analysis of the week’s triggers: [25]
- During President Vladimir Putin’s recent visit, India and Russia signed 16 agreements spanning defence, trade, the economy, healthcare, education, culture and media.
- Putin assured that Russia is ready to supply India with uninterrupted fuel shipments, a key reassurance for a fast-growing economy heavily dependent on energy imports.
- Simultaneously, India is working on a multi-stage trade arrangement with the US, with a US delegation due in New Delhi to resume negotiations.
- A key early focus is on rolling back retaliatory tariffs, including a 50% duty tied to India’s Russian oil purchases.
For markets, these developments matter because they intersect directly with:
- US tariff policy, which the RBI has already flagged as a headwind for Indian exports and future growth. [26]
- Oil prices and supply security, crucial for India’s inflation trajectory and current account.
- The broader geopolitical positioning of India between major powers, which influences both trade flows and capital flows.
Positive progress on India–US trade, while preserving beneficial energy ties with Russia, would be seen as a constructive outcome for both the rupee and export-oriented sectors.
7. Flows and safe-haven trade: FII selling, DII support and surging gold
Foreign vs domestic flows
Flows remain a dominant story:
- Livemint reports that foreign institutional investors (FIIs) have sold more than $1 billion (about ₹10,401 crore) in Indian equities over the first four trading days of December.
- Over the same period, domestic institutional investors (DIIs) bought roughly ₹19,783 crore, more than offsetting FII selling and supporting indices. [27]
- On Friday alone, ET notes that FIIs were net sellers to the tune of about ₹439 crore, while DIIs were net buyers of around ₹4,189 crore. [28]
Strategists attribute FII outflows largely to rupee depreciation of about 5% this year, which erodes USD returns, and to concerns over stretched valuations. DIIs, by contrast, are riding steady domestic mutual fund and insurance flows, and are more focused on India’s robust growth backdrop. [29]
Net-net, domestic money is still absorbing foreign profit-taking, but persistent FII outflows remain a risk if currency volatility intensifies.
Gold at record levels
Gold, meanwhile, is flashing a strong safe-haven signal:
- Spot gold has climbed to around US$4,212 per ounce, buoyed by expectations of a Fed rate cut. [30]
- In India, gold prices in the national capital have jumped by roughly ₹1,300 to about ₹1,32,900 per 10 grams, with silver surging to record levels as well. [31]
For equity investors, elevated gold prices often reflect underlying risk aversion in the global system, even when stock indices are still near highs. It can also divert household savings flows away from equities and into bullion, at the margin.
8. IPO calendar and corporate actions: ICICI Prudential AMC steals the show
Primary markets are set for an action-packed week.
According to ET Markets: [32]
- Five mainboard IPOs and seven SME IPOs are scheduled to hit D-Street this week, collectively aiming to raise about ₹13,807 crore.
- The headline event is the ICICI Prudential Asset Management Company (ICICI Pru AMC) IPO, an offer-for-sale (OFS) of up to 48,972,994 shares by promoter Prudential Corporation Holdings Limited, pegged at roughly ₹10,603 crore. The issue opens on Friday, 12 December, with an indicative price band around ₹2,061–2,165 per share.
- Other mainboard issues in the pipeline include Corona Remedies, Wakefit Innovations, Park Medi World and Nephrocare Health Services, while a series of SME IPOs — from display equipment makers to agritech firms — will also tap investors.
- On the listing side, names like Vidya Wires, Aequs and Meesho are slated to debut on the mainboard, along with several SME listings.
Heavy primary issuance can have a two-sided effect:
- It may absorb liquidity from secondary markets in the short term, especially if large deals like ICICI Pru AMC see strong oversubscription.
- At the same time, successful IPOs and strong listings often reinforce bullish sentiment, showcasing investor appetite for new-age and financial sector plays.
Corporate actions to watch
In addition, several corporate actions will keep stock-specific interest high this week: [33]
- Deccan Gold Mines has its rights issue record date on Tuesday, 9 December.
- Mrs. Bectors Food Specialities will see a 5:1 stock split with a record date on Friday.
- Bharat Rasayan has scheduled the same Friday as the record date for a 1:1 bonus issue plus a 5:1 stock split.
- Nureca and VLS Finance also have share buyback record dates on Friday.
These events can spark short-term price volatility and may create trading opportunities in the respective counters.
9. Technical picture: “Buy on dips” but volatility likely
Multiple brokerages highlight that, despite FII selling and rupee worries, the technical structure of the Nifty remains bullish: [34]
- The index is holding comfortably above its 21-day moving average,
- Momentum indicators like RSI and MACD are supportive,
- Support zones are seen near 26,000–26,060, while 26,350–26,440 act as near-term resistance.
In simple terms, traders are being advised to maintain a “buy on dips” approach, focusing on stock-specific setups while respecting key support levels — particularly ahead of the Fed meeting and CPI data, which could trigger sharp intraday moves.
10. What this all means for investors this week
Bringing the threads together, here’s how the landscape looks as trading resumes:
- Macro backdrop is supportive
- Strong GDP growth, ultra-low inflation and a pro-growth RBI tilt create a favourable medium-term environment for Indian equities. [35]
- Currency and Fed risk are the main pressure points
- A rupee flirting with the ₹90 mark and uncertainty over the exact pace of Fed easing mean global risk sentiment can shift quickly. [36]
- Flows are a tug of war
- FIIs are cautious and booking profits, but DIIs and domestic retail money continue to back the market, limiting downside — at least for now. [37]
- Primary markets and corporate events add another layer of complexity
- The huge ICICI Pru AMC IPO and other issues will test risk appetite and liquidity, while corporate actions will fuel stock-specific swings. [38]
- Sectoral focus could shift
- Financials, autos, real estate and domestic cyclicals stand to benefit from lower rates and strong growth.
- IT and other exporters may continue to gain from a weaker rupee.
- Rupee-sensitive and import-heavy sectors, as well as companies with high dollar-linked input costs, may remain under pressure if currency volatility persists. [39]
For traders and investors alike, the message from 7 December 2025 onward is clear:
This week is not just about one data point or one IPO — it is about how monetary policy, currency markets, geopolitics and investor behaviour interact.
References
1. timesofindia.indiatimes.com, 2. www.livemint.com, 3. m.economictimes.com, 4. timesofindia.indiatimes.com, 5. timesofindia.indiatimes.com, 6. www.livemint.com, 7. timesofindia.indiatimes.com, 8. timesofindia.indiatimes.com, 9. timesofindia.indiatimes.com, 10. www.livemint.com, 11. m.economictimes.com, 12. www.livemint.com, 13. www.livemint.com, 14. timesofindia.indiatimes.com, 15. timesofindia.indiatimes.com, 16. m.economictimes.com, 17. m.economictimes.com, 18. timesofindia.indiatimes.com, 19. timesofindia.indiatimes.com, 20. m.economictimes.com, 21. www.livemint.com, 22. www.livemint.com, 23. m.economictimes.com, 24. m.economictimes.com, 25. www.livemint.com, 26. timesofindia.indiatimes.com, 27. www.livemint.com, 28. m.economictimes.com, 29. www.livemint.com, 30. www.livemint.com, 31. www.livemint.com, 32. m.economictimes.com, 33. m.economictimes.com, 34. m.economictimes.com, 35. timesofindia.indiatimes.com, 36. m.economictimes.com, 37. www.livemint.com, 38. m.economictimes.com, 39. www.livemint.com
