Indian equity markets witnessed a volatile yet range-bound week, opening on a positive note before succumbing to selling pressure and eventually consolidating through the remainder of the week. Investor
sentiment remained cautious amid persistent foreign institutional investor (FII) outflows and heightened anticipation around potential monetary tightening by the Bank of Japan, which kept global risk appetite in check. As the calendar approaches year-end, thinner liquidity and a relatively light domestic data calendar have resulted in Indian markets taking cues largely from global developments.
On the macroeconomic front, India’s headline consumer price inflation (CPI) for November came in at a benign 0.71% YoY, rising from an all-time low of 0.25% in October. The uptick was primarily driven by higher prices of vegetables, eggs, meat and fish, spices, and fuel. Fuel and light inflation accelerated to 2.32% in November from 1.98% in the previous month, while inflationary pressures were visible across both urban and rural segments. Despite this sequential increase, headline inflation remains well below the Reserve Bank of India’s lower tolerance band, reinforcing expectations of an extended pause in policy rates, with the central bank likely maintaining a neutral stance in the near term.
From a liquidity perspective, the RBI’s announcement of an open market operation worth ₹50,000 crore, scheduled from 18 December 2025, is expected to inject liquidity into the system. This move should help ease domestic liquidity conditions and provide some support to the rupee amid a challenging global currency environment. The Reserve Bank of India’s active intervention continues to anchor the rupee within the ₹89–91 range against the US dollar, although clarity on the timing and contours of the India–US trade deal remains elusive.
