Market outlook: FII trend, monthly expiry among top factors to track this week

Markets wrapped up the holiday-shortened week with modest gains, continuing their ongoing consolidation trend. Despite a strong start, benchmark indices remained largely range-bound in the latter half, weighed down by mixed global cues and subdued year-end trading volumes. The Nifty closed at 26,042.30, while the Sensex ended at 85,041, indicating a cautious yet steady market tone.Investor sentiment was influenced by a mix of domestic macroeconomic data and international developments. India finalised a comprehensive Free Trade Agreement (FTA) with New Zealand, marking a step forward in its Indo-Pacific outreach and export diversification efforts. However, growth across the eight core infrastructure sectors decelerated sharply to 1.8% in November, signalling a short-term slowdown in industrial activity.Foreign Institutional Investors (FIIs) resumed their selling streak after a brief pause last week, while stable currency trends, record-setting bullion prices, and thin holiday participation added to the lacklustre trading backdrop.Here are the top xx factors that could influence market movement as trading resumes this week:1. Monthly expiry: The upcoming week marks the transition into calendar year 2026 and is likely to witness heightened volatility due to the December F&O expiry.2. Domestic data: Key domestic data points to track include Industrial Production data for November, government budget value figures, external debt statistics, and the final HSBC Manufacturing PMI reading.3. Macroeconomic cues: Globally, markets will closely monitor US macroeconomic cues, including the FOMC minutes and updates on the Federal Reserve’s balance sheet.4. Technical movements: The Nifty index continues to consolidate near record highs, indicating a healthy pause within the broader uptrend. Immediate support is placed in the 25,500–25,700 zone, while resistance is seen near 26,200 initially. A sustained breakout could open the path toward the 26,500–26,700 zone.“With liquidity conditions remaining muted and key macro cues awaited, markets are likely to stay range-bound in the near term. Investors may continue to adopt a buy-on-dips strategy, focusing on large-cap stocks and select cyclicals offering relative value and stability,” said Ajit Mishra, SVP- Research at Religare Broking.“Traders are advised to remain stock-specific, trail stop-losses on profitable positions, and avoid aggressive leverage amid expected volatility around the expiry and data releases. A balanced approach with disciplined risk management remains crucial as markets enter the New Year,” he added.5. FII activity: As of December 27, Foreign Institutional Investors (FIIs) have offloaded equities worth Rs 22,130 crore through the exchanges, pushing the total equity selling for calendar year 2025 to Rs 2,31,990 crore.In contrast, FII investments through the primary market amounted to Rs 73,583 crore, resulting in a net outflow of Rs 1,58,407 crore—marking the highest annual net selling by FIIs since their entry into Indian capital markets.6. Currency: USD/INR traded marginally lower near 89.75, easing from recent highs as capital outflows moderated and holiday-thinned liquidity curtailed momentum. Despite the near-term consolidation, the pair continues to hold its multi-year ascending channel, with the broader structure of higher highs and higher lows firmly intact.“The 89.50–89.20 zone remains a strong support base and is likely to limit further downside. On the upside, resistance is seen in the 90.00–90.50 band, where a sustained breakout would be required for momentum to re-accelerate. As long as the pair holds above 89.50, the medium-term bias remains bullish, with scope for a gradual move toward 92+ in early 2026, supported by global dollar strength and policy divergence. Pullbacks continue to offer buying opportunities within the broader uptrend," notes Ponmudi R, CEO of Enrich Money.7. Crude oil prices: Crude oil prices edged higher in global markets after geopolitical developments on Friday, including increased US pressure on Venezuelan oil exports and security concerns in parts of Africa. Brent crude rose 0.4% to $62.48 per barrel, reviving concerns around inflation and input costs.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)