Weekly Trend Report
- 23rd Dec 2025
Week Gone By
Indian equities ended the week marginally lower as continued selling in heavyweight stocks offset steady buying in mid and small caps, keeping sentiment cautious amid mixed global cues. Domestic macros offered some support, with wholesale inflation remaining in deflationary territory and the trade deficit narrowing to a five month low in November on the back of stronger exports and lower imports, even as high frequency indicators such as the HSBC Flash PMIs moderated, pointing to some loss of growth momentum. Globally, market sentiment remained guarded as the Bank of Japan raised interest rates to 0.75%, the highest level in three decades, while in the US, resilient job additions alongside a rise in the unemployment rate reinforced uncertainty around the timing and pace of future policy easing, capping risk appetite across equities.
Week Ahead
Indian equities enter the holiday truncated week on a mixed footing, with domestic momentum stabilising after the recent pullback and the rupee showing tentative strength near the Rs 90 level following central bank intervention, even as foreign outflows remain elevated. Benign inflation, with provisional CPI for November at 0.71%, keeps the policy backdrop supportive and provides room for further easing by the RBI, while investors track key domestic data including infrastructure output, money supply, bank credit growth, deposits and foreign exchange reserves for signals on growth and liquidity conditions. Globally, softer US inflation has supported risk appetite, though attention will remain on US GDP, corporate profits, labour market indicators and crude inventory data for cues on growth and policy expectations. In Asia, the Bank of Japan’s rate hike underscores widening policy divergence, which could influence regional currencies and flows, while China’s Loan Prime Rate decision and trade dynamics remain in focus amid resilient exports and softer domestic demand.
Technical Overview
- The Nifty 50 has entered a phase of healthy consolidation after registering a fresh all-time high near 26,325. While the index witnessed minor profit booking at higher levels, it continues to hold above the 25,900–26,000 zone, indicating that the broader trend structure remains intact. The inability of sellers to push the index decisively below this zone reflects underlying strength.
- On the weekly timeframe, the index has formed a small-bodied candle with wicks on both sides, highlighting temporary indecision between bulls and bears after a sharp up-move.
- This price behaviour is typical of a pause or breather phase within a strong uptrend rather than a reversal. Importantly, the index continues to trade well above the long-term rising trendline and the 200-week moving average, confirming that the primary trend remains bullish.
- On the daily chart, price action resembles a bullish flag-like consolidation. The strong rally from late November has formed the pole, while the recent sideways to slightly corrective movement represents the flag. The index has consistently defended the 25,850–25,900 demand zone, which aligns closely with the rising 20-day and 50-day moving averages, making this area a strong dynamic support. The 200-day moving average continues to slope upward well below current prices, reinforcing long-term trend stability.
- The RSI has cooled off from overbought levels and is now hovering around 60, suggesting that excess froth has been removed without damaging trend strength. This creates room for the next leg of the rally.
- The MACD histogram has flattened, reflecting consolidation, but the signal lines remain firmly in positive territory with no bearish crossover, confirming that momentum remains supportive of the broader uptrend.
- Volumes during the recent consolidation have been lower compared to the breakout phase, which is a constructive sign. The absence of aggressive volume on declines suggests that selling pressure is limited and profit booking is controlled, not distribution.
- Conclusion:
Nifty 50 is undergoing a constructive consolidation after a strong rally and record high. The combination of a bullish flag on the daily chart, indecision candle on the weekly chart, stable momentum indicators, and declining volumes during the pullback suggests that the market is gathering strength for the next directional move. As long as the index sustains above the 25,900–26,000 psychological zone, the broader bias remains positive. The preferred strategy continues to be “buy on dips” with a focus on a decisive breakout above the all-time high to trigger the next leg of the uptrend
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