Domestic markets are anticipated to open on a weak note on Tuesday, as analysts predict bearish sentiment to dominate and risk-off trading to keep small- and mid-cap stocks vulnerable. However, some value buying in specific sectors may occur later in the day.
The GIFT Nifty is currently trading at 25,960, down from the previous close of Nifty futures at 26,060, suggesting a gap-down opening of approximately 100 points for the Nifty.
Ponmudi R, CEO of Enrich Money, notes that Indian equity markets are entering Tuesday’s session in a cautious consolidation phase following a controlled corrective pullback from recent highs. He points out that global cues remain mixed ahead of the crucial U.S. Federal Reserve policy decision, which is keeping most Asian markets flat to slightly negative.
Overnight, Wall Street closed mixed, with the Dow and S&P 500 showing pressure while volatility increased, indicated by an over 8% rise in the VIX. The uptick in U.S. Treasury yields before the anticipated quarter-point rate cut by the Federal Reserve has heightened caution among global investors, adding pressure on equities. Typically, yields decline when markets expect rate cuts, making the current rise a source of concern for risk assets.
GIFT Nifty futures indicate a subdued and mildly bearish start, reflecting this prevailing risk-off sentiment.
From a macroeconomic standpoint, the broader market backdrop remains supportive. The Reserve Bank of India’s recent 25 basis points repo rate cut to 5.25%, softening Consumer Price Index (CPI) trends toward the lower band, and FY26 GDP growth estimates around 7.3% provide a solid foundation for corporate earnings and support India’s long-term equity narrative. However, near-term investor sentiment is curtailed by global uncertainty regarding the Fed’s rate trajectory, a strong U.S. dollar, pressures on the rupee near the 90 mark, and ongoing geopolitical risks, which are all keeping risk appetite in check. While immediate sentiment appears cautious, the medium-term market structure remains constructive, Ponmudi adds.
Nilesh Jain, Head of Technical and Derivatives Research at Centrum Broking Ltd, comments, “The Nifty halted its two-day winning streak, forming a strong bearish candle on the daily chart. It slipped below the short-term 21-DMA around 26,000, which now becomes the immediate resistance zone. A sell signal on the MACD and a bearish divergence on the RSI further reinforce a cautious tone. Overall, the setup indicates a consolidation phase, with the index likely to oscillate within a broader range of 25,800 to 26,200 in the near term. This decline was accompanied by a sharp 7% rise in the INDIA VIX to 11, signaling heightened uncertainty.”
Published on December 9, 2025.
