December 26, 2025 | Markets Reopen Flat as FIIs Sell ₹23,830 Cr in December, DIIs Absorb ₹62,284 Cr, and Carraro IPO Allotment Finalizes

Good Morning: Markets Resume After Christmas Break

Indian equity markets are set to resume trading today after remaining closed for Christmas on December 25. GIFT Nifty futures are trading at 26,131.00, virtually flat at the previous close, indicating a subdued start to the session. Global cues remain mixed as Wall Street hit fresh record highs on Christmas Eve, while Asian markets show divergent trends with Japan's Nikkei rising 1.12% and China's CSI 300 slipping 0.16% on weak industrial profit data.

Key watch factors include Carraro India IPO allotment finalization today, rupee stability after hitting ₹89.77 on Dec 24 (near-record lows), and fresh FII/DII flow data after the holiday. FIIs sold ₹1,721.26 crore on December 24, extending December's net outflow to ₹23,830.77 crore, while DIIs bought ₹2,381.34 crore, bringing monthly net inflows to ₹62,284.05 crore.

Market Snapshot: December 24 Close

Indian benchmarks ended marginally lower on December 24 in a lacklustre pre-holiday session. Nifty 50 closed at 26,142.10, down 35.05 points or 0.13%, while Sensex settled at 85,408.70, losing 116.14 points or 0.14%. Bank Nifty ended at 59,183.60, down 0.20%.

Small-cap stocks bucked the trend with gains, while sectors like FMCG and Auto ended higher despite weakness in heavyweight banking and metal stocks. Among Nifty 50 constituents, 28 stocks ended in the red, led by Power Grid Corporation of India Limited, JSW Steel Limited, and SBI Life Insurance Company Limited, while 22 stocks gained, with Tata Motors Limited, Adani Enterprises Limited, and Eicher Motors Limited leading the charge with gains up to 1.79%.

Sectoral Performance (Dec 24):

• Gainers: FMCG (+0.57%), Auto (+0.48%), OMC (+0.32%)
• Losers: Metal (-0.83%), IT (-0.52%), Private Bank (-0.18%)
• Healthcare and Pharma sectors remained flat with minor gains

Global Markets (Dec 24)

• Dow Jones: 43,297.03 (+0.9%)
• Nasdaq: 20,031.13 (+1.3%)
• S&P 500: 6,040.04 (+1.1%) - hit fresh all-time high

U.S. markets rallied in a shortened Christmas Eve session, with the S&P 500 posting its first Christmas Eve record close since 2013. Technology stocks led gains, with Tesla Inc surging 7.4% and Broadcom Inc adding 3.2%.

Currency & Commodities (Dec 24)

• INR/USD: ₹89.7703 (RBI Reference Rate)
• Brent Crude: $73.00 per barrel (+0.56%)
• Gold: Record highs reached on Dec 24 amid safe-haven demand

Tech Pulse

India's Startup Funding Winter Continues in 2025

Indian tech startups raised $10.5 billion in 2025, marking a 17% decline from 2024 levels, as the funding winter persists. Despite the downturn, India secured the 3rd spot globally in tech startup funding during H1 2025 with $4.8 billion raised, overtaking Germany and Israel, though this represented a 25% YoY decline from H1 2024.

Seed-stage funding showed resilience, jumping 31% YoY to $893 million in 2024, driven by major rounds in Sentient Labs, Nurix AI, and Lyskraft. Women-led startups saw funding double in 2024, with Finova Capital ($135 million) and Atlan ($105 million) leading the year's biggest deals.

Sector Sentiment Impact: The funding slowdown reflects global VC caution amid high interest rates and uncertain macroeconomic conditions. However, India's ranking as the 3rd largest ecosystem indicates structural strength despite cyclical headwinds.

Recent Notable Funding (November 2025):

• IntrCity SmartBus Private Limited: $28.3 million Series D for intercity travel expansion
• Mantra Softech India Limited: $14.1 million PE round for AI-powered security solutions
• Agraga Limited: $11.3 million Series B for agri-logistics tech

IPO Pipeline Watch

Carraro India Limited IPO allotment is being finalized today (December 26), following the subscription closure on December 24. The ₹1,250 crore offer-for-sale was priced at ₹704 per share with a lot size of 21 shares. The company raised ₹375 crore from anchor investors on December 19.

Listing Ahead

DAM Capital Advisors Limited is scheduled to list on BSE and NSE on December 27, 2024, following its ₹840.25 crore OFS that closed on December 23. The investment banking firm's issue was priced at ₹269-₹283 per share.

Oorjita Pre-Emptive Read on Carraro India

The Italy-based Carraro Group's Indian subsidiary specializes in transmission systems (axles, transmissions, drives) for agricultural tractors and construction equipment. With steady revenue growth (₹1,806.55 crore in FY24 vs ₹1,520.05 crore in FY22) and improving profitability (PAT of ₹62.56 crore in FY24 vs ₹22.43 crore in FY22), the company demonstrates operational momentum.

However, at the issue price, the post-IPO P/E stands at 40.24x, which appears aggressive compared to the pre-IPO EPS of ₹11 expanding to ₹17.50 post-issue. The company operates in a niche segment with preferred Tier-1 supplier status but faces valuation concerns.

Red Flags:

• Aggressive valuation at 40.24x P/E post-IPO
• Entire ₹1,250 crore issue is OFS - no fresh capital for growth

Green Flags:

• Preferred supplier status with established client base in tractor transmission systems
• Two manufacturing plants with end-to-end capabilities in Pune
• Strong ROE of 17.69% and ROCE of 19.35% indicating efficient capital deployment

Timeline: Allotment today (Dec 26) → Credit to demat (Dec 27) → Listing on BSE/NSE (Dec 30)

Market Movers & Watchlist

FII/DII Activity (Dec 24)

FIIs sold ₹1,721.26 crore in cash markets on December 24, while DIIs bought ₹2,381.34 crore, continuing their counter-balancing trend. December month-to-date, FIIs have net sold ₹23,830.77 crore, while DIIs have absorbed ₹62,284.05 crore, providing crucial market support.

Stocks in Focus

December 24 Outperformers (up to 1.79%):

• Tata Motors Limited - Auto sector strength
• Adani Enterprises Limited - Diversified business resilience
• Eicher Motors Limited - Premium motorcycle demand
• Bharat Petroleum Corporation Limited - OMC sector gains
• Nestle India Limited - FMCG defensive play

December 24 Underperformers (down up to 1.68%):

• Power Grid Corporation of India Limited - Utilities sector pressure
• JSW Steel Limited - Metal sector weakness
• SBI Life Insurance Company Limited - Insurance sector drag
• Titan Company Limited - Discretionary spending concerns
• Infosys Limited - IT sector softness

Quick Bytes

Asian Markets Show Divergent Trends: Japan's Nikkei 225 rose 1.12% as the government prepared to propose a record ¥115 trillion ($735 billion) budget for fiscal 2025-26, the largest in history. Meanwhile, China's industrial profits extended declines for the fourth straight month, dropping 7.3% in November YoY, indicating Beijing's stimulus measures have yet to arrest corporate profit erosion.

Tokyo Inflation Uptick: Tokyo's overall inflation accelerated to 3% in November from 2.6% in October, while core inflation (excluding fresh food) rose to 2.4%, suggesting the Bank of Japan may continue its monetary tightening path. The Japanese yen strengthened and 10-year JGB yields climbed on rate hike expectations.

Nissan-Honda Merger Talks: Nissan Motor Co Ltd shares plunged over 9% after formal merger discussions commenced with Honda Motor Co Ltd earlier in the week, potentially creating the world's third-largest automaker by sales. Nissan CEO warned the merger could necessitate severe cost-cutting measures.

Deep Dive: FII Exodus vs. DII Defense - December Dynamics

December 2025 has witnessed a stark divergence in institutional flows, with Foreign Institutional Investors (FIIs) net selling ₹23,830.77 crore month-to-date, while Domestic Institutional Investors (DIIs) have net bought ₹62,284.05 crore, absorbing more than double the foreign outflows.

Why the FII Exodus?

The sustained FII selling reflects three key global factors:

1. A strengthening US dollar and elevated US Treasury yields making emerging markets less attractive
2. Elevated India equity valuations with Nifty 50 trading at ~20x forward P/E versus historical averages of 18-19x
3. Profit booking after the October-November rally

The rupee's weakness to ₹89.77 on December 24 (near all-time lows) further compounds FII concerns about currency depreciation eroding dollar-denominated returns.

DII to the Rescue

Domestic institutions have stepped up as the market's stabilizing force, with mutual funds and insurance companies deploying ₹62,284 crore in December alone. This reflects strong domestic savings channelization into equities through SIPs and insurance premium collections.

DII buying has been particularly focused on banking, FMCG, and auto sectors - defensives that offer relative safety amid global uncertainty.

Investor Takeaway

The DII-FII divergence has kept markets range-bound rather than triggering sharp corrections. However, sustained FII outflows could pressure valuations in Q4 FY25. Watch for Union Budget 2025-26 (early February) and Q3 corporate earnings (January) as potential catalysts for flow reversal.

Technical Watch: Nifty 50 support at 25,800-26,000 remains critical; a break below could trigger accelerated selling toward 25,500. Resistance at 26,250-26,500 needs to be reclaimed for bullish momentum.

What to Watch Today

• Macro: Japan's unemployment rate (Nov) at 2.5%; Tokyo inflation data indicates BoJ tightening path
• Earnings: No major Q3 FY25 results scheduled today
• IPO: Carraro India allotment finalization; check status via MUFG Intime India registrar
• Global: China industrial profit data (-7.3% YoY in Nov) weighs on Asian sentiment
• FII/DII Flows: Fresh December 26 provisional data after market close
• Currency: INR/USD stability crucial after ₹89.77 close on Dec 24

Technical Levels

Nifty 50: Support at 26,000, 25,800 | Resistance at 26,250, 26,500
Bank Nifty: Support at 59,000, 58,500 | Resistance at 59,500, 60,000

Stocks to Watch Today

• Tata Motors, Eicher Motors, Adani Enterprises - December 24 outperformers, momentum continuation potential
• Power Grid, JSW Steel, Infosys - Oversold bounce candidates after Dec 24 weakness
• Carraro India - Allotment finalization today; listing expected Dec 30
• DAM Capital Advisors - Listing tomorrow (Dec 27)

Quote of the Day

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

— Warren Buffett, Chairman & CEO, Berkshire Hathaway

This timeless wisdom from the Oracle of Omaha resonates particularly in today's market environment where valuation discipline matters. As Buffett emphasizes, high-quality companies with durable competitive advantages can bail out investors even if purchased at slightly elevated prices, whereas mediocre companies bought cheaply may never return to purchase price or beyond. His largest holdings - Apple Inc, American Express Company, The Coca-Cola Company, and Moody's Corporation - exemplify this philosophy of owning "wonderful companies" for the long term.

COMPLIANCE & DISCLAIMER

This analysis is for educational purposes only. Markets are subject to risks and uncertainties. Please consult your financial advisor before making investment decisions. Past performance is not indicative of future results.

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Whatever trends you're following today: hope you're early enough to profit and wise enough to exit.