December 5, 2025 | Nifty Reclaims 26,000 as IT Rally Lifts Sentiment, Meesho IPO Nears Close, and RBI Policy Hangs in Balance

Good Morning & Market Recap

Indian Indices Snap Losing Streak; Nifty Reclaims 26,000

The Indian equity markets staged a smart recovery yesterday, snapping a four-day losing streak. The Nifty 50 closed above the psychological 26,000 mark, driven by a strong rally in IT stocks and domestic institutional buying.

• Key Driver: A weakening Rupee (hovering near 89.86 against the USD) acted as a tailwind for export-heavy IT counters.

• Overnight Cues: Global cues remained mixed overnight, with U.S. markets ending near flat as the Dow Jones slipped 31 points to close at 47,850.94, while the S&P 500 edged up 0.11% to 6,857.12 and Nasdaq gained 0.22% to settle at 23,505.14. Investors are now focused on the upcoming U.S. inflation data and the Federal Reserve's policy meeting next week.

• Today’s Tone: Cautiously Optimistic. The GIFT Nifty is trading at 26,189.50, suggesting a gap-up opening of roughly 150 points.

• The rupee recovered slightly to 89.837 per dollar on December 4 from 90.171 on December 3, while crude oil hovered around $63.58 per barrel and gold traded at $4,218 per troy ounce.

Tech Pulse: AI Search Wars & Hardware Shifts

Google Gemini has overtaken ChatGPT in India's AI search rankings, with emerging players like Grok and Perplexity gaining ground in the domestic market. The shift reflects changing user preferences for conversational AI tools and search capabilities. In a significant personnel move, Apple's UI design lead Alan Dye has joined Meta to lead a new hardware studio, signaling Meta's continued push into consumer devices beyond VR headsets. Apple's foldable iPhone reportedly entered the production phase, with Korean pricing hints suggesting a premium positioning in India if launched.

Tata Group, Cyient, and Applied Materials units emerged as L1 bidders for the Semiconductor Laboratory (SCL) fab upgrade, marking a crucial step in India's semiconductor manufacturing ambitions. Data security firm Cohesity is preparing for a $1-billion India expansion, eyeing the country's growing enterprise data protection market. The upcoming Flipkart Buy Buy 2025 Sale starting December 5 will offer massive discounts on flagship devices including iPhone 16 and Galaxy S24, intensifying year-end consumer electronics competition.

Funding Radar: Modulus Housing Closes Series A

Modulus Housing, an IIT Madras-incubated proptech and construction-tech startup, raised $7.83 million (Rs 70 crore) in a Series A round led by Kalaari Capital, Hero Enterprise, and Samarthya, with participation from SVAS, Sigma, Zetwerk founder Srinath Ramakkrushnan, and Sanjiv Rangrass. The December 2 announcement marks one of the week's significant infrastructure-tech deals. The company plans to deploy the capital toward market expansion in India and select international markets, R&D for innovative construction technologies, scaling its partner-factory cloud manufacturing network, and strengthening its lightweight green-concrete technology.

Established in 2018, Modulus Housing specializes in industrialized micro-construction using a decentralized network of partner factories optimized for rapid, scalable production for the low-rise building sector. The firm reported a 38% revenue increase to Rs 54 crore in FY24 and has delivered over 1,500 modular structures across 21 Indian states and regions in Africa, serving food & beverage, edge data centers, FMCG, oil & gas, healthcare, and public sector clients. Vamsi P, Partner at Kalaari Capital, noted that Modulus is "addressing a critical challenge in the infrastructure domain—where demand is decentralized, recurring, and pressing, yet often falls short of quality standards".

The December funding landscape includes broader VC activity, with Nexus closing a $700 million Fund VIII to back India and U.S. startups focused on AI, enterprise, and consumer sectors—one of the largest raises this year. Indian startups collectively raised over $296 million between November 24-29, led by solar infrastructure and EV deals.

IPO Pipeline Watch: Meesho Closes Strong

Meesho IPO enters its final day today, December 5, with subscription reaching 8.28 times as of Day 2 close. The SoftBank-backed e-commerce platform's Rs 5,421.20 crore offering (Rs 4,250 crore fresh issue + Rs 1,171.20 crore OFS) saw robust demand across all categories, with retail investors subscribing 3.85 times and non-institutional investors at 1.80 times. The issue, priced at Rs 105-111 per share, garnered Rs 2,439 crore from anchor investors including SBI Mutual Fund, Fidelity Funds, and BlackRock.

Oorjita Pre-Emptive Read:

At the upper price band of Rs 111, Meesho is valued at a FY25 price-to-sales ratio of 5.3x on post-issue capital, connecting over 5 lakh sellers with 199 million annual transacting users. The grey market premium (GMP) surged 41% to Rs 40, indicating strong listing expectations. SBI Securities recommends subscribing for long-term investment, noting that exceptional tax expenses are behind the company and profitability trajectory remains the key monitorable as investments continue in technology and marketing.

Timeline: Subscription closes today (Dec 5) → Allotment on Dec 8 → Listing on Dec 10.

Market Movers & Watchlist: IT Leads, IndiGo Drags

Top Performers

Tech Mahindra, TCS, HCL Technologies, Adani Enterprises, Wipro, and Infosys led Nifty 50 gains on December 4, with the IT sector surging over 1.6%. In the midcap space, Coforge, Policybazaar, Persistent Systems, and Mphasis gained 2-3%. Among smallcaps, Hindustan Copper, PC Jeweller, Banco Products, and India Cements surged 6-8%.

Underperformers

InterGlobe Aviation (IndiGo) fell 2.39%, attracting negative attention due to flight cancellations and service disruptions caused by crew shortages and new pilot-duty rest regulations. Maruti Suzuki, Eternity Ceramics, Kotak Mahindra Bank, and Dr. Reddy's Laboratories were notable Nifty 50 laggards. Hitachi Energy India and Biocon declined over 5% in the midcap segment.

Sectoral Snapshot

The Nifty IT index's 1.41% gain reflected rupee weakness benefits, while PSU Banks, Defense, and Oil & Gas sectors underperformed. Market breadth was relatively balanced with 1,499 stocks advancing versus 1,456 declining on the NSE. Hero MotoCorp, Vedanta, and Asian Paints hit 52-week highs, while Colgate and Teamlease touched 52-week lows.

Deep Dive: RBI Policy Crossroads – Growth vs. Currency Stability

The Reserve Bank of India's Monetary Policy Committee faces a pivotal decision on December 6 as it balances growth support against rupee volatility and inflation dynamics. Market participants remain divided, with 12 out of 20 economists polled by ET expecting a 25-basis-point repo rate cut to 5.25%, while eight anticipate a pause. Financial Express polling shows an even sharper divide, with 8 of 15 economists expecting no change and seven anticipating a 25-bps reduction.

The Case for a Cut:

Inflation has eased to multi-year lows, remaining comfortably within the RBI's 2-6% tolerance band, giving the MPC room to prioritize growth without risking macroeconomic stability. JM Financial expects the RBI to raise its FY26 growth forecast by at least 20 basis points to 7%, while lowering its inflation projection by 40 basis points to 2.2%. Sonam Srivastava, Founder of Wright Research, noted that "with inflation easing to multi-year lows and remaining comfortably within the RBI's tolerance band, the probability of a repo rate cut has strengthened meaningfully". Rohit Arora, CEO of Biz2X and Biz2Credit, added that "financial markets are increasingly pricing in a 25-basis-point reduction, presenting a strong opportunity for the RBI to adopt a more supportive stance".

The Currency Complication:

The rupee's recent fall to record lows near 90 per dollar complicates the policy calculus, though JM Financial believes "the currency's recent fall is unlikely to influence the MPC's decision". Bank of Baroda's report suggests the central bank is likely to maintain the repo rate at 5.50% and retain its neutral stance. The RBI has signaled there is still room for more policy rate cuts after already reducing rates by 100 basis points in early 2025, with Governor Sanjay Malhotra stating the rupee remains within the long-term depreciation trend.

Market Impact:

A rate cut would support consumption cycles and boost credit demand across sectors, benefiting rate-sensitive stocks in real estate, auto, and consumer durables. Conversely, maintaining rates would signal inflation vigilance and currency stability priorities. India VIX declined 3.52% to 10.82 on December 4, suggesting markets expect a measured policy response.

Quick Bytes (Global/Off-Radar)

• Gold Rushes to New Highs: Gold prices in Bangalore touched ₹1,26,630 per 10g (24K) today. The yellow metal continues to act as a hedge against currency depreciation and global geopolitical jitters.

• Crude Softness: Despite a minor uptick, Brent Crude remains relatively soft at $63.29, which is a net positive for India's import bill, balancing the weak Rupee impact.

Quote of the Day

"Every 1% rupee depreciation boosts IT EBITDA margins by roughly 30 basis points. With the Rs 3-4 fall in the rupee over the last few months, the market is baking in nearly 100 bps margin improvement. But this benefit is visible only at the EBITDA level—below that, hedge-related losses offset gains."

— Sandip Agarwal, Principal Officer & Co-Founder, Sowilo Investment Managers, explaining the IT sector's recent rally amid rupee weakness. Published December 4, 2025, Economic Times.

Chart of the Day

NSE sectoral indices performance on December 4, 2025, with IT leading gains at 1.41% while PSU Banks, Defense, and Oil & Gas underperformed.

The Nifty IT index led sectoral gains on December 4 with a 1.41% surge, benefiting from rupee depreciation against the dollar. Every 1% rupee depreciation boosts IT EBITDA margins by approximately 30 basis points, with the recent Rs 3-4 fall translating to nearly 100 bps of margin improvement. Financial Services, Metal, and Pharma sectors posted modest positive returns, while defensive positioning drove flows into IT stocks amid currency volatility. PSU Banks, Defense, and Oil & Gas sectors underperformed, dragged by profit-taking and sector-specific headwinds.

What to Watch Today

• Macro: RBI's Monetary Policy Committee decision scheduled for December 6; market participants watching for rate stance amid rupee volatility and growth-inflation trade-offs

• IPO: Meesho IPO subscription closes today at 5:00 PM; final subscription data crucial for listing sentiment on December 10

• Global: U.S. November jobs report due; Fed officials' commentary ahead of December 17-18 policy meeting

• FPI/DII Flows: Yesterday's provisional FII outflow at Rs 3,207 crore; cumulative December outflow at Rs 13,121 crore

• Sectoral: IT stocks in focus as rupee weakness continues; broader markets underperformed with Nifty Smallcap 100 down 0.24% and Nifty Midcap 100 flat

• Earnings: Watch for Q3 FY25 result announcements and management commentary on demand outlook

Technical Levels (indicative):

• Nifty 50: Support at 25,951 | Resistance at 26,098 (intraday high Dec 4)
• India VIX: Declined 3.52% to 10.82, indicating reduced near-term volatility

Stocks to Watch:

• IT Pack: TCS, Infosys, Tech Mahindra, HCL Tech (rupee depreciation tailwinds)
• JSW Steel: JFE JV deal finalized for Bhushan Power at Rs 531 billion EV
• InterGlobe Aviation: Flight disruptions and crew shortage impact
• Hero MotoCorp, HAL: Each rose 2% on December 4
• Meesho: Final day of IPO subscription; GMP at Rs 40 premium

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

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