As global and domestic markets head into the final trading week of 2025, investors are expected to closely track a mix of macroeconomic cues, currency movements, and foreign fund flows. With thin volumes due to the year-end holiday season, volatility may remain elevated as key triggers shape near-term market sentiment.
Rupee Movement in Focus
The Indian rupee will be under close watch after showing signs of weakness against the US dollar in recent sessions. Persistent dollar strength, driven by firm US bond yields and expectations of a cautious Federal Reserve stance, has kept emerging market currencies under pressure. Any further depreciation in the rupee could weigh on import-heavy sectors while offering some relief to export-oriented stocks such as IT and pharmaceuticals.
Foreign Institutional Investors’ Activity
Foreign Institutional Investors (FIIs) are likely to play a decisive role in the week ahead. After bouts of selling seen toward the end of December, market participants will monitor whether FIIs return as net buyers or continue to pare exposure amid global uncertainties. Analysts believe FII flows will be influenced by currency trends, US interest rate expectations, and relative valuations in Indian equities compared to other emerging markets.
Key Global Cues: US Jobs Data
Globally, the spotlight will be on the US non-farm payrolls and unemployment data, scheduled for release later in the week. The numbers are expected to provide fresh insight into the health of the US labor market and could influence the Federal Reserve’s outlook on interest rates. A stronger-than-expected jobs report may reinforce expectations of higher rates for longer, potentially pressuring global equities, while softer data could offer some relief to risk assets.
Domestic Economic Indicators
On the domestic front, market participants will keep an eye on any late-month macro data and updates related to inflation trends and growth outlook. Although no major policy announcements are expected, commentary from policymakers and global central bankers could still sway sentiment.
Market Outlook
With the year drawing to a close, experts caution that low liquidity could exaggerate market moves. Traders are advised to remain cautious and focus on stock-specific opportunities rather than broad-based bets.
Overall, rupee movements, FII flows, and critical US economic data are set to be the key drivers for Indian markets in the final week of 2025, as investors look to wrap up the year on a stable note and position themselves for the new year ahead.
