Nifty drops below 26,000 as Fed nerves, sliding rupee and FII selling hit trade

The domestic equity indices slipped on Monday as traders cashed out of midcaps and blue chips, sparking a broad selloff. Foreign investors quickened their retreat ahead of the US Federal Reserve's policy decision later this week, pulling the Nifty below 26,000. All the sectoral indices on the NSE ended in the red, with Nifty PSU Bank index leading the decline. Sentiment weakened as traders braced for a potentially hawkish Fed signal, the rupee flirted with lifetime lows on persistent dollar demand, and conflicting cues from ongoing India'US trade negotiations kept investors uneasy. Rising Japanese bond yields added another jolt by threatening to trigger an unwinding of yen carry trades, tightening liquidity and stirring volatility. Even with India's solid macro backdrop, these crosscurrents weighed on risk appetite and kept market on the back foot.

The S&P BSE Sensex declined 609.68 points or 0.71% to 85,102.69. The Nifty 50 index fell 225.90 points or 0.86% to 25,960.55. In two trading sessions, the Nifty and Sensex declined 0.77% and 0.71%, respectively.

Interglobe Aviation (down 8.28%), Bharat Electronics (down 4.97%) and Bajaj Finance (down 2.12%) were major drags today.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index fell 1.73% and the S&P BSE Small-Cap index declined 2.20%.

The market breadth was strong. On the BSE, 950 shares rose and 3,348 shares fell. A total of 198 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, jumped 7.85% to 11.13.

Numbers To Track:

The yield on India's 10-year benchmark federal paper jumped 0.88% to 6.557 compared with previous session close of 6.500.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 90.1725 compared with its close of 89.9525 during the previous trading session.

MCX Gold futures for 5 February 2025 settlement rose 0.09% to Rs 130,584.

The US Dollar Index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.04% to 98.95.

The United States 10-year bond yield added 0.22% to 4.149.

In the commodities market, Brent crude for January 2025 settlement rose 8 cents or 0.13% to $63.83 a barrel.

Global Markets:

Most European shares declined on Monday as global investors focus on the U.S. Federal Reserve's monetary policy decision this week.

Most Asian indices ended higher as China's outbound shipments surged 5.9% last month in U.S. dollar terms from a year earlier, China's customs data showed Monday. Imports rose 1.9% last month compared to 1% in October.

China's exports of rare earths accelerated in November, as it shipped out 5,494 tons of the critical minerals, up 24% from a year earlier.

Attention also drifted toward Washington, where the Federal Reserve meets this week and is widely expected to roll out another interest rate cut. With inflation easing and growth signals turning patchy, investors are hoping the Fed will keep the monetary support flowing.

Fresh revisions from Tokyo added a dash of gloom early Monday. Japan's economy shrank more than initially reported in the July to September quarter, with official numbers showing GDP contracting at an annualized 2.3%. The decline was steeper than both the earlier 1.8% estimate and economists' expectation of a 2.0% drop, underscoring the challenges facing Asia's second-largest economy.

Wall Street, however, wrapped up last Friday on a more cheerful note. All three major indices finished in the green as markets sifted through a batch of U.S. data. The S&P 500 notched its fourth straight gain, inching up 0.19% to 6,870.40 and moving to within about 0.7% of its intraday peak. The Nasdaq Composite rose 0.31% to 23,578.13, while the Dow Jones Industrial Average added 104.05 points, or 0.22%, to close at 47,954.99.

Adding fuel to rate-cut hopes was the latest Personal Consumption Expenditures Price Index reading for September, the Federal Reserve's preferred inflation measure. Core PCE climbed 0.2% month-on-month and 2.8% year-on-year, cooler than analysts had pencilled in. Coupled with signs of a softening labor market and increasingly cautious consumers, the reading strengthened expectations that the Fed is preparing to lean further into policy support.

Stocks in Spotlight:

PG Electroplast slumped 4.19% after a domestic broker published a report flagging alleged stress in the company's finances, citing rising leverage, weak cash flows and higher debt obligations. The note sparked investor worries, prompting the selloff. The company swiftly countered the claims, calling the report inaccurate and asserting that it is a net cash firm with strong liquidity and consistently reflected profits and sector-leading margins in FY26 so far. It reiterated its full-year revenue and profit guidance and urged the broker to correct the report, warning that unverified research risks misleading investors and may breach SEBI norms.

Matrimony.com surged 10% to Rs 524.10 after the company informed exchanges that its board will meet on 15 December 2025 to consider a buyback of equity shares.

Dynamatic Technologies rose 6.06% after the company said it signed a new agreement with Dassault Aviation to build the complete rear fuselage of the Falcon 6X business jet.

SML Mahindra added 2.74% after the company reported 94.29% jump in commercial vehicle (CV) sales to 952 units in November 2025, compared with 490 units sold in November 2024.

SPML Infra fell 0.53%. The company said its joint venture with Shree Hari Infraprojects had secured an order worth Rs 207.38 crore from the Public Health Engineering Department (PHED), Jhalawar, Rajasthan.

Ashoka Buildcon surged 1.86% after the company announced that it has secured an order worth Rs 447.21 crore from the Brihanmumbai Municipal Corporation (BMC) for its ongoing flyover construction project on the Sion-Panvel Highway.

HFCL slipped 3.44%. The company announced that it has secured export orders worth $72.96 million (Rs 656.10 crore) for the supply of optical fiber cables (OFC).

RailTel Corporation of India fell 5.19%. The company announced that it has received a letter of acceptance (LoA) worth Rs 14.40 crore from the Ministry of External Affairs (MEA).

MTAR Technologies declined 2.11%. The company announced that it has secured an order worth Rs 194 crore from Megha Engineering & Infrastructures (MEIL) for the supply of end fittings and associated components.

IPO Update:

Corona Remedies received bids for 27,53,618 shares as against 45,71,882 shares on offer, according to stock exchange data at 16:45 IST on Monday (8 December 2025). The issue was subscribed 0.60 times. The issue opened for bidding on 8 December 2025 and it will close on 10 December 2025. The price band of the IPO is fixed between Rs 1,008 and 1,062 per share.

Wakefit Innovations received bids for 54,55,432 shares as against 3,63,53,276 shares on offer, according to stock exchange data at 16:45 IST on Monday (8 December 2025). The issue was subscribed 0.15 times. The issue opened for bidding on 8 December 2025 and it will close on 10 December 2025. The price band of the IPO is fixed between Rs 185 and 195 per share.

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