• The Indian stock market ended positively last Friday, with gains in various sectors.
• The market closed on a subdued note due to a lack of major triggers and caution ahead of the US Republican Party administration swearing-in.
• The Indian rupee dropped to a new low, influenced by the expectation of fewer Fed rate cuts, a widening trade deficit, and weak economic growth.
• Despite the positive close, markets lacked conviction due to late profit-taking in several sectoral stocks and the rupee's record fall against the dollar.

The Indian stock market concluded on a positive note last Friday, with the Sensex settling at 78,699.07, marking an increase of 226.59 points or 0.29 per cent. The Nifty also closed higher at 23,813.40, up by 63.20 points or 0.27 per cent. This upward trend was driven by gains in various sectors including pharma, auto, IT, financial service, FMCG, media, and private banks.

The Nifty Bank ended at 51,311.30, up by 140.60 points, or 0.27 per cent. The Nifty Midcap 100 index closed at 56,979.80 after dropping 145.90 points, or 0.26 per cent, while the Nifty Smallcap 100 index closed at 18,755.85, after rising 27.20 points, or 0.15 per cent. On the Bombay Stock Exchange (BSE), 1,946 shares ended in green and 2,026 shares in red, with no change in 115 shares.

Market experts noted that the Christmas week trading ended on a subdued note due to a lack of major triggers and caution ahead of the swearing in of the US Republican Party administration. The Indian rupee dropped to a new low, weighed down by the expectation of fewer Fed rate cuts, a widening trade deficit, and weak economic growth.

Sectoral Performance and Market Influencers

On the sectoral front, selling was seen in the PSU Bank, Metal, Realty, Energy, Infra and Commodities sectors on Nifty. In the Sensex pack, M&M, IndusInd Bank, Tata Motors, Bajaj Finance, Bajaj Finserv, Sun Pharma, Nestle India, ICICI Bank and Asian Paints were the top gainers. SBI, Tata Steel, Zomato, UltraTech Cement, HCL Tech, L&T, Titan, TCS and Power Grid were the top losers.

The Indian rupee closed at a new low of 85.54 per dollar. The previous close of the Indian currency was 85.26. Foreign institutional investors (FIIs) sold equities worth Rs 2,376.67 crore on December 26, while domestic institutional investors bought equities worth Rs 3,336.16 crore on the same day.

In related news, the Nifty Auto Index led sectoral gains with a 1% rise, followed by Nifty Healthcare and Nifty Bank, up 0.8% and 0.3%, respectively. European stocks also edged higher in light holiday trading, mirroring Asian market strength. The Stoxx Europe 600 gained 0.2 percent as trading resumed after a two-day break. Meanwhile, US equity futures dipped following a lackluster Thursday session on Wall Street. Treasury yields and the dollar remained steady.

Historical Context and Market Outlook

Asian markets rallied, with the MSCI Asia Pacific Index posting its fifth consecutive gain-the longest streak since July. Tokyo stocks surged as the yen weakened to a five-month low of 158 per dollar, spurred by Bank of Japan Governor Kazuo Ueda's comments, which provided no clear signal on upcoming interest rate decisions.

Despite ending higher for the second straight session, markets lacked conviction as indices came off their early highs amid late profit-taking in several sectoral stocks. The mood remains that of caution as foreign investors have not softened their stance on Indian equities with rupee's record fall against the dollar continuing to create uncertainty amongst the investors.

Considering today's closing of 80,182.20, the Sensex has crashed 1,951 points in three days. The overall market capitalisation of BSE-listed firms has dropped to nearly ₹453 lakh crore from about ₹459 lakh crore on Friday, December 13, making investors poorer by about ₹6 lakh crore in three sessions.