Indian equity markets ended lower in a subdued session as sustained foreign institutional investor outflows and year-end caution weighed on sentiment. With December F&O expiry approaching, analysts expect elevated volatility and range-bound trading in the near term.

Market Performance Overview

The trading session reflected cautious investor sentiment as major indices posted losses amid low volumes. The Nifty's decline was accompanied by varied sectoral performance, with certain stocks bucking the overall trend.

Technical Outlook and Volatility

With the December series monthly F&O expiry approaching, market volatility is expected to remain elevated. The Nifty is likely to trade in a range of 25,800–26,100 in the near term. India VIX, which measures market fear, rose 6.00% to settle at 9.72 levels, indicating increased uncertainty among traders.

Institutional Flow Dynamics

Foreign portfolio investors continued their selling spree, net selling shares worth ₹2,760.00 crore. However, domestic institutional investors provided support by net buying ₹2,643.00 crore worth of equities, partially offsetting the foreign outflows.

Top Performers and Laggards

Despite the overall market decline, several stocks demonstrated strong performance. Tata Steel, Asian Paints, Tata Consumer Products, Grasim Industries, and Axis Bank emerged as the day's top gainers. Conversely, Reliance Industries, Bharti Airtel, ICICI Bank, HCL Technologies, and Mahindra & Mahindra were among the worst performers in the Nifty 50 index.

Major Corporate Developments

Several companies announced significant business developments that could impact their future operations and financial performance.

Defense and Infrastructure Sector

Bharat Electronics received an additional order worth ₹569.00 crore, covering various defense equipment including radars, tank overhaul systems, communication equipment, fire control systems, simulators, antenna stabilization systems, security software, components, upgrades, spares, and services. RVNL emerged as the lowest bidder for a ₹201.00 crore project from East Coast Railway, strengthening its infrastructure portfolio.

Healthcare and Pharmaceuticals

Lupin signed an exclusive partnership agreement with Gan & Lee for GLP-1 receptor agonist Bofanglutide, a fortnightly injection used to treat Type-2 Diabetes and obesity in adults. This collaboration could expand Lupin's diabetes treatment offerings in the market.

Aviation and Manufacturing Updates

IndiGo revised its pilot pay structure by restructuring additional allowances, expected to increase take-home pay. The changes include a 50.00% increase in Domestic Layover Allowance to ₹3,000.00 for Captains and ₹1,500.00 for First Officers, alongside increased Deadhead Allowance to ₹4,000.00 per hour for Captains and ₹2,000.00 per hour for First Officers.

Futures and Options Activity

Nifty futures declined 0.44% to 26,119.00, trading at a premium of 77.00 points. The futures open interest increased by 75.00%, indicating active participation in derivative markets. Maximum call open interest was observed at 26,100.00 while maximum put open interest stood at 25,900.00, suggesting key support and resistance levels for upcoming trading sessions.

Sammaan Capital is currently in the F&O ban period, having crossed 95.00% of the market-wide position limit. The rupee depreciated eight paise to close at 89.98 against the US dollar, weighed down by foreign fund outflows and negative equity trends.

Indian equity markets are positioned for a challenging Tuesday session as negative global trends and monthly F&O expiry create a volatile trading environment. Following Monday's decline, where both benchmark indices extended their losing streak, market participants brace for continued pressure from multiple headwinds.

Monday's Market Performance and Current Setup

The trading session witnessed sustained selling pressure as muted year-end trading volumes and foreign fund outflows dampened investor sentiment. Both benchmark indices closed in negative territory despite opening with early gains, reflecting cautious market positioning.

Tuesday's Market Outlook and Key Factors

Ponmudi R, CEO of Enrich Money, highlighted that Indian equity markets remain in a cautious consolidation-to-mildly bearish phase. The combination of ongoing profit booking, expiry-related positioning, and thin year-end liquidity continues to weigh on sentiment. Intraday volatility is expected to remain elevated, particularly during the latter half of Tuesday's session, amid monthly F&O expiry and rollover activity.

Derivatives Analysis and Technical Levels

Derivatives data reflects a cautious market stance with significant positioning changes. Dhupesh Dhameja from SAMCO Securities noted that call writers have added fresh positions at at-the-money strikes, with nearly 2.30 crore call contracts accumulated at the 26,000 strike, establishing firm overhead resistance. Put writers have reduced exposure and rolled positions lower, with 1.13 crore put contracts added at 25,900 creating strong support.

Economic Data Bright Spot

Despite market weakness, India's industrial sector demonstrated strong resilience with the Index of Industrial Production rising 6.70% year-on-year in November, the highest reading in 25 months. The growth was driven by an 8.00% surge in manufacturing and 5.40% rebound in mining. However, analysts expect markets to discount this positive data amid prevailing negative sentiment.