Nifty 50 outlook: As 2025 winds down, investors are asking the one question — how will the market close out the year? The benchmark Nifty 50 has already scaled a new high in the first trading day of the year, although sentiment turned jittery amid a slide in the Indian rupee and investors resorted to profit-taking. The index closed 0.10% lower at 26,175.75.
During the day, the index jumped to a record peak of 26,325.80.
Nifty 50 in December
Meanwhile, a look at the Nifty 50’s December track record over the past decade doesn’t offer a simple answer.
The index has fallen in six of the last ten years, yet its average December return still sits above 1%. In other words, when the market ends the year on a strong note, it tends to do so decisively. The index has gyrated in the range of -3.5% to 8.15% in stronger years in December, typically supported by FII positioning resets, domestic SIP inflows and year-end window dressing.
Analysts see 2-5% rise in Nifty this month
Now, with the macro setup looking robust, analysts expect a big-bang closure for Nifty 50 this month. A 1%-5% rally is being projected for the index, as the underlying sentiment for the large-cap stocks remains positive amid the robust GDP growth, RBI rate cut possibility and stronger corporate earnings in the third quarter.
Index is likely to be slightly higher, possibly 5% higher by end of the month, said Vikas Gupta, CEO & Chief Investment Strategist, Omniscience, driven by the RBI rate cuts and its outlook for the rest of FY26.
Analysts believe that any announcements of an India-US trade deal would also be supportive. “FII flows are likely to be net outflows due to tax loss harvesting at the end of their tax year. If the FII outflows for tax-loss harvesting are lower than expected, that too would contribute to supporting the index,” he added.
Despite brutal FII selling of ₹147,164 crore, the Nifty 50 is still up 10% this year —thanks to steady domestic inflows holding the fort.
While the Nifty 50 outlook remains firm, analysts see pain for midcaps and small-caps continuing. “For the Sensex and Nifty, I am positive. The market can rise another couple of percentage points in December, or by March-end, it can go up 3–5%. But small and midcaps will continue to remain weak. The problem is liquidity,” said G Chokkalingam, Founder, Equionomics Research.
He explained that IPOs have also absorbed around ₹1,60,000 crore, promoters have sold more than ₹1 lakh crore, and already one-third of small caps are down anywhere from 10% to even 40%. “All of this has reduced liquidity in the hands of retail investors,” making him bullish on the index stocks but not on the broader markets. Both Nifty Midcap and Nifty Smallcap 100 indices are trailing Nifty 50, with 7% and -5% returns in 2025.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.