December 2025 Market Review

World Happenings:
December 2025 closed the year on a tense and eventful note across the world. Geopolitical uncertainty remained high, especially in the Middle East, where a fragile ceasefire continued amid humanitarian concerns and sporadic clashes. These developments kept global sentiment cautious and reminded markets that geopolitical risks are far from settled.

In Europe, economic pressure spilled onto the streets. Large-scale farmer protests in Greece disrupted transport and supply chains as rising costs and delayed subsidies became a major concern. Iran also saw widespread protests driven by currency weakness and rising living expenses, highlighting the strain inflation and economic stress continue to place on households globally.

Natural events added another layer of uncertainty. A strong earthquake near Japan triggered tsunami warnings, while parts of Southeast Asia dealt with urban safety incidents and climate-related disruptions. Climate concerns remained front and centre globally, with 2025 being confirmed as one of the warmest years on record.

On the global policy front, the US Federal Reserve cut interest rates by 25 basis points, signalling a shift towards supporting growth as inflation eased. This move influenced global markets and capital flows, even as investors stayed selective. Amid all this uncertainty, silver gained attention worldwide, rising around 6–7% during the month, supported by rate-cut expectations and steady industrial demand.

Indian Market Overview
Indian equity markets navigated December with resilience, balancing domestic positives with global pressure. The month began on a strong note after the Reserve Bank of India cut the repo rate by 25 basis points, bringing it down to 5.25%. The move was seen as a clear signal that inflation is under control and growth support is now a priority.

Markets reacted positively to the policy action. Banking, financial services, real estate, and auto stocks led the rally as borrowing costs were expected to ease. As the month progressed, however, foreign institutional investors continued to sell Indian equities, largely due to global portfolio rebalancing and a strong US dollar. This selling was felt more sharply in mid and small-cap stocks, while large caps remained relatively stable.

By the final trading session of the year, Indian markets managed to close on a firm footing. The BSE Sensex ended December at 85,220.60, while the Nifty 50 closed at 26,129.60 on 31 December 2025. Despite lower year-end volumes and global uncertainty, the benchmarks reflected confidence in India’s long-term growth outlook.

Sector-wise, IT and pharma stocks faced pressure due to softer global demand cues, while metals and select PSU stocks saw buying interest toward the end of the month. The Indian rupee weakened during December, moving closer to record lows against the US dollar. While this added to short-term volatility, it supported export-oriented sectors. Silver prices in India also moved higher, tracking global trends and attracting interest as investors looked to diversify.

What December Tells Us
December 2025 was not about chasing big rallies. It was about adjustment and positioning. Global uncertainty remained high, but policy support at home helped Indian markets stay steady. As the year ended, investors appeared more focused on quality, stability, and assets that can hold up well in an uncertain world, setting the tone for 2026.

Sources:
AMFI, Business Standard, Mint, Reuters

Ria Jadav

Marketing Strategist | FIKAA