Santa Claus rally fizzles: Indian markets end 2025 on a down note
The much-hyped Santa Claus rally didn't show up for Indian stocks this December.
The Sensex is set to close the year with a small 0.2% drop—making it two years in a row of weak holiday returns and the sixth disappointing December in 10 years.
Even though domestic investors poured in ₹7.55 trillion this year, big foreign investors pulled out ₹1.55 trillion, with domestic inflows outweighing foreign outflows, cushioning the market.
Why does this matter?
December saw domestic investors step up, buying ₹59,903 crore worth of stocks while foreign players sold off ₹11,830 crore.
According to market watchers, without DII buying, markets could easily be at least 10% lower than current levels.
This shift means local money is now steering the market more than seasonal trends—which could affect how volatile things get and how long-term investments play out.
What's behind the foreign sell-off?
Foreign investors are playing it safe due to global inflation worries, delayed interest rate cuts, geopolitical tensions, a weakening rupee, and some profit-taking.
Plus, all the IPO buzz soaked up short-term cash but didn't change the bigger picture shaped by overseas flows.