Santa Rally Loses Steam: How to trade Indian stock markets in the final 2 sessions of 2025

With just two trading sessions left before we enter the new calendar year 2026, Indian stock markets are witnessing a lacklustre phase amid a pause in the absence of fresh global or domestic triggers — such as progress on a US-India trade deal.

Markets are expected to consolidate around current levels rather than make aggressive directional moves, believe experts.

Despite a tough year amid global trade tensions, persistent FII outflows, and subdued earnings growth, the Indian markets are set to end 2025 with double-digit growth. Nifty could close 2025 with a near 10% rise.

For the final two trading sessions of the year, trading volumes are likely to stay light, with investors preferring selective, stock-specific exposure instead of broad-based bets amid the lack of strong near-term catalysts. Global cues and company-specific developments would continue to dictate day-to-day sentiment.

Ajit Mishra, SVP – Research at Religare Broking, said the broader structure still suggests limited directional clarity. “We continue to maintain our consolidation view on the index, though the scheduled monthly expiry could lead to some intraday volatility. Despite this, trading opportunities remain available across sectors. Participants are advised to stay selective, align trades with sectors showing relatively higher strength and keep position sizes in check until a clearer trend emerges."

What should traders do in the final sessions?

As markets head into the final two trading days of the year, attention is firmly on the December monthly derivatives expiry scheduled for December 30. Analysts expect the Nifty to remain range-bound with a cautious undertone, as technical indicators point to fatigue at higher levels.

Sachin Gupta, VP – Research at Choice Equity Broking, said the index is facing strong overhead resistance. “The Nifty is encountering stiff resistance in the 26,100–26,300 zone, limiting near-term upside,” he said.

Gupta noted that immediate support is placed around 25,830–25,700, while derivatives data shows heavy call writing at the 26,000–26,100 strikes and put writing around 25,900–25,800, clearly defining the expiry range. He added that FIIs remained net sellers for most of the month, even as sustained DII participation cushioned sharper downside moves.

Given year-end and expiry-related volatility, he advised traders to keep positions light, follow a sell-on-rise strategy, and prioritise capital preservation over chasing index moves.

Hrishikesh Yedve, AVP – Technical and Derivative Research at Asit C. Mehta Investment, highlighted the importance of key support levels. “As long as the index holds above 25,800, consolidation within 25,800–26,325 is likely,” he said, adding that 26,200 and 26,325 would act as stiff resistance levels in the short term.

Looking beyond 2025: A fundamental perspective

While lack of triggers are likely to keep the last 2 trading sessions muted, market analysts remain optimistic about start of 2026.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, believes a rally could emerge in the initial phase of the new year. “A rally in the market in the early stage of 2026 is on the cards. Investors should give high weightage to value while deciding to invest. Irrational valuations in some of the IPOs and the willingness of the newbie investors to buy stocks at excessive valuations are reflections of exuberance in the market," said Vijayakumar.

As 2025 draws to a close, the message from the Street is clear: stay selective, respect technical levels, and enter 2026 with a sharper focus on valuations and risk management rather than short-term excitement.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.