WPI inflation to India-US trade deal: Top five triggers for Indian stock market this week

Indian equity benchmarks closed the week on a stronger footing, extending gains for a second consecutive session on Friday, December 12, aided by improved global sentiment after the US Federal Reserve signalled a rate cut. The Sensex rose 450 points, or 0.53%, to end at 85,267.66, while the Nifty 50 advanced 148 points, or 0.57%, to close at 26,046.95.

Broader markets outpaced frontline indices, with the BSE Midcap index climbing 1.14% and the Smallcap index gaining 0.65%. The rally added sharply to investor wealth, pushing the total market capitalisation of BSE-listed companies past ₹470 lakh crore, up from ₹466.6 lakh crore in the previous session — a single-day addition of over ₹3 lakh crore.

Despite Friday’s rebound, the week as a whole remained challenging. Ajit Mishra, SVP–Research at Religare Broking, said markets were marked by volatility and ended slightly lower on a weekly basis. Persistent foreign fund outflows, combined with sharp weakness in the rupee, kept sentiment fragile for most of the week, though late buying helped cap losses. The Nifty ended the week down 139 points, while the Sensex declined 445 points.

Looking ahead, Mishra advised investors to remain selective and adopt a balanced approach amid currency volatility and mixed global signals. He said large-cap stocks continue to offer relative safety, particularly in private banking, automobiles, metals and pharmaceuticals. Export-oriented sectors could benefit from a weaker rupee, though IT stocks may remain range-bound due to softness in the US Nasdaq. He also cautioned against aggressive bets in mid- and small-caps, citing stretched valuations and moderating liquidity.

Top triggers for the Indian stock market

WPI Inflation

Ministry of Commerce and Industry will be announcing WPI for the month of November, 2025 on December 15. Wholesale price inflation (WPI) eased to –1.21% in October, mainly due to falling prices of food items such as pulses and vegetables, along with declines in fuel and manufactured goods prices.

A key domestic data point next week will be wholesale price inflation (WPI) for November, scheduled for release on December 15 by the Ministry of Commerce and Industry. In October, WPI slipped to –1.21%, driven largely by easing food prices — particularly pulses and vegetables — along with declines in fuel and manufactured goods. Any sharp deviation from expectations could influence rate-sensitive stocks and broader sentiment.

Global cues will also remain crucial, especially movements in the dollar, bond yields, and commodity prices. Gold and silver prices surged last week, reflecting increased safe-haven demand and expectations of further rate cuts, factors that could indirectly influence equity flows.

India-US trade deal

Trade negotiations between India and the United States remain in focus. According to a PTI report, both sides agreed to sustain constructive engagement after two days of talks between an Indian delegation and a US team led by Deputy US Trade Representative Rick Switzer.

The discussions concluded on Thursday, with both sides exchanging views on key trade issues as part of ongoing efforts to finalise a mutually beneficial bilateral trade agreement. While no immediate breakthrough was announced, progress on this front is being closely watched by currency and equity markets alike.

Rupee outlook

The rupee ended Friday at a fresh record low, weakening by 17 paise to close at 90.49 against the US dollar. The currency opened at 90.43 and slid to an intraday low of 90.56, marking a 24-paise fall from the previous close.

Forex traders said the rupee remains under sustained pressure due to continued foreign investor outflows and strong dollar demand from importers, particularly amid rising global precious metal prices. Uncertainty surrounding the India-US trade agreement has added to the cautious mood, keeping the currency vulnerable in the near term.

FII activity

Foreign portfolio investors have remained consistent sellers of Indian equities throughout 2025. So far this year, FIIs have been net sellers on 141 out of 234 trading sessions — a figure that is on track to surpass the 146 selling days recorded in 2022.

The only year with heavier FII selling over the past two decades was 2008, when net selling was seen on 154 sessions during the global financial crisis. This prolonged foreign selling continues to cap market rallies and adds to near-term volatility.

Technical outlook

From a technical perspective, Mishra said the Nifty has reclaimed its key short-term moving average, the 20-day DEMA, around the 25,950 level. Holding above this zone will be critical for extending the recovery toward the record high near 26,300, with further upside potential toward 26,550. A failure to sustain above support could result in a retest of 25,700, followed by the major support near 25,400, which aligns with the 100-day DEMA.

For Bank Nifty, Mishra noted continued relative strength, with the index holding above its short-term average. The 58,400–58,800 zone remains an important support band; a breakdown below this could trigger pressure toward 57,600. On the upside, immediate resistance lies between 60,000 and 60,500, and a decisive breakout could revive bullish momentum.