Sensex today: A sharp two-day surge in the Indian stock market‘s benchmark indices, Sensex and Nifty, has raised investors’ hope of a rally in the run-up to the end of year, which has otherwise proven to be a difficult one for stock market investors.
Despite being on track to end higher for the 10th year in a row, 2025 was marked by high turbulence as investors reeled under the shock of 50% Trump tariffs, record FII outflows and earnings slowdown.
Now, with the Sensex rising almost 1,000 points in just two days, and Nifty 50 reclaiming the 26,100 mark on Monday, December 22, hopes of a rise in the fag-end of the year are ripe for the Santa Claus Rally — but the key question remains, will it materialise?
The Santa Claus Rally is a seasonal stock market pattern where prices tend recorded by indices amid improved sentiment, lighter volumes, and year-end positioning.
Is Sensex set for Santa Rally?
According to analysts, while talks of a Santa Rally in the market are gaining momentum, the possibility of a broad-based market surge looks dim.
Kunal Kamble, Sr. Technical Research Analyst at Bonanza, said the possibility of a Santa Rally during the year-end cannot be ruled out. However, it may remain selective and range-bound rather than a sharp one-sided move, he said.
Echoing similar views, Harshal Dasani, Business Head at INVAsset PMS, said, “The idea of a year-end ‘Santa Rally’ is being discussed, but the Indian market setup today is more nuanced than a simple seasonal surge. Globally, risk appetite is clearly supportive, monetary conditions are easing, and the RBI’s rate cuts have improved domestic liquidity and borrowing sentiment. Combined with recent tax relief measures and the festive season tailwinds, India has many ingredients in place for a strong cyclical upswing in consumption and corporate activity. In that sense, the broader setup suggests India is positioning itself for a potential “grand slam” phase over the medium term. However, the near-term constraint remains sentiment rather than fundamentals.”
Looking at historical behaviour, Nifty has often seen a sharp correction around 21st December (±2 days), followed by stabilisation, said Kamble. However, in the current setup, such a sharp correction has not yet occurred. Instead, Nifty witnessed mild profit booking after making an all-time high, indicating healthy consolidation rather than distribution.
Moreover, FII activity has moderated, with net open positions around – ₹13,964 crore. Historically, December has been dominated by DII and retail participation, which generally carries a bullish bias due to year-end optimism and portfolio adjustments, he added.
India-US trade deal holds key
The lack of progress on the India-US trade deal remains a key overhang and has kept the Indian stock market in a consolidation phase.
Progress on this front is likely to take time, especially given India’s calibrated strategic alignment with Beijing and Moscow, which complicates negotiations, said Dasani.
“As a result, while sharp, runaway gains during the festive year-end period cannot be ruled out, the more probable outcome is a measured move—where optimism builds gradually rather than explosively. A decisive breakout may require geopolitical and trade clarity, rather than just seasonal cheer,” he added.
Nifty Outlook: Technical View
On the price structure, the index is clearly respecting the 25,720 level, where a window formation on the daily timeframe is visible, said Kamble, adding that this suggests that the market is likely to treat this zone as an important base in the near term.
“From a trend perspective, the bias remains positive as long as Nifty sustains above the near-term support at 25,995, followed by 25,720. On the upside, immediate resistance is placed near 26,330, and a move beyond this level could open the path toward 26,450,” he observed.
India VIX is currently trading near its lower support zone, indicating complacency. Such low volatility environments often precede abrupt directional moves, making the near-term setup more favourable for option buyers.
“Directional option buying with defined risk appears more suitable than futures positions. Traders should remain flexible and avoid aggressive leverage, as volatility expansion can be sudden,” Kamble advised.
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.
