Weekly Insight

Market Highlights – December 2025

• Exceptional Volatility:
  2025 has been an unusually volatile year, with the Nasdaq experiencing two separate corrections of ~25% within a 12-month period — a rare occurrence in modern market history.

• AI Boom & Valuation Concerns:
  While investors broadly accept that AI is a long-term structural growth theme, excessive valuations across AI-linked stocks created market nervousness.
  Many of the top 10 Nasdaq AI-related stocks traded within ±25% to ±50% ranges, an unusually wide band by historical standards.

• Energy Market Uncertainty:
  Natural gas price spikes remained difficult to predict, driven largely by weather variability and geopolitical developments, particularly ongoing conflicts.

• Forex Stability:
  The FX market remained largely range-bound, offering relatively predictable trading opportunities compared to equities and commodities.

• Banking Sector Strength:
  Banking stocks reached all-time highs, supported by:

  • Cooling CPI data

  • Stable job market figures

  • Measured interest-rate policies from the Federal Reserve

• Options Trading Challenges:
  Elevated and unpredictable volatility made options trading more challenging, especially for strategies relying on stable volatility assumptions.

Strategy Outlook – 2026

Given that Nasdaq and Dow Jones indices are trading close to all-time highs, capital deployment in 2026 will require more selective and disciplined decision-making, balancing both short-term opportunities and longer-term positioning.

Key Strategic Focus

• Adopt a conscious, event-driven approach

• Prioritise risk-managed entries, especially around known catalysts

• Avoid passive exposure at elevated valuations

Event-Driven Trading (January Focus)

January is traditionally earnings-heavy, making it an ideal environment for event-driven strategies.
The initial focus will be on trade ideas around quarterly earnings announcements, with exact execution strategies to be shared separately.

High-Level Market Views

Indices

Short-Term Outlook

• Nasdaq & Dow Jones: Range-bound / Neutral

• Nifty (India): Bullish

• Japan 225 (Nikkei): Range-bound / Neutral

Stocks

• NVDA (NVIDIA):
  Remains a priority stock. While valuations are elevated, the company continues to benefit from strong AI-driven demand.
  Near-term bias: Bullish, with careful position sizing.

• Micron Technology

• UK Banking Stocks (FTSE):

  • Barclays

  • Lloyds

  • NatWest

  These names remain attractive due to strong balance sheets, improved margins, and a stable macro backdrop.