NEW DELHI: Despite a sharp gain made by rupee on Wednesday, India’s equity market benchmarks - BSE Sensex and NSE Nifty - fell significantly from day's high and ended in red for the third straight day. The Sensex settled 120.21 points or 0.14% lower at 84,559.65, and the Nifty was down 41.55 points or 0.16% at 25,818.55.
The rupee, after facing relentless pressure in the past one week, recovered 55 paise from its all-time low level to close at 90.38 (provisional) against the U.S. dollar. Sources said that the Central bank intervened to control the fall of the rupee.
An ongoing delay in the US–India trade negotiations is said to be the major reason for the rupee's fall. The sustained fall in the rupee has accelerated foreign institutional investor (FII) outflows, thereby hurting the market.
“Domestically, the RBI’s efforts to stabilise the rupee lent support to rate-sensitive sectors. Foreign investors are pulling out funds, and emerging markets are struggling, while developed economies remain strong, showing that investors are becoming more cautious about emerging markets,” said Vinod Nair, Head of Research, Geojit Investments Limited
He added that although currency stability offers temporary relief, global uncertainty and sustained foreign selling keep upside potential limited, leaving markets skewed toward a bearish bias. Rising Japanese bond yields point to tighter liquidity and pressure on equity valuations, while soft U.S. labour data amplifies recession concerns and strengthens expectations of a more accommodative Federal Reserve.
Ajit Mishra – SVP, Research, Religare Broking said that early optimism of Wednesday faded as the session progressed, despite some easing in currency pressure. Selling in heavyweight stocks across sectors led to broad-based weakness, while muted cues from global markets further dampened investor sentiment.
“Looking ahead, choppy price action is likely to persist amid ongoing currency swings and mixed global signals…Participants are advised to adopt a stock-specific approach, keep position sizes in check, and remain mindful of risk management in the current volatile environment,” added Mishra.
Sectoral performance was largely negative on Wednesday, with realty, FMCG and financials emerging as the key laggards. Continued pressure in the broader market weighed on sentiment, with the midcap and smallcap indices declining in the range of 0.66%–0.83%.