India’s equity market registered healthy gains for the second consecutive session after the rupee made a sharp rebound against the US dollar on Friday and helped maintain its position on Monday. The benchmark BSE Sensex advanced 638 points, or 0.75%, to close at 85,567.48, while the Nifty ended at 26,172.40, up 206 points, or 0.79%.
The fresh gains came after the two benchmarks snapped their four-day losing streak on Friday. In the past two sessions, the Sensex has gained 1,086 points, or 1.3%, while the Nifty has climbed 356 points, or 1.4%.
“Indian equities extended their rebound for the second straight session on Monday, supported by a firmer rupee and sustained FII buying over the past three days. The INR strengthened for the second consecutive day, aided by intervention from the Reserve Bank of India (RBI),” said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services.
The Indian rupee hit a record low last week, breaching the 91 mark against the US dollar on heavy foreign capital outflow. It strengthened sharply to 89.60 on Friday, gaining over 0.7% and traded flat near 89.65, holding in a narrow 89.45–89.65 range on Monday as a weaker dollar index around 98.45 and positive sentiment in domestic capital markets offered support.
“The currency has shown a technical reversal after recent intervention-led buying from last week’s lows near 91, stabilizing the currency for now, improving short-term stability. Market focus now shifts to key US data including the PCE price index, new home sales, and weekly jobless claims, which could drive fresh volatility. Technically, support is seen near 90.00, while resistance is placed around 89.25," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.
The recovery in the rupee is accompanied by capital infusion by foreign institutional investors (FIIs). FIIs were net buyers between Wednesday and Friday last week but turned net sellers on Monday. Domestic institutional investors, however, cushioned the FII outflow, as they bought (net purchase) shares worth Rs 3,898 crore on Monday.
Ajit Mishra – SVP, Research, Religare Broking, said that sentiment was supported by favourable global cues and relative stability in the currency, which helped ease concerns around external pressures. A pause in aggressive foreign selling, along with rotational buying in select index heavyweights, contributed to the steady undertone. That said, overall activity remained selective, as participants stayed cautious in the absence of strong domestic triggers, added Mishra.
Global cues remain firm on expectations of further monetary policy easing by the US Federal Reserve, which helped sustain the risk-on momentum across global markets. India and New Zealand concluding a free trade agreement also added to the positive sentiment.
The broader market also witnessed healthy participation on Monday, with the Nifty Midcap100 and Smallcap100 indices gaining 0.8% and 1.2%, respectively. Sectorally, market breadth remained positive with most Nifty sectoral indices ending in the green. IT and metals led the rally, rising 2.1% and 1.4%, respectively.
“Optimism around potential further rate cuts by the US Federal Reserve and a sharp rise in Infosys ADRs drove the Nifty IT index higher for the fourth consecutive session. Additionally, strong buying interest was seen in railway and defence stocks, driven by expectations from the upcoming Union Budget, particularly around capital expenditure and new project announcements,” said Khemka of Motilal Oswal.