Indian Markets Slip Amid Rupee Weakness, FII Outflows and Trade Uncertainties

Indian equity markets ended Wednesday on a subdued note, pressured by the rupee’s depreciation against the US dollar, foreign fund outflows, and lingering trade uncertainties, according to. At closing, the BSE Sensex slipped 31.46 points, or 0.04%, to 85,106.81, while the NSE Nifty fell 46.20 points, or 0.18%, to 25,986.

All sectoral indices closed in red, with metal, oil & gas, private banks, consumer durables, and media sectors losing around 0.5% each.

Rupee hits fresh record low

The Indian rupee breached the 90-per-dollar mark on Wednesday morning, continuing its weakening trend and marking an all-time low for the currency. At the time of reporting, the rupee was trading at 90.21 per US dollar, having depreciated over 5% cumulatively this year.

Vinod Nair, Head of Research at Geojit Investments, noted “Indian equities are consolidating amid the rupee’s slide, driven by foreign outflows and trade-related uncertainties. Industrial activity slowed in November, reflected in weaker new orders, muted export demand, and a widening trade deficit.”

Profit-taking impacts key sectors

Ponmudi R, CEO of SEBI-registered Enrich Money, said, “The continued rupee depreciation prompted foreign investors to book profits, impacting dollar-adjusted returns. Markets ended lower, with sectors like PSU banks, automobiles, and consumer durables witnessing heavy profit-taking after recent rallies.”

Earlier, hopes of a potential RBI rate cut were buoyed by record-low inflation. However, stronger-than-expected Q2 GDP data has introduced uncertainty over the central bank’s policy direction, keeping investor sentiment cautious.

Also Read: Indian Stock Indices Decline As Rupee Crashes Past 90 vs USD: What’s Driving The Sell-Off? | Republic World

Market dynamics and technical outlook

Wednesday’s trade saw early selling pressure pulling indices lower, although buying near key support levels prevented deeper losses. The Nifty attempted to reclaim the 26,000 mark in the final hour but could not overcome persistent selling, closing below this critical resistance. This marks five consecutive sessions of lower closes, reflecting ongoing short-term weakness.

Ponmudi added, “For Nifty to aim for the 26,300 zone, it must sustain levels above 26,100. Until then, the market remains in a consolidation and corrective phase.”

Global market context

Globally, markets showed mixed trends as investors awaited upcoming Fed and ECB monetary policy announcements amid currency volatility. Japanese bond yields rose on expectations of Bank of Japan tightening and increased government spending, adding to cautious sentiment.

Analysts noted that the RBI’s upcoming policy decision will be closely watched, particularly by banks, as the likelihood of a rate cut has diminished following robust Q2 GDP numbers.