Rupee slide, FII outflows drag Indian equity indices into red

At the closing of the trade, BSE Sensex ended at the 85,106.81 level, slipping 31.46 points, or 0.04 per cent, while the NSE's Nifty declined 46.20 points, or 0.18 per cent, to end at the 25,986 level.

All the sectoral indices closed in the red zone, with the metal, oil & gas, private Banks, consumer durables, and media indices down 0.5 per cent each.

In a major development, the Indian rupee breached the 90 mark against the USD on Wednesday morning, extending its depreciation run through sessions now and hitting a fresh all-time low for the Indian currency.

At the time of filing this report, the Rupee was trading at 90.21 per US dollar. So far this year, the currency has depreciated by over 5 per cent on a cumulative basis.

Observing the market's movement, Vinod Nair, Head of Research, Geojit Investments Limited, said, "Indian equities continued to consolidate as the rupee slid to a record low, weighed down by FII outflows and ongoing trade uncertainties."

He added that industrial activity moderated in November, with the manufacturing PMI indicating slow new orders, softer export demand, and a spike in the trade deficit.

Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth tech firm, said, "Equity markets ended lower as the continued slide in the Indian rupee -- which hit a fresh record low against the US dollar -- prompted foreign portfolio investors to lock in profits, with the currency weakness weighing on their dollar-adjusted returns."

Sectors that had rallied sharply in recent sessions, particularly PSU banks, automobiles, and consumer durables, witnessed the heaviest bout of profit-taking.

"Earlier, record-low inflation had boosted hopes of a rate cut in the ongoing RBI policy meeting. However, the stronger-than-expected Q2 GDP data has injected fresh uncertainty around the central bank's policy trajectory, adding to the cautious tone among investors," Enrich Money CEO added.

In today's trade, early selling pressure pulled the index lower, but steady buying near the lower support zone limited further downside. In the final hour, Nifty once again attempted to reclaim 26,000, but persistent supply at this level capped the recovery, resulting in a close below this key resistance. The index has now logged five consecutive lower closes, indicating short-term weakness. The formation of lower highs and lower lows continues to reflect selling pressure on intraday pullbacks.

"For any meaningful recovery and a potential move toward the 26,300 zone, Nifty must decisively reclaim and sustain above 26,100. Until then, the market remains in a corrective and consolidation phase," Enrich Money CEO further added.

Global markets were mixed as investors assessed the outlook ahead of the Fed & ECB monetary policy and amid currency volatility. At the same time, sentiment remained cautious after a jump in Japanese bond yields on expectations of BOJ tightening and increased government spending.

According to analysts, the RBI's policy decision this week will be crucial, especially for banks, as the probability of a rate cut has reduced following the strong Q2 GDP data. (ANI)