The timing couldn’t be more precarious. Foreign institutional investors offloaded shares worth Rs 1,700 crore on Friday alone, a sharp turnaround that underlines how the rupee’s weakness is eroding dollar-adjusted returns and dampening foreign appetite for Indian assets.“The movement of the Indian rupee against the US dollar will be a key sentiment driver in the coming week,” warned Ponmudi R, CEO of Enrich Money. “The sharp depreciation of the currency – which hit a low of 89.54 on Friday – remains a concern as continued weakness could dampen the appetite of foreign investors by eroding dollar-adjusted yields.”
Technically, the damage appears serious. The USD/INR pair has broken out of a multi-month ascending triangle to close decisively above the 89.00-89.20 zone – a bearish shift that projects downside targets for the rupee towards 90.50-91.00 through December 2025-January 2026. The RBI intervention has remained calibrated, allowing for a controlled pace of depreciation, while the USD/INR outlook remains above remain firmly bullish. 89:00
Yet stock bulls refuse to surrender. The Nifty rose 0.61% to 26,068.15 this week, while the Sensex rose 0.79% to 85,231.92, buoyed by optimism around India-US trade talks, stronger second-quarter earnings and easing inflation. Bullish sentiment continued throughout the week, supported by stronger second-quarter earnings, easing inflation and optimism around India-US trade talks,” said Vinod Nair, head of research at Geojit Investments. Limited. “A moderation in FII sales – driven by expectations of earnings growth in the second half of FY26 – also helped valuations.” But Friday’s volatility exposed the market’s fragility. Weak global signals and growing concerns over possible delays in India-US trade talks caused sharp swings. A better-than-expected nonfarm payrolls report lowered expectations of a Fed rate cut in December, putting pressure on global stocks and sending safe assets like gold into selling mode.
“If the pressure on the INR continues, the market may see some gains in the near term,” Nair warned.
Ajit Mishra, SVP Research at Religare Broking, noted that while sentiment was supported by expectations of progress on an India-US trade deal, gains were limited by weak domestic macroeconomic data and weak global cues. He warned that volatility could increase in the coming week ahead of derivatives expiry in November, with markets monitoring several high-impact macro releases, including second-quarter GDP data, industrial production, government budget figures, bank loan and deposit growth, and foreign exchange reserves.
From a technical perspective, there is reason for cautious optimism. Rupak De, Senior Technical Analyst at LKP Securities, pointed out that the Nifty made a breakout on the weekly chart in November, paving the way for a decent rally in the short term. The index broke out of a falling channel and recovered towards its all-time high, with a successful retest of the breakout point strengthening the case for further gains.
“Heavy calls are visible at the strike of 26,200 CE, indicating a strong resistance level for the November range,” De noted. “A decisive move above 26,200 could trigger a rally towards 26,400 and beyond.”
Support is provided in the 26,000–25,900 zone, with De expecting range-bound trading through the November expiration until the index breaks above 26,200.
With the rupee showing no signs of meaningful strength unless the USD/INR falls below 88.50, and critical economic data emerging, the coming trading sessions will reveal whether the Indian stock market can defy gravity or whether the currency rush will limit the rally just below record highs.
#Nifty #eyes #alltime #high #rupee #crashes #lifetime #bulls #survive #currency #rush