Market Pullback: Rupee Weakness & FPI Outflows Trigger Profit‑Booking
Indian equities extended their decline on Tuesday as a weakening rupee and persistent foreign investor outflows weighed on sentiment. After touching fresh all‑time highs on Monday, traders rushed to book profits, pushing benchmark indices lower.
Benchmark Performance
Sensex: ↓ 503.63 points to 85,138.27
(Intraday low: 85,053; sharp reversal from Monday’s peak)Nifty50: ↓ 143.55 points to 26,032.20
The selloff was largely concentrated in blue-chip financial and banking stocks, which came under pressure following the NSE’s sectoral index reshuffle aligned with revised SEBI norms.
What Triggered the Pullback?
NSE Sectoral Index Overhaul
The reclassification—done to comply with updated SEBI rules—sparked corrective moves across heavyweight banking names, dragging the indices lower.
Waning Hopes of an RBI Rate Cut
A strong Q2 GDP print reduces the urgency for monetary easing, cooling rate‑cut expectations.
Rupee Depreciation
The persistent fall in the INR continues to choke FPI inflows, a key driver of medium‑term momentum.
Uncertainty Around US–India Trade Talks
Ongoing ambiguity around trade negotiations added another layer of caution.
Expert View: Healthy Consolidation Near Highs
Market veteran Dr. V.K. Vijayakumar described the decline as a “healthy consolidation” near lifetime peaks.
“Fundamentals remain strong—robust GDP numbers and upbeat November auto sales indicate room for fresh highs. The weak rupee remains the biggest drag.”
He added that a balanced US–India trade accord could ease currency pressure and restore foreign inflows.
What Should Investors Do?
Areas Showing Strength
Large-caps: Attractive valuations
Growth-focused mid-caps: Favorable risk–reward
Banking: Supported by valuation comfort & rising credit demand
Areas Requiring Caution
Small-caps: Elevated valuations; selective accumulation advised
Strategy:
Use the consolidation phase to accumulate quality names rather than chase momentum.
Global Market Check
Shanghai SSE Composite: Lower
Nikkei 225, Kospi, Hang Seng: Ended in the green
Asian markets mirrored a mixed global sentiment as investors keenly watched currency moves and central-bank cues.
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