Global sentiment remains fragile due to uncertainty over the US interest-rate path, mixed US economic data and cautious Asian markets ahead of key policy cues, including a possible Bank of Japan rate hike.
Indian equity markets are likely to remain under pressure in early deals on Wednesday amid a weakening rupee and continued selling by foreign portfolio investors (FPIs). However, Gift Nifty at 25,932 signals a flattish opening.
Ponmudi R, CEO of Enrich Money, said global markets are trading cautiously amid lingering uncertainty over the US interest-rate trajectory. “Mixed signals from the latest US jobs data and flat retail sales growth have kept risk appetite subdued, with the S&P 500 and Dow Jones ending lower, even as the Nasdaq closed marginally higher. Asian markets are trading mixed in early hours as investors remain guarded ahead of key policy cues, including the possibility of a Bank of Japan rate hike later this week.”
Currency pressure
The rupee breached the 91 mark on Tuesday.
“On the domestic front, persistent FII selling and continued weakness in the rupee remain key near-term headwinds, compounded by delays in the conclusion of India–US trade negotiations. However, steady domestic inflows through SIPs and insurance channels continue to provide a strong structural buffer, helping limit downside risks. While India’s long-term growth narrative remains intact, near-term market direction is likely to be driven by global cues, currency movements and year-end positioning, keeping investor sentiment cautious and selective,” he added.
Sachin Sawrikar, Founder and Managing Partner at Artha Bharat, said the rupee’s move to record lows is primarily driven by global factors rather than India-specific concerns. “A stronger US dollar, supported by higher-for-longer US rates and safe-haven flows, has weighed on emerging market currencies broadly. Several peers have seen comparable or larger declines, with the Japanese yen weakening over 10 per cent year-on-year, while currencies such as the Korean won, Indonesian rupiah, Brazilian real and Mexican peso have posted mid- to high-single-digit depreciations,” he said. In comparison, the rupee’s movement has been relatively orderly.
A weaker rupee also improves the competitiveness of Indian exporters, particularly in IT services, pharmaceuticals and manufacturing, thereby supporting export earnings, he added.
“FPI equity flows may remain selective in the near term, while debt flows could see some moderation due to currency volatility. FDI flows should remain largely unaffected, given India’s strong growth outlook. Looking ahead to 2026, we expect the rupee to stabilise as global monetary conditions ease and capital flows normalise,” Sawrikar said.
Range-bound trade
Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking Pvt Ltd, said volatility remained subdued, with India VIX easing 1.83 per cent to 10.06, reflecting continued market complacency and expectations of range-bound trading. “Derivatives data indicate aggressive call writing at the 25,900 strike, while strong put open interest at 25,800 highlights a tightly defined trading band in the near term. A sustained close above 26,200 will be essential to revive bullish momentum, while failure to do so may prolong the ongoing consolidation in the sessions ahead.”
Published on December 17, 2025
