D-St just 5% away from highs with a 10% bounce from lows

The rupee pulled off a sparkling turnaround to emerge as Asia’s best-performing currency this week – just in time for a stellar Diwali – after the steepest weekly retreat in oil prices since April 2020 and nearly $4 billion of net equity purchases by foreign funds in the past fortnight eased pressure on the local unit. The currency closed at 93.90 on Friday, its best level since late April this year, as oil prices cooled and foreign investors returned to local assets. A post-midterm relief rally and short covering helped the rupee close 57 paise stronger from its previous close of 94.47.

After touching a record low of 96.96 late May, the rupee has recovered 3.2%. However, in the current financial year, it has gained just about 1% – from 94.83 on March 30.

Foreign portfolio investors (FPI) bought nearly ₹15,000 crore from Indian equities on Thursday, the largest single day purchase since September 2024. On Friday, they bought equities worth ₹13,750 crore, taking net investments in November so far to ₹45,960 crore.

“The rupee has broken its range today and India is suddenly the safe bet for an ‘anti-AI’ trade,” said Anindya Banerjee, head, currency research, Kotak Securities.

India’s diversified industrial base is likely to appeal to FPIs as concentrated AI trades, which boosted chip-focused east Asian equities, are reversed in the immediate aftermath of the US midterms that have given the Democrats congressional control.

D-St Just 5% Away From Highs With A 10% Bounce From Lows

Mumbai: The recent rally in Indian equities has pushed the benchmark Sensex and Nifty into technical rally territory, with both indices gaining more than 10% from their recent lows. The recovery has been supported by strong corporate earnings, reasonable valuations, falling crude oil prices and renewed foreign investor interest.

A technical rally is generally defined as a short-term rise of 10% or more from a recent low. The Sensex has crossed the 81,000 mark, while the Nifty has moved above 25,000. Both indices are now 5% away from their record highs.Ben Powell, chief investment strategist for the Middle East and APAC at BlackRock Investment Institute, said the recent gains were encouraging after a period in which Indian equities had been weighed down largely by global factors. “The durability of the rally will increasingly depend on earnings delivery. Valuations have become more attractive, but we remain selective and focused on fundamentals. We remain strategically overweight Indian equities for the long term, while maintaining a more neutral tactical view,” Powell said. Since October 26, the Sensex has gained 7,905 points, or 10.8%, while the Nifty has risen 2,430 points, also up 10.8%. Both indices advanced in eight of the 10 trading sessions during this period.

Oil Sinks, Funds Flow

Crude oil prices have declined more than 20% over the past three sessions, easing concerns over inflation, India’s import bill and pressure on the rupee. A correction in AI-related stocks across global markets, including the US, Japan, South Korea and Taiwan, has also supported sentiment.

Foreign portfolio investors (FPIs) have made net purchases of more than $4 billion over the past 13 sessions.

Separately, corporate earnings have strengthened the investment case for India, which remained a relative laggard in Asia, where AI-led trades drove valuations in countries housing chip factories and related hardware.

Companies that have reported results so far have delivered average earnings growth of 25% year-on-year, said Deepak Malik, CIO and fund manager at Carnelian Mutual Fund.

“I believe markets follow earnings growth. Corporate earnings growth has been extremely strong over the past two to three quarters. As long as this growth continues, markets should also remain on an upward trajectory,” Malik said.

However, Shankar Sharma, founder of GQuant Investech, cautioned against interpreting the gains as the start of a sustained recovery without any further confirmation.

“What has been surprising in the Indian bear market of two-and-a-half years is the absence of violent rallies. Most bear markets have such events quite regularly. You can go back to 2008 and see plenty of such fast and furious upward moves. The broader market has not done much; only the underperforming sectors have done well. We need more confirmation on whether this is a technical rally or the start of something more interesting,” Sharma said.