The stock market is on the verge of making a record. Where the National Stock Exchange’s main index Nifty is 210 points away from creating a new life time record. On the other hand, Bombay Stock Exchange’s main index Sensex is 746.33 points away from life time high. Both these indexes can create a new record on Monday. But there has been a new twist in the story. In fact, the fall of rupee has become a new wall in front of the stock market. Which can prove to be a big barrier in front of both the stock market indexes making new records. On the other hand, with foreign investors becoming net sellers and foreign exchange volatility rising, the coming sessions will decide whether India’s stock market rally can withstand rising currency-driven challenges.
There was a record fall in the rupee
The rupee fell to 89.49 against the US dollar on Friday, surpassing its all-time low of 88.80 hit between late September and early this month. The currency fell 0.9 per cent in a single day, its biggest decline since May, driven by portfolio withdrawals, uncertainty over the US-India trade deal and an apparent retreat by the RBI from maintaining key levels. On the other hand, foreign institutional investors sold equities worth Rs 1,700 crore on Friday alone, indicating how rupee weakness drags down dollar-adjusted returns and reduces foreign interest in Indian assets.
There was a rise in the stock market
Ponmudi R, CEO of Enrich Money, said in an ET report that the movement of the Indian rupee against the US dollar will be a major factor influencing sentiment in the coming week. He further said that the sharp decline in the currency remains a matter of concern, as continued weakness could weigh on the interest of foreign investors by reducing dollar-adjusted yields. Technically, the loss looks serious.
Between December 2025 and January 2026, the rupee may remain between 90.50-91.00 against the dollar. Still, the bullish trends in the stock market are not ready to accept defeat. During the week, Nifty rose 0.61 per cent to 26,068.15, while Sensex rose 0.79 per cent to 85,231.92 on optimism over India-US trade talks, strong second quarter earnings and falling inflation.
Will the rupee become the villain of the stock market?
Vinod Nair, Research Head, Geojit Investments Limited, said that due to better results of the second quarter, falling inflation and optimism regarding India-US trade talks, the bullish trend remained throughout the week. He further said that moderation in selling by foreign institutional investors (FIIs) driven by expectations of improvement in earnings in the second half of FY 2026 also boosted valuations. But Friday’s volatility exposed the market’s weakness.
The market witnessed huge volatility due to weak global cues and growing concerns over possible delay in India-US trade talks. Better than expected non-agri salaries report reduced expectations of interest rate cut by the Fed in December, putting pressure on global stock markets and leading to selling of safe assets like gold. Nair warned that if the pressure on the rupee continues, then some profit-booking may be seen in the market in the near future.