Sensex Reclaims 74,700 and Nifty Advances 2.8% as RBI Rupee Support Sparks Market Rebound

Indian benchmark equity indices registered a strong rally, extending their recovery for a second consecutive week as aggressive foreign-exchange intervention by the Reserve Bank of India (RBI) restored investor confidence and stabilized the Indian rupee.

The 30-share BSE Sensex advanced 3.11% over the week, finishing Friday’s trading session higher by 413 points, or 0.56%, at 74,729. Meanwhile, the broader NSE Nifty 50 climbed 2.78% week-on-week, finishing the final session up 0.65% to close near its weekly high at 23,146. The benchmark has now gained more than 4% from its recent low of 22,231.80 recorded on October 8.

RBI Interventions Ease Currency Strain

Sentiment on Dalal Street had turned cautious earlier in the week following domestic inflation data. Consumer price inflation hovered close to the upper threshold of the central bank's tolerance band, while a sharper-than-expected wholesale price index (WPI) reading pushed domestic benchmark bond yields to multi-year highs. The RBI also tightened the daily cash reserve ratio (CRR) maintenance requirements to drain surplus liquidity, adding to initial market nervousness.

However, sentiment rebounded sharply after the central bank deployed decisive measures to shield the domestic currency:

• The central bank instituted a dedicated foreign exchange window for state-run oil marketing companies (OMCs), fulfilling their high dollar requirements off-market and insulating the spot currency market from bulk energy-import demand.
• Regulators tightened hedging norms and non-deliverable derivative contracts, requiring financial institutions to set aside a 20% cash reserve requirement on foreign-exchange derivative transactions exceeding $2 million to clamp down on currency speculation.
• The resulting pullback in dollar-rupee volatility lifted the domestic unit toward the 94.80–95.00 zone, sparking a relief rally across interest-rate-sensitive and large-cap equities.

Institutional Flows and Broader Market Performance

The currency stabilization triggered a notable moderation in foreign portfolio outflows. Foreign institutional investors (FIIs) remained net sellers for the week at ₹8,991 crore, but the pace of selling decelerated considerably from the ₹30,294 crore offloaded in the previous week. On Friday, FIIs turned net buyers, injecting ₹1,166 crore into domestic equities.

Domestic institutional investors (DIIs) provided strong counter-support, recording net purchases of ₹7,813 crore over the week. On a month-to-date basis, cumulative DII buying of ₹48,168 crore has almost entirely absorbed FII selling worth ₹48,769 crore.

In broader markets, mid- and small-cap stocks saw mixed participation:

• The Nifty Midcap 100 index gained 0.58% across the week.
• The Nifty Smallcap 100 index slightly lagged the headline rally, dipping 0.12%.
• Fast-moving consumer goods (FMCG) shares remained under selective pressure as elevated input costs and agricultural commodity prices triggered margin concerns.

Key Triggers for Investors

Market participants will focus on whether the equity rally can sustain momentum amid elevated global crude prices, with Brent crude fluctuating near $105 per barrel. Investors are also tracking the ongoing second-quarter corporate earnings announcements (Q2 FY27) and the upcoming minutes of the RBI Monetary Policy Committee meeting, which will provide insight into policymakers' calibrated stance on inflation and systemic liquidity.

Tags: Sensex Nifty 50 Reserve Bank of India FII Flows Indian Rupee Oil Marketing Companies