The market's mood this week has been a study in cross-currents — the finance minister's remarks that she is open to hearing views on LTCG and STT gave equities a lift and reminded investors that tax certainty still matters, even as the rupee found a firmer footing after the RBI's latest interventions and the partial unwinding of the global AI trade began to ease some of the dollar demand that had been draining emerging markets. That same AI repricing, now sharpened by Anthropic's slower sequential growth and the broader sell-off in the semiconductor complex, has at least stopped treating every non-AI market as a funding source, which is why Indian IT stocks could rally on better-than-feared Q2 numbers from TCS, HCLTech and Tech Mahindra even while US yields jumped on a hotter September CPI print that kept the Fed in tightening mode. Against this backdrop, the FM's comments on both the rupee and market taxes have left the street weighing how much policy flexibility still exists when global rates, oil and capital flows remain the larger constraints.
Fissures in the AI trade?
From June to now, India's total market capitalisation has gone from roughly $4.8 trillion to $4.9 trillion - essentially flat, up about 1%. But that is not the story. You don't invest for flat returns. But a large part of investing is also protecting downside. And that is where South Korea going the other way: from around $5 trillion down to $3.7 trillion, a drop of about 35%, is the story. Korea was one of the purest expressions of the AI equity boom outside the United States, with Samsung and SK Hynix as the high-beta proxies for Nvidia and the hyperscalers. When the trade softens, those proxies get hit first and hardest. India, with its broader domestic base and lower weight in the global AI supply chain, has simply not been the funding source for the same degree of global reallocation. And as JPMorgan has reportedly said, India's equity market is emerging as the world's largest, liquid AI hedge.
Middle Eastern Conflict spreads
This week the Middle East stayed on a knife-edge as Houthi strikes hit Riyadh airport and Aramco sites while Iran stepped up attacks in the Strait of Hormuz, sinking ships and drawing direct US responses. Saudi Arabia intercepted drones and missiles but struggled to stop the barrage, and talks between Washington and Tehran remained stuck even as the US moved another carrier into the region. In Gaza, the IDF kept targeting militants. Oil flows faced fresh risk and events across the Gulf were postponed as the proxy fight between Iran and the US-Saudi side showed no signs of easing, with Brent prices ranging between 100 and 110 dollars per barrel.
RBI in action mode, again
The RBI has sought to curb speculative dollar demand and steer oil companies' purchases away from the spot market. Since Monday, the RBI would have been directly meeting the daily dollar requirements of oil marketing companies, which means their large crude-import dollar demand will no longer hit the open forex market in the normal way, and the rupee has seen a rebound from lows on the RBI measures.
READ | RBI Curbs May Support Rupee, But Oil Prices Remain A Risk: Nomura's Sonal Varma
CAS - revisited
SEBI's recent revision of the Closing Auction Session framework, which takes effect from December 7, reverts expiry-day derivatives settlement to the familiar last-30-minute VWAP of continuous trading while shifting the cash-market auction itself to a 10-minute window from 3:30 pm to 3:40 pm. The changes followed a consultation that drew over 20,000 responses, with many participants - including traders and the Futures Industry Association - arguing that an immediate move to a blended VWAP would make settlement prices harder to track for hedgers and arbitrageurs, and preferring the existing continuous-session method until the auction itself builds deeper liquidity. Whole-time member KVR Murty, in an interview with NDTV Profit, has said the regulator received 'a lot of positive responses' and will give the revised rules at least a year to operate before considering further changes, while remaining open to additional feedback as the mechanism evolves. The net effect is a pragmatic pause that prioritises orderly settlement over a fuller integration of the auction into derivatives pricing, at least for now.
READ | SEBI To Wait At Least A Year Before Revisiting CAS, Says KVR Murty
Results this week
Indian IT majors delivered a mixed but generally resilient set of Q2 FY27 numbers that helped lift the sector even as global AI stocks sold off. While HCLTech posted a 21% profit jump and solid deal momentum, Wipro's profits were largely flat, and Tech Mahindra stood out with a 33% profit increase and healthy sequential margin expansion. Outside IT, Nestle India reported a 36% jump in profit on 20% sales growth driven by volumes, and Polycab delivered strong double-digit gains in both revenue and profit. The results have supported a sharp rebound in the Nifty IT index, underscoring that domestic enterprise demand and AI-related services are providing a partial offset to slower traditional IT spending.
Globally, while markets fretted over yields and liquidity, NASA's Perseverance rover quietly set a new off-world distance record by driving past Opportunity's mark on Mars, and astronomers caught a star slowly devouring its companion 300 light-years away. A US company announced fresh progress towards bringing back the extinct dodo, palaeontologists identified a new predatory dinosaur with giant claws from a British fossil, and space startups pulled in a record $20.8 billion in a single quarter as investors bet on the next infrastructure wave. Formula 1 confirmed its return to Africa with a Rwanda Grand Prix planned for the early 2030s, the first on the continent since 1993. Even Voyager 1, still sending data from the edge of the solar system, edged closer to the milestone of being a full light-day from Earth - reminders that the real action often happens far from trading screens.
May the world continue to surprise us positively, and may all Navratri revellers have a phenomenal celebration this weekend.
Happy Dussehra, everyone!
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