India's benchmark indices fell nearly 1% on Friday a day after ending with decent gains, resuming its downward march. Nifty fell near 25,000, while Sensex was down over 800 points. The broader segment of the market was also negative, with the Nifty Midcap 100 falling 1.59% and Smallcap 250 index slipped 1.68%.
Volatility index VIX rose over 6% on Friday.
Here's why the market's are falling:
Rupee Hits New Record Low
Rupee's weakness continues as the local currency has hit a record low of 91.95 against the US Dollar. This comes against the backdrop of global turmoil, rapid FII selling and uncertainty around the India-US trade deal.
These are only a few of the many factors contributing to the rupee's weakness against the greenback. In light of this weakness, NDTV Profit spoke to Anindya Banerjee, Senior Vice President of Currency at Kotak Securities, who explained why the rupee has once again hit a new record low.
Banerjee stated that the sudden fall in equity markets on Friday has played a key role in putting pressure on rupee. "The Indian rupee is one of the weakest currencies in Asia. So wherever there is a sharp fall in the equities market, it paves the way for speculators to come in and short the rupee," he said.
FII Selling
FII has been offloading Indian equities relentlessly. They have offloaded Indian stocks worth Rs 36,500 crore in the cash segment in January so far this year.
Budget 2026
There is also some caution ahead of the Union Budget 2026 as investors expect pro-growth and investor-friendly measures like job creation initiatives, rationalisation of LTCG and higher capital expenditure on infrastructure.
However, there are speculations that the government this year will not announce any major measures to boost consumption as there is limited scope for capex to increase due to higher based. With focus on fiscal consolidation, it is also likely that the government will keep the expenditure tight.
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