Indian Markets Trim Early Gains Following US Inflation Data; Rupee and Equities Close Higher

Indian financial markets reopened following the Diwali break on Wednesday with early gains, though indices later pared a significant portion of their intraday highs. The Nifty 50 touched an intraday high of 25,424 before closing at 25,255.05, marking an increase of 210.40 points or 0.84 per cent. The Sensex settled at 81,879.40, up 772.75 points or 0.95 per cent.

The market retreat was driven by hotter-than-expected US inflation data for October, which rose 0.4 per cent month-on-month against an expected 0.3 per cent. This development revived concerns regarding an aggressive Federal Reserve rate hike in December, pushing US Treasury yields up and causing benchmark Indian 10-year G-Sec yields to rise 6 basis points to close at 7.21 per cent.

Despite the afternoon cooling off, the Nifty extended its winning streak to a ninth consecutive regular session, gaining roughly 11.1 per cent over 10 sessions. This momentum was largely powered by foreign institutional investor (FII) inflows of approximately ₹54,000 crore ($5.68 billion) during the first nine days of November, representing the strongest monthly inflow since September 2024.

Sectoral performance remained divided. Gains were led by public sector undertaking (PSU) banks, auto, chemicals, and FMCG sectors, while IT, realty, and pharma experienced selling pressure. Analysts noted that the rupee's recent appreciation, alongside expectations of higher global interest rates, weighed on IT stocks. Broader markets showed resilience, with the Nifty Midcap 100 gaining 0.81 per cent and the Smallcap 100 rising 1.59 per cent. Bank Nifty closed up 1.76 per cent at 60,792.40.

In currency markets, the Indian rupee closed near a seven-month high at 93.69 per US Dollar, gaining 24 paise over the previous close. The local currency was supported by softening crude oil prices—with Brent crude near $92–93 per barrel—and strong foreign inflows, though a rebound in the US dollar capped further appreciation.

On the macroeconomic front, Moody's raised India's FY27 GDP growth forecast to 7 per cent from 6.5 per cent, pointing to broad-based economic momentum and potential private capex recovery. Globally, investor attention turned toward Anthropic’s upcoming Nasdaq IPO, valued at up to $1.4 trillion.

Markets face a data-heavy schedule on Thursday, including India's October CPI inflation, US weekly jobless claims, UK Q3 GDP figures, and upcoming quarterly earnings from companies including Vodafone Idea, Oil India, and HAL.

"The recent trend in foreign institutional inflows highlights continued confidence in the Indian macroeconomic environment, even as global monetary policy uncertainty persists. While short-term market volatility is expected following US inflation reports and changing interest rate expectations, long-term investors should remain focused on fundamental business strengths, capital efficiency, and sustainable revenue growth across sectors." — Dr. Shishir Gupta, Founder & CEO, StartupLanes