Morning Session – Indian Financial Market (13 February 2026)

Indian Rupee
The Indian rupee opened at 90.68 against the U.S. dollar on Friday, compared to its previous close of 90.59 on Thursday. The Indian rupee weakened modestly, trading at 90.7125 per US dollar in mid-morning trade, down 0.1% from the previous close. This decline was driven by strong dollar demand from maturing non-deliverable forwards (NDF) positions and a broader risk-averse sentiment in global markets, fueled by concerns over potential AI disruptions impacting the IT sector, which contributed to sharp drops in Indian equities (Nifty 50 down ~1%) and Asian stocks. Traders indicated that the Reserve Bank of India (RBI) was likely intervening in the NDF market to curb excessive weakness, limiting the rupee's slide—otherwise, it could have fallen below 91—following similar support the day before. Despite some relief from a recent US trade deal announcement, the currency faces ongoing vulnerability to gradual depreciation throughout the year, with BMI (a Fitch Solutions unit) revising its year-end forecast to around 93 per dollar (from a prior 95), anticipating a slower pace of weakening amid sideways dollar movements and anticipation of upcoming US CPI data.

Indian Equities
The Indian stock market experienced a sharp decline Friday, with the Sensex dropping over 900 points (intraday low around 82,771) and the Nifty 50 falling below 25,650 (intraday low of 25,513), amid heavy selling pressure driven primarily by a massive sell-off in IT stocks due to renewed fears of AI disruption (often referred to as the "Anthropic shock" from advancements in AI tools threatening the sector's traditional models). IT companies, which form about 10% of the Nifty and represent a major profit pool for Indian corporates, led the rout, exacerbated by overnight weakness in global tech indices like the Nasdaq. Additional factors included anticipation of potentially weak US CPI data (released post-Indian market close, heightening caution ahead of the weekend), profit-booking after a sentiment-driven rally following the recent India-US trade deal announcement (which boosted markets temporarily but faced reality checks on implementation timelines and geopolitical balancing with China), volatility in the Indian Rupee against the USD, and broader concerns over tepid upcoming quarterly earnings and global economic challenges like de-dollarization threats. Experts advise against panic selling in IT, viewing the AI correction as potentially positive for India in the long run if the global AI hype unwinds, and suggest a wait-and-watch approach as opportunities may emerge from this turbulent phase.

Indian Government Bonds
India's government, in collaboration with the Reserve Bank of India (RBI), conducted a debt switch operation on February 12, 2026, to manage its upcoming repayment obligations more effectively. The government repurchased approximately ?755 billion ($8.34 billion) worth of four government securities maturing in fiscal year 2026-27 (FY27) directly from the RBI, while issuing ?694 billion of a new 8.30% coupon bond maturing in 2040 in exchange. This liability management exercise replaces shorter-term debt with longer-dated securities, easing near-term redemption pressure—particularly relevant ahead of a heavy maturity schedule of ?5.47 trillion in FY27 and a record planned gross borrowing of ?17.2 trillion for the fiscal year starting April 2026. The move, which exceeds budgeted levels, helps smooth the government's debt profile, reduces rollover risks, and supports market stability amid elevated borrowing needs, with bond yields reportedly softening in response.

The 10-year benchmark bond yield was trading at 6.668%.