Morning Session – Indian Financial Market (30 Jan 2026)

Indian Rupee
The Indian rupee opened at 91.91 against the U.S. dollar on Friday, compared to its previous close of 91.9550 on Thursday. Indian rupee has significantly depreciated—falling about 6-6.5% against the US dollar from April 2025 to January 2026—despite India's strong macroeconomic fundamentals, including robust growth, low inflation, healthy banking sector, and comfortable forex reserves. Chief Economic Adviser V Anantha Nageswaran describes the rupee as "punching below its weight," meaning its valuation does not reflect India's stellar economic performance and positions it as a victim of geopolitical tensions, a global strategic power gap, foreign portfolio investment outflows, persistent goods trade deficit (not fully offset by services and remittances), and uncertainties like US tariffs under President Trump. While this undervaluation does not currently hurt the economy—actually providing a cushion against higher import costs (e.g., no major inflation threat from crude oil) and offsetting some tariff impacts on exports—it deters foreign investors, raises capital costs, and prompts caution on inflows. The Survey emphasizes the need for stronger goods exports, manufacturing competitiveness, diversified trade agreements, and sustained investor interest to stabilize the currency long-term, amid a broader optimistic outlook for India's growth resilience in a volatile global environment.

Indian Equities
Indian stock markets opened sharply lower ahead of the Union Budget presentation scheduled for Sunday, February 1. The BSE Sensex tumbled over 600 points in early trade to around 81,947, while the NSE Nifty 50 dropped more than 170 points to below 25,300 (opening near 25,247), driven by weakness in metal stocks, a depreciating rupee, ongoing FII selling (though DIIs bought strongly), and caution over rising oil prices and global uncertainties. Gift Nifty indicated a sluggish start, trading at a discount. MCX gold prices fell significantly by about 3% to around ?1,78,444 per 10 grams, with silver also declining sharply amid profit-taking after recent highs. Global cues were mixed, with Asian markets mostly gaining on news of US President Trump's upcoming Federal Reserve chair announcement, while Wall Street closed lower in tech-heavy sectors. Stocks like Swiggy slumped over 7% on wider quarterly losses, though analysts remained optimistic on select names. Experts noted stronger medium-to-long-term tailwinds from projected GDP growth of 6.8-7.2% in FY27 and export diversification, despite short-term headwinds, with Nifty facing resistance near 25,400-25,800 and support around 25,180-24,900.

Indian Government Bonds
India's bond market is experiencing robust expansion, reaching approximately $2.78 trillion as of March 2025, with government bonds comprising $2.16 trillion and corporate bonds $626 billion, driven by accelerated growth in recent years and a 12% annual increase in the corporate segment over the past decade. Domestic investors are increasingly drawn in due to SEBI's enhanced disclosure requirements for greater transparency, successive reductions in the minimum face value of debt securities—from Rs. 10 lakhs to Rs. 1 lakh in 2022 and further to Rs. 10,000 in 2024—lowering entry barriers for retail participants, and the rise of SEBI-registered Online Bond Platform Providers (OBPPs) like Bondbazaar and Grip Invest, which have facilitated over Rs. 10,000 crores in fixed-income investments by making primary and secondary market access easier and more digital. For foreign investors, key attractions include the inclusion of Indian government securities (G-secs) in major global indices such as JP Morgan's Emerging Market Bond Index (starting at 1% weightage and rising to 10%, attracting around $25 billion) and FTSE's EMGBI (phased to 10% by 2025), competitive higher yields on India's 10-year G-secs at 6.63% compared to lower rates in the US (4.27%), Japan (2.24%), and China (1.83%), and recent sovereign credit rating upgrades by agencies like S&P to BBB and others to BBB+ in 2025, signaling improved fiscal stability and growth prospects—though rupee depreciation remains a risk. Overall, these reforms and developments are channeling more capital into bonds, supporting infrastructure and India's ambitions for developed-nation status.

The 10-year benchmark bond yield was trading at 6.714%.