The Indian rupee opened at 90.21 against the US dollar, showing a marginal recovery from its previous close of 90.27. The local currency had weakened by seven paise in the previous session, facing mounting pressure from a combination of external factors, with market experts warning of potential further declines in the near term.

Recent Currency Performance

The rupee's recent performance reflects the challenging market conditions, with the currency experiencing volatility amid various economic pressures.

Central Bank Intervention Strategy

The Reserve Bank of India had stepped in during the previous session when the rupee touched 90.29 levels, implementing measures to curb excessive volatility in the currency market. However, market dealers noted that the central bank's intervention was measured rather than aggressive in nature.

"The RBI intervened near the 90.30 levels, but it was only to curb the depreciation and not to turn the tide," explained Ritesh Bhansali, Deputy CEO of Mecklai Financial Services. This approach suggests the central bank is focused on managing volatility rather than defending a specific exchange rate level.

Ongoing Market Challenges

Several negative factors continue to weigh on the rupee's performance. The delayed trade deal negotiations with the United States have created uncertainty in the market, while diminished foreign investor appetite for Mumbai-listed equities has reduced dollar inflows. These safe-haven pressures have contributed to the currency's weakness.

Market experts indicate a greater probability for further slippages in the rupee, suggesting that the current negative sentiment may persist. The combination of external pressures and reduced foreign investment flows continues to challenge the local unit's stability despite the marginal recovery in opening rates.

The Indian rupee extended its losing streak on Monday, declining for the fourth consecutive session to close at 90.28 (provisional) against the US dollar, weighed down by geopolitical uncertainties and profit-booking in domestic equity markets after benchmark indices touched fresh all-time highs.

Currency Performance and Market Dynamics

At the interbank foreign exchange market, the rupee opened at 90.21 and touched an intra-day low of 90.50 during the session before ending 8 paise weaker compared to the previous closing level. This marks the fourth consecutive day of decline for the Indian currency, which has lost 53 paise since December 30 when it closed at 89.75 per dollar.

The currency's weakness reflects sustained pressure from dollar demand and geopolitical tensions, with the dollar index trading 0.24% higher at 98.39, reflecting safe-haven demand.

Equity Markets Witness Sharp Reversal

Domestic equity markets surrendered early gains to close lower despite touching fresh all-time highs during the session. The Sensex declined 322.39 points or 0.38% to close at 85,439.62, while the Nifty slipped 78.25 points or 0.30% to settle at 26,250.30. The Nifty opened strong at 26,333.70 and scaled a fresh all-time high of 26,373 during early trade but failed to sustain elevated levels as selling pressure intensified.

Sectoral Performance and Stock Movements

IT stocks emerged as the biggest laggards amid concerns over potential US tariff actions. The IT index shed over 1.50%, becoming the worst-performing sectoral index. Infosys declined 2.03% to ₹1,607.10, HCL Technologies fell 1.85% to ₹1,609.80, and Wipro dropped 1.71% to ₹264.40. HDFC Bank also weighed on sentiment, declining 1.87% to ₹982.90.

On the positive side, defence and realty stocks outperformed. Bharat Electronics surged 3.03% to ₹415.35, emerging as the top gainer on the Nifty. The Nifty Realty index surged 2.10% on strong business updates from multiple realty companies.

Geopolitical Concerns and Market Outlook

Market sentiment remained guarded as geopolitical tensions escalated following US military action in Venezuela. President Donald Trump's renewed remarks on potential tariff hikes against Indian imports linked to India's continued purchases of Russian oil added caution to global markets. Despite the overall weakness, falling crude oil prices provided some cushion, with Brent crude trading 0.36% lower at $60.53 per barrel.

Foreign institutional investors turned net buyers, picking up equities worth ₹289.80 crore, while India's forex reserves jumped by $3.29 billion to $696.61 billion in the week to December 26. Market breadth tilted towards declines, with 2,545 stocks falling against 1,723 advancing on the BSE. Volatility picked up during the session, with India VIX rising 6.06% to 10.02, reflecting increased market uncertainty amid global developments.