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Below the Views on Morning Market 17th December 2025 by Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited

Recent sharp fall in the rupee and crude has been attracting the attention of investors. Decline in crude, on poor demand from China and the US, is good news for India’s macros, which are already in a Goldilocks setting. However, sustained fall in the rupee is accelerating FII outflows, thereby hurting the market. This kind of sharp depreciation in the rupee was not expected particularly after the November trade data showed sharp decline in trade deficit at $24.5 billion vs 41.5 billion in October. One possible way of reason for the RBI’s non-intervention in the currency market to stem the rupee slide is that the rupee depreciation is not hurting the economy. With very low CPI inflation of 0.71% in November, there is no threat of imported inflation. On the other hand, rupee depreciation is a boost for India’s exports which were impacted by the Trump tariffs. 

With the ongoing weakening of the AI trade, FIIs are likely to turn buyers in India sometime in 2026. If, along with this, a US-India trade deal happens, FIIs will turn buyers in India. There is a likelihood of rupee strengthening in H1 2026. Therefore, while FII selling is depressing stock prices now, investors should buy in anticipation of a 2026 rally.

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