Nifty near ATH. Any cracks though?

Markets Overview

It was a whirlwind of a week for the markets — one that started with optimism and ended on a slightly anxious note. For the first four days, strong rumors circulated that the much-awaited India–US tariff deal was finally about to be sealed. The markets took it positively until Friday brought a rude shock — the USD/INR shot up to nearly 89.6, signaling heavy selling pressure on the rupee. For weeks, the RBI had been defending the 88.5 level, but with most Asian currencies weakening against the dollar, it finally stepped back, allowing the rupee to adjust. The sudden depreciation wasn’t an isolated event — Japan’s yen has been under severe strain as Tokyo prepares a massive stimulus package, effectively devaluing its currency. Such regional moves inevitably ripple across Asia, and India wasn’t spared.

At the same time, a tech and crypto meltdown in the U.S. added another layer of pressure. A sharp sell-off in mega-cap tech names and continued outflows from digital assets caused a global flight to safety. As global funds pulled money from riskier assets, India too faced short-term outflows, adding to rupee weakness. It’s not a crisis yet, but it’s a reminder that in interconnected markets, stress anywhere in the system quickly spills over. From expecting a “new high on the Nifty” just a few days ago, sentiment has shifted to “wait and watch.” The index may still have the potential to break higher, but the broader market isn’t confirming that strength.

Technically, on the daily Nifty chart, the index managed to gain 0.61%, clipping the top end of the trading range (ref to the image below) that’s been in place since July. It’s pausing here — consolidating, not reversing — suggesting a healthy cooling period after the recent move.

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The last 24 to 48 hours have been marked by significant flux in global markets. One major factor is the tech meltdown following Nvidia’s results. The other is the issue of Japanese yields going through the roof. Japan’s planned large stimulus is causing tremors globally because of the carry trade—where people borrow cheaply in Japanese yen and invest overseas for better yield. If the interest rates or yields within the Japanese economy start to rise, a large portion of this carry trade will need to reverse, causing pressure across asset classes.

Rebalance Update for the week