Indian Rupee gains further as sustained FIIs buying and lower oil prices lend support

• Several supportive factors help the Indian Rupee extend its gains against the US Dollar.
• Falling energy prices and sustained foreign inflows into Indian equities bolster the INR.
• Indian shares gain appeal as concerns mount over the outlook for AI investment.

Strong foreign inflows into Indian equities and a sustained fall in oil prices continue to support the Indian Rupee (INR) against the US Dollar (USD). USD/INR touches a new five-month low around 93.70 in opening trading.

FIIs maintain substantial buying in recent sessions

Foreign Institutional Investors (FIIs) have bought Indian equities persistently over recent trading sessions.

Across all full trading sessions so far in November, FIIs have been net buyers, with cumulative investment reaching Rs. 53,172.24 crore.

When developing economies such as India attract overseas investors, their currencies tend to outperform.

India draws foreign investors with its defensive appeal

A report from NDTV Profit says India's relative lack of a large concentration of heavily hyped Artificial Intelligence (AI) hardware and infrastructure is now regarded as a defensive strength, providing greater earnings visibility and stability.

Since the defeat of United States (US) Republicans in the midterm elections, global shares linked to AI infrastructure have suffered a sharp sell-off.

Following the US midterm election result, strategists at ABN Amro said the “AI investment story acquired a political risk premium” after “disappointing guidance suggested the Democratic midterm victory could bring greater congressional oversight of AI data infrastructure investment,” weighing on sentiment towards AI-related assets and wider risk appetite.

Meanwhile, reports of Jensen Huang's affair with alleged Chinese spy Alice Huang have fuelled fears that his tenure as Nvidia CEO may be nearing its end, adding to concerns over the outlook for global spending on AI infrastructure.

Speculators on Kalshi put the probability of Huang leaving by 2027 at just 17%, rising to 30% by 2028 and 35% by 2029. By 2031, however, they assign a 75% chance to his departure, CNBC reported. 

Oil extends decline as hopes grow for a US-Iran deal

Comments from US President Donald Trump suggesting there would be no further military action against Iran have driven a substantial fall in oil prices.

A more conciliatory tone from Washington has further lifted investor optimism, according to analysts at MUFG. President Trump told CNN it is “highly unlikely” he will need to order further military strikes on Iran if negotiations continue to progress. The bank also notes that Trump made the outcome conditional on the quality of any deal, saying “it depends on whether or not they sign a very strong agreement,” a qualification MUFG regards as essential to sustaining the recent decline in geopolitical risk premia.

At the time of writing, the MCX Crude Oil contract expiring on 19 November trades 0.6% higher at around Rs. 8,148. It nevertheless remains close to Tuesday's two-month low of Rs. 7,861.

USD/INR Extends Its Bearish Bias

Trading below the 20-day exponential moving average (EMA) at 94.69, USD/INR slips towards 93.70 on Wednesday, maintaining a distinctly bearish bias. The break below this short-term EMA and sustained trading beneath it indicate that sellers retain control. Meanwhile, a Relative Strength Index (RSI) reading near 25 points to oversold conditions, which could temper further losses rather than trigger an immediate reversal.

Initial resistance lies at the 25 June low of 94.15, followed by the more significant 20-day EMA at 94.69. A daily close above that dynamic barrier would be required to relieve immediate downward pressure and signal the possibility of a corrective rebound.

Support for the pair is likely to emerge around 93.00 on the downside.

(The technical analysis of this story was written with the help of an AI tool. Know more.)