What drove the bounce?
According to Subramaniam, the rupee’s sudden appreciation was engineered by the RBI, which had recently capped open dollar positions at $100 million for banks. When banks began routing those positions through the NDF market or passing them to corporates — effectively bypassing the spot market — the RBI stepped in with a subsequent circular banning the practice and forcing banks to sell dollars outright.
“The rupee bears got hammered today. It is very technical — and nothing has really changed at the ground level.”
That forced liquidation drove a sharp rupee rally. Foreign institutional investors (FIIs), anticipating the rupee would weaken again once the RBI pressure lifts (with April 10 cited as a key deadline), seized the moment as a buying opportunity — particularly in IT stocks, which benefit when the rupee depreciates.
Why the IT index led the charge
The IT index was the primary engine behind Monday’s Nifty recovery. With a temporarily strong rupee offering an attractive entry price, FIIs rushed into large-cap IT names. Subramaniam also noted that algorithmic trading systems — which use rupee movement as an input signal — likely triggered automatic buy orders as the currency strengthened, amplifying gains in F&O-active stocks including select banks.
Headwinds haven’t gone away
Despite the market’s cheerful face, Subramaniam points to a trio of headwinds that remain very much in play: the dollar index has crossed the psychologically significant 100 mark, crude oil is hovering near $109 per barrel, and US 10-year yields have climbed from 4.30% to 4.38%. None of these factors, he argues, are supportive of a stronger rupee over the medium term. India’s own 10-year bond yield has also crossed 7.1%.
Where should investors look now?
Subramaniam’s near-term conviction lies in two domestic-facing sectors: BFSI and consumer discretionary. He sees summer demand driving consumer durables and high-end retail, with credit growth — largely through NBFC and bank EMIs — sustaining the consumer discretionary theme. Strong store addition numbers from Avenue Supermarts were cited as evidence that ground-level consumption remains resilient, even amid market volatility.On defence, despite record exports of ₹35,000 crore being reported, he stays on the sidelines — calling valuations “a little bit overvalued still” and preferring to wait for further price correction before entering.
Is IT close to a bottom?
Subramaniam believes it may be. The sector has been one of the worst performers over the past year — alongside realty — weighed down by fears around AI’s impact on traditional IT business models. He argues the market is pricing in a “falling off the cliff” scenario five years out, which he views as an overreaction. With large-cap dividend yields now looking attractive to pension funds and income-seeking institutions, value buying could be stepping in. The upcoming earnings season will be closely watched for commentary on three things: internal AI cost reduction, a shift from per-employee to per-outcome pricing models, and deployment plans for the large cash reserves sitting on IT balance sheets.
“IT has now got to be a part of your value portfolio — not your growth portfolio. That is the significant mindset change,” says Subramaniam.
The bottom line
Friday’s rally was a technical reprieve, not a structural turn. The real test comes from April 10 onwards, when the RBI-forced dollar unwinding deadline passes and the earnings season begins. Until then, Subramaniam advises selective accumulation in BFSI and consumer discretionary — and keeping dry powder ready for the right earning-season signals.