Consistent foreign institutional investor (FII) selling weighed on the Indian rupee in November while domestic flows supported equity markets and bond yields hardened, a report said on Friday. 

The report from JM Financial noted that the rupee depreciated about 6 per cent in 2025 compared to the historical average annual depreciation of roughly 3.5 per cent, citing FII outflows and trade‑deal overhang with the US.

It also highlighted robust growth in Banking, Financial Services, and Insurance (BFSI) and the automobile sector.

“BFSI indicators reflected stable system credit growth, improving deposit growth and rising insurance premiums, while asset management flows were largely stable,” the report said.

Outside BFSI, auto wholesales showed broad-based on-year growth, infrastructure ordering moderated, metal prices and steel volume softened sequentially, and port cargo volume grew at a slower pace compared to the previous month.

India’s external balance improved as the merchandise trade deficit normalised to $24.5 billion in November from a steep $42 billion deficit in October.

Services surplus continued to cushion India’s external balance, the report noted.

Bond markets appeared to have called an end to the rate‑cut cycle as yields hardened despite open market operations by the RBI and a 25 basis‑point policy cut in December.

Steady system credit growth in banks was steady at 11.5 per cent year‑on‑year, and deposits grew to 10.2 per cent YoY. Private banks’ Marginal Cost of Funds-based Lending Rate (MCLR) eased to 9.4 per cent, while PSU banks’ MCLR was flat at 8.8 per cent.

The report also noted that auto wholesales accelerated to 22.2 per cent growth on-year, and commercial vehicles (CV) sales were up 26.6 per cent in November.

In December, FPIs were net sellers in nine of 11 trading days. Bank of Baroda, in a recent report, suggested that the rupee may remain volatile until a deal with the US is reached, possibly by March 2026.