The rupee fell to a record low against the dollar on Tuesday, raising expectations that the government would soon be forced to introduce new measures to stem its ongoing decline.
Agency Report
Mumbai: A benchmark index of Indian equities markets plunged 449 points or 2.34 percent in Tuesday’s trade after the rupee hit a record low of 61.86 against a dollar.
All the sectors ended the day in red. Major sectors like banking, consumer durables, oil and gas, metal, capital goods, fast moving consumer goods (FMCG) and public sector undertakings (PSU) saw heavy selling pressure.
The partially convertible rupee fell to a new record low of 61.86 against a dollar at the inter-bank foreign exchange market here, surpassing its previous low of 61.21 hit on July 8.
The rupee hovered around Rs.60.77 against a dollar around 5.00 p.m. Tuesday. The Indian currency had closed at 60.88 against a US dollar Monday.
The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 19,127.10 points, closed at 18,667.30 points, down 449.22 points or 2.34 percent from the previous day’s close at 19,182.26 points.
The Sensex touched a high of 19,131.92 points and a low of 18,667.30 points intra-day.
“Markets ended sharply lower on the back of continuing concerns about the rupee and some disappointing results. The rupee traded at a new low and that caused concerns in the market,” said Dipen Shah, head, private client group research, Kotak Securities.
“Rupee has been weakening even after the liquidity measures taken by the RBI (Reserve Bank of India), largely due to the high CAD (current account deficit). Markets have been expecting some measures from the government to control the depreciation of the rupee.”
The fall in the rupee value also coincided with the appointment of Raghuram Rajan, chief economic adviser in the finance ministry, as the new RBI Governor replacing D Subbarao. Rajan will take charge Sep 5.
The S&P BSE bank index lost 449.51 points, followed by consumer durables index which decreased by 358.70 points, oil and gas index was down 221.44 points, metal index closed Tuesday’s trade down 216.60 points, capital goods index was lower by 197.90 points, FMCG index was down by 135.48 points and PSU index was down 133.24 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was down 143.15 points or 2.52 percent at 5,542.25 points.
Scrip of Tata Power stock fell 14.76 percent or 12.35 points at Rs.71.35 from its previous close of Rs. after the firm reported a net loss of Rs.115 crore in the April-June quarter caused by higher finance costs and foreign exchange losses due to the weakening rupee.
Other major Sensex losers were: BHEL, down 6.58 percent at Rs.112.95; HDFC, down 5.90 percent at Rs.751.55; Sterlite Inds, down 5.18 percent at Rs.71.40; Tata Steel, down 4.47 percent at Rs.198.60; and ICICI Bank, down 4.03 percent at Rs.866.25.
Only three companies of the Sensex index were gainers: Tata Motors, up 0.97 percent at Rs.287.35; Wipro, up 0.37 percent at Rs.451.30; and Tata Consultancy Services (TCS), up 0.21 percent at Rs.1,870.50.
Among the Asian markets, Japan’s Nikkei gained 1.00 percent in Tuesday’s trade; Hong Kong’s Hang Seng was down by 1.34 percent and China’s Shanghai Composite Index was marginally up by 0.49 percent.
In Europe, London’s FTSE 100 was trading 0.21 percent down. Germany’s DAX Index was 0.10 percent lower and the French CAC 40 Index was up 0.12 percent. (IANS)