12:26 PM:
IT Stocks Celebrating While Others are in Pain
IT Shares rose as the rupee hit record lows today with Tata Consultancy Services rising as much as 4% in the early trades.
Decline in Rupee is the gain of software exporters. More the rupee will weak, more will be the earnings for exporters.
According to news in Moneycontrol, Infosys shares hit a 28-month high today as brokerage house CLSA accorded a buy recommendation on the stock.
The brokerage house has set a target price for the stock at Rs 3,550 a share, the report said.
CLSA says that the company is likely to witness earnings per share upgrade of 8-12% on weaker rupee and that it expects clarity on US Immigration Bill in two months.
HCL Technologies gained more than 1%. Meanwhile, Wipro shares traded 2.42% higher at Rs. 466 on the National Stock Exchange as of 12:8 PM a day after it replaced Reliance Infrastructure Ltd in the National Stock Exchange’s 50-stock Nifty.
12:15 PM:
Gold Prices Hits All-time high
Gold prices zoom to all-time high of Rs. 34,500 per ten gram at open as rupee hits historic low of 68.75 amid firm global trend.
11:05 AM:
Rupee, Stock markets pulls back
The Indian rupee and stock markets pulled back from the lows probably after the RBI sold dollars through the public sector banks, reported CNBC-TV18.
The rupee was at 68.07, after touching a 67.88 against the dollar. The Sensex was at 17,629.77, down 338.31 or 1.88%, and the Nifty at 5,165.30, down 122.15 or 2.31%.
However, the pullback is likely to be a temporary one as the underlying bearish tone is unlikely to change by the RBI’s intervention.
10:28 AM:
With rupee at 68.66, it’s a bottomless fall
The rupee continued its fall to hit 68.66 taking all financial markets along with it. The Sensex was at 17502.76 down 465 points and the Nifty was at 5131.85, down 153 points.
41 of the Nifty constituents and 26 of the Sensex were in the red. The rupee has fallen 8 percent this week and 13 percent and July 15 when the RBI started its tightening cycle.
HSBC, meanwhile, said that the biggest problem with Indian equities is the over ownership of foreign institutional investors. Though the situation is changing, the stock market will have to bear the brunt for some more time. There is nothing much to do now, but to adjust to further slowdown in growth.
10:10 AM:
Rupee breaches 68, is this Chidu jinx?
The Indian rupee has hit 68 against the dollar a day after Finance Minister P Chidambaram reiterated that the rupee is undervalued and the government will not miss the fiscal deficit target. At 10.10 am, the rupee is trading at 68.02 against dollar.
The rupee has dropped 19.2% this year and is set for the worst fall since 1991. The rupee is currently the world’s worst performing currency.
The currency has plunged a little over 13% so far in the month of August alone to mark its worst monthly fall since the year 1993.
Herald Van Der Linde, Head of Equity Strategy, Asia-Pacific, HSBC feels that India was over-owned by Foreign Intuitional Investors (FIIs) as the situation is changing. In an interview to CNBC-TV18, he warned that over-ownership will remain an overhang on India.
“We will see economy, earnings downgrades in India. India’s multiples need to come down further. India needs to adjust to further slowdown in growth,” he explained.
10:00 AM:
‘RBI must intervene to tackle rupee fall,” says JP Morgan
Expressing concern over the rupee fall, JP Morgan said Forex intervention by the Reserve Bank of India is required to stem rupee fall. “Turnaround in real economy will take some time,” it said.
JP Morgan said that the Food Security Bill is not a major factor for rupee depreciation and said tax collection, oil & gas subsidies are worries for fiscal deficit target.
9:50 AM:
Rupee falls panic spreads on Twitter
The rupee panic has spread across social media too, with many coming up with suggestions of what the government must do to stop the rupee fall.
9:15 AM:
Sensex opens 100 pts down, banks biggest loser
The Indian markets opened in the red once again today following the rupee fall and weak global cues.
The BSE Sensex opened at 17778.68, down 1.06%, while the Nifty opened at 5215, down 1.40 percent. The Sensex is down more than 100 points with 27 components in red.
BSE bank ex sits at the bottom of the sectoral pack with losses of nearly 3 percent; all components in the red.
Among the bank stocks, Axis Bank is trading down 6%, HDFC and Yes Bank are down almost 5%.
Tech stocks continue to perform well with BSE IT index at the top of the sectoral pack with gains of 1.1%.
Meanwhile, extending its early rally, gold price hit fresh all-time high of Rs 33,824 per 10 grams Tuesday on heavy buying as rupee plunged to its new record low of 66.30 against the US dollar.
9:00 AM:
Rupee hits 67.98
The Indian rupee opened at new record low today at 66.90 against the dollar. Rupee has fallen more than 6 percent this week so far.
In ten minutes of trade, rupee hit 67.98, its new record low.
On Tuesday i.e. 27th August 2013, the rupee hit a record low of 66.30 before closing at 66.19, down 188 paise from Monday’s close of 64.31, over concerns that the food security bill would throw government finances into disarray and fears of a US strike against Syria.
The rupee is emerging as a front-runner in a race to the bottom among emerging market currencies. In both absolute and percentage terms, Tuesday’s drop is the highest ever. The rupee has fallen by around 20% since the beginning of the year.
Updates end for 28 August
4:00 PM:
Sensex closes 590 pts down
The Indian markets gave up nearly all gains made over the previous three sessions, as blue chips including HDFC plunged on worries the passage of a food security bill would worsen the country’s fiscal deficit.
The rupee closed at 66.24 to a dollar, its lowest in 18 years.
The BSE Sensex closed at 17968.08, down 590.05 points or 3.18%. The Nifty closed at 5287.45, down 189.05 points, or 3.45 percent. Bank Nifty closes at lowest level since January 11, 2012.
The rupee hit a record low and shares slumped on Tuesday after Lok Sabha’s approval of a $20 billion plan to provide cheap grain to the poor renewed doubts about the government’s resolve to control spending ahead of elections due next year.
SBI Chairman Pratip Chaudhuri said that RBI will take final call on currency swap and he does not think it will make a huge difference. Adding that currency swap has been tried before, Chaudhuri stresses that it won’t correct trade imbalance. “Banking system will not be impacted by rupee depreciation and MTM losses depend on domestic interest rate,” he said.
Technology stocks remained on buyers’ radar as the rupee depreciation will help these IT software services exporters to report better earnings in Q2.
However, BHEL, HDFC and HDFC Bank plunged more than 8 percent, which indicates that there may be some offloading by foreign institutional investors.
2:50 PM:
Large fiscal deficit will impact growth negatively, says Yashwant Sinha
Criticising the government and the state of economy, BJP leader Yashwant Sinha said that running a large fiscal deficit will impact inflation which will lead to rising interest rates, thus impacting investment and growth.
“All of us remember the famous statement made by the PM that ‘money doesn’t grow on trees’. He also said that when the fiscal deficit will increase, the CAD will increase; prices will raise leading to an increase in the unemployment rate. I agree with the Prime Minister. This is a vicious cycle, and we need to find a way,” he said.
Sinha said that India’s external debt is Rs 390 billion dollar, out of this the short-term debt if a little over 172 billion dollars. And this is a worrying scenario as short-term debt is supposed to be repaid by 2014.
1.:40 PM:
Rupee hits 66
The Indian rupee has hit a new record low of 66. At 1.47 pm, rupee is at 66.02 against dollar.
The BSE Sensex is at 18032.16, down 525.97 points, 2.83%. The Nifty is at 5298.35, down 178.15 points, 3.25%.
Ajay Marwaha of HDFC Bank told CNBC-TV18 that the RBI’s intervention in the forex market has been largely ineffective and attributed the fall in rupee to the fall in emerging market currencies.
12:11 PM:
‘Market in Catch-22 situation’
“The market is in a catch-22 situation, but it’s like catching a falling knife. Investors with 1-and a half to 2 years horizon may get into select frontline stocks where FII selling has been huge, Dilip Bhat of Prabhudas Lilladher told CNBC-TV18.
He said though the Nifty may bounce back to 5700 levels, the volatility in the markets will be killing.
The Sensex was 491 points down and the rupee hit a new low of 65.87.
Finance Minister had earlier allayed fears saying that the Food Security Bill will not have a negative impact on the fiscal deficit. “We will not cross the red line of 4.8 percent of GDP this fiscal,” he told at a press conference.
IT stocks are doing well in what is otherwise a weak day for markets. The rupee’s weakness may be helping tech stocks. Wipro is trading 0.63 percent up, Infosys is up 1 percent.
11:35 AM:
Rupee hits record low, Sensex down 500 pts
The Indian rupee hit a record low today at 65.68 against the dollar. The Indian currency fell nearly 4% in the last three trading sessions.
Meanwhile, reacting to the rupee fall, the markets also went in deep red. The BSE Sensex is at 18076.28, down 2.60 percent, nearly 500 points down. While the Nifty is at 5325.55, down 2.76%.
Ashutosh Raina of HDFC Bank attributed rupee weakness to general decline in all emerging market currencies across the globe. He said food security bill passed by the Lok Sabha yesterday added to already existing concerns about the twin deficits. He however said 70 levels may not be that near as 66 will have to be defended for some time.
11:25 AM
CLSA says Modi stock market’s greatest hope
Indian remains the most at risk of a sovereign debt crisis, though the country does not have a high foreign ownership of rupee debt, said CLSA in its GREED and Fear note.
That Congress President Sonia Gandhi’s rare speech was only to endorse the highly expensive Food Security Bill is clouding the hope that the Congress will at least now strive to improve the governance, it said.
“The Indian stock market’s greatest hope in this respect is the emergence of Gujarat Chief Minister Narendra Modi as the BJP’s prime ministerial candidate. While the odds are definitely stacked against him, GREED & fear’s view is simply that the worse the sense of crisis the better Modi’s chance of winning,” it said.
According to the brokerage, Modi has been increasingly attacking the direction-less government and the collapsing rupee of late. It expects the rhetoric to gain pitch as the election approaches.
10:40 AM:
Chidambaram says food bill won’t affect Fiscal deficit
Finance Minister P Chidambaram said that the ‘red line’ on fiscal deficit is 4.8 percent of GDP and that will not be breached even if Food Security Bill is implemented.
The Food Bill was passed in the Lok Sabha yesterday.
The Finance Minister reiterated that the rupee is undervalued and it will find its own level. “We have to be patient, firm. Rupee will find its appropriate level,” he said.
He said that the CCI has cleared Rs 1.83 lakh crore worth projects yesterday and the message that the government wants to send through this is that investment cycle has been revived and the government is pushing it.
10:20 AM:
‘Don’t be surprised if Nifty hits 4900′
Hiren Ved, Director & CIO Alchemy Capital says the recent pullback seen in the market was entirely due to short covering and given the way Indian’s macros are shaping up, one should not be surprised if Nifty hits 4900 going ahead.
His views come in line with Ridham Desai of Morgan Stanley. The market is likely to remain in a sideways range till the next Reserve Bank of India (RBI) monetary policy, which is scheduled in September, he told CNBC-TV18.
10.00 AM:
18303.76 -254.37 (-1.37%)
NIFTY 5395.10 -81.40 (-1.49%)
9.:45 AM:
Food Bill fans deficit concerns, rupee falls below 65
The rupee plunged near its all-time low and paring its gains in the last two sessions, as concerns weighed heavily in the financial markets on the expected increase in government’s subsidy burden following the passage of the food security Bill.
The rupee had ended down 110 paise or 1.74 percent at 64.30 against the US dollar after hitting an intra-day low of 64.75 in the previous session.
Forex dealers said besides strong demand for the American currency from importers and banks, dollar’s strength against other currencies overseas amid expectation that the Federal Reserve will soon taper its bond-buying programme weighed on the domestic currency.
They said several measures announced by the government and the RBI failed to check volatility in the rupee.
Weak domestic fundamentals such as record current account deficit concern too put pressure on the rupee, they said.
In order to arrest the rupee slide, RBI had announced measures such as restriction on Indian firms investing abroad and on outward remittances by resident Indians, triggering talks of return of capital control regime.
9:15 AM:
Rupee plunges below 65, Sensex down 200 pts
The rupee resumed its free fall and plunged to 65.22 in the opening trades today largely in line with the rout witnessed in the emerging market currencies globally.
Adding to the rupee’s worries was the month-end dollar demand from importers including oil marketing companies.
The experts spoke on the CNBC-TV18 said the rupee’s depreciation was linked to the wide current account deficit. “The rupee will continue to depreciate” Ray Farris of Credit Suisse told CNBC-TV18. He India may have to resort to monetary tightening to arrest the currency slide.
The rupee depreciation pulled down the Sensex and the Nifty, with both the benchmark indices opening down about 1 percent.
The BSE Sensex opened at 18323, down 1.5 percent, while the Nifty opened at 5399, 1.4 percent down.
On Monday night, Parliament approved the historic Food Security Law after just six hours of debate. Food minister KV Thomas tweaked several key proposals including assuring states that their existing schemes will not be tampered with and they will get to select the beneficiaries. The total food grain requirement is projected at 62 million tonnes for an estimated expenditure of around Rs 125000 crore this year.
Globally, Syria concerns led US stocks to reverse earlier gains in the last hour of trading with the Dow and S&P 500 ending about half a percent lower. In Europe, shares closed slightly lower with fears of a government collapse in Italy dragging down the Italian index.
Asian markets were trading lower today morning following a lackluster lead from Wall Street and fears of a possible confrontation with Syria.
Banking stocks have been badly hit with all BSE bankex components trading in red. Yes Bank , Indus Ind Bank and Canara Bank are all down more than 3 percent.
Sesa Goa is down 4%. On Monday, Sesa Goa announced it will replace Sterlite in the Sensex. Sesa Goa’s weight age will also increase in Nifty and FTSE.
IDFC is down 7.23% as Reserve Bank has notified the decrease in FII limit in IDFC to 54% from 74% earlier.
IT Stocks Celebrating While Others are in Pain
IT Shares rose as the rupee hit record lows today with Tata Consultancy Services rising as much as 4% in the early trades.
Decline in Rupee is the gain of software exporters. More the rupee will weak, more will be the earnings for exporters.
According to news in Moneycontrol, Infosys shares hit a 28-month high today as brokerage house CLSA accorded a buy recommendation on the stock.
The brokerage house has set a target price for the stock at Rs 3,550 a share, the report said.
CLSA says that the company is likely to witness earnings per share upgrade of 8-12% on weaker rupee and that it expects clarity on US Immigration Bill in two months.
HCL Technologies gained more than 1%. Meanwhile, Wipro shares traded 2.42% higher at Rs. 466 on the National Stock Exchange as of 12:8 PM a day after it replaced Reliance Infrastructure Ltd in the National Stock Exchange’s 50-stock Nifty.
12:15 PM:
Gold Prices Hits All-time high
Gold prices zoom to all-time high of Rs. 34,500 per ten gram at open as rupee hits historic low of 68.75 amid firm global trend.
11:05 AM:
Rupee, Stock markets pulls back
The Indian rupee and stock markets pulled back from the lows probably after the RBI sold dollars through the public sector banks, reported CNBC-TV18.
The rupee was at 68.07, after touching a 67.88 against the dollar. The Sensex was at 17,629.77, down 338.31 or 1.88%, and the Nifty at 5,165.30, down 122.15 or 2.31%.
However, the pullback is likely to be a temporary one as the underlying bearish tone is unlikely to change by the RBI’s intervention.
10:28 AM:
With rupee at 68.66, it’s a bottomless fall
The rupee continued its fall to hit 68.66 taking all financial markets along with it. The Sensex was at 17502.76 down 465 points and the Nifty was at 5131.85, down 153 points.
41 of the Nifty constituents and 26 of the Sensex were in the red. The rupee has fallen 8 percent this week and 13 percent and July 15 when the RBI started its tightening cycle.
HSBC, meanwhile, said that the biggest problem with Indian equities is the over ownership of foreign institutional investors. Though the situation is changing, the stock market will have to bear the brunt for some more time. There is nothing much to do now, but to adjust to further slowdown in growth.
10:10 AM:
Rupee breaches 68, is this Chidu jinx?
The Indian rupee has hit 68 against the dollar a day after Finance Minister P Chidambaram reiterated that the rupee is undervalued and the government will not miss the fiscal deficit target. At 10.10 am, the rupee is trading at 68.02 against dollar.
The rupee has dropped 19.2% this year and is set for the worst fall since 1991. The rupee is currently the world’s worst performing currency.
The currency has plunged a little over 13% so far in the month of August alone to mark its worst monthly fall since the year 1993.
Herald Van Der Linde, Head of Equity Strategy, Asia-Pacific, HSBC feels that India was over-owned by Foreign Intuitional Investors (FIIs) as the situation is changing. In an interview to CNBC-TV18, he warned that over-ownership will remain an overhang on India.
“We will see economy, earnings downgrades in India. India’s multiples need to come down further. India needs to adjust to further slowdown in growth,” he explained.
10:00 AM:
‘RBI must intervene to tackle rupee fall,” says JP Morgan
Expressing concern over the rupee fall, JP Morgan said Forex intervention by the Reserve Bank of India is required to stem rupee fall. “Turnaround in real economy will take some time,” it said.
JP Morgan said that the Food Security Bill is not a major factor for rupee depreciation and said tax collection, oil & gas subsidies are worries for fiscal deficit target.
9:50 AM:
Rupee falls panic spreads on Twitter
The rupee panic has spread across social media too, with many coming up with suggestions of what the government must do to stop the rupee fall.
9:15 AM:
Sensex opens 100 pts down, banks biggest loser
The Indian markets opened in the red once again today following the rupee fall and weak global cues.
The BSE Sensex opened at 17778.68, down 1.06%, while the Nifty opened at 5215, down 1.40 percent. The Sensex is down more than 100 points with 27 components in red.
BSE bank ex sits at the bottom of the sectoral pack with losses of nearly 3 percent; all components in the red.
Among the bank stocks, Axis Bank is trading down 6%, HDFC and Yes Bank are down almost 5%.
Tech stocks continue to perform well with BSE IT index at the top of the sectoral pack with gains of 1.1%.
Meanwhile, extending its early rally, gold price hit fresh all-time high of Rs 33,824 per 10 grams Tuesday on heavy buying as rupee plunged to its new record low of 66.30 against the US dollar.
9:00 AM:
Rupee hits 67.98
The Indian rupee opened at new record low today at 66.90 against the dollar. Rupee has fallen more than 6 percent this week so far.
In ten minutes of trade, rupee hit 67.98, its new record low.
On Tuesday i.e. 27th August 2013, the rupee hit a record low of 66.30 before closing at 66.19, down 188 paise from Monday’s close of 64.31, over concerns that the food security bill would throw government finances into disarray and fears of a US strike against Syria.
The rupee is emerging as a front-runner in a race to the bottom among emerging market currencies. In both absolute and percentage terms, Tuesday’s drop is the highest ever. The rupee has fallen by around 20% since the beginning of the year.
Updates end for 28 August
4:00 PM:
Sensex closes 590 pts down
The Indian markets gave up nearly all gains made over the previous three sessions, as blue chips including HDFC plunged on worries the passage of a food security bill would worsen the country’s fiscal deficit.
The rupee closed at 66.24 to a dollar, its lowest in 18 years.
The BSE Sensex closed at 17968.08, down 590.05 points or 3.18%. The Nifty closed at 5287.45, down 189.05 points, or 3.45 percent. Bank Nifty closes at lowest level since January 11, 2012.
The rupee hit a record low and shares slumped on Tuesday after Lok Sabha’s approval of a $20 billion plan to provide cheap grain to the poor renewed doubts about the government’s resolve to control spending ahead of elections due next year.
SBI Chairman Pratip Chaudhuri said that RBI will take final call on currency swap and he does not think it will make a huge difference. Adding that currency swap has been tried before, Chaudhuri stresses that it won’t correct trade imbalance. “Banking system will not be impacted by rupee depreciation and MTM losses depend on domestic interest rate,” he said.
Technology stocks remained on buyers’ radar as the rupee depreciation will help these IT software services exporters to report better earnings in Q2.
However, BHEL, HDFC and HDFC Bank plunged more than 8 percent, which indicates that there may be some offloading by foreign institutional investors.
2:50 PM:
Large fiscal deficit will impact growth negatively, says Yashwant Sinha
Criticising the government and the state of economy, BJP leader Yashwant Sinha said that running a large fiscal deficit will impact inflation which will lead to rising interest rates, thus impacting investment and growth.
“All of us remember the famous statement made by the PM that ‘money doesn’t grow on trees’. He also said that when the fiscal deficit will increase, the CAD will increase; prices will raise leading to an increase in the unemployment rate. I agree with the Prime Minister. This is a vicious cycle, and we need to find a way,” he said.
Sinha said that India’s external debt is Rs 390 billion dollar, out of this the short-term debt if a little over 172 billion dollars. And this is a worrying scenario as short-term debt is supposed to be repaid by 2014.
1.:40 PM:
Rupee hits 66
The Indian rupee has hit a new record low of 66. At 1.47 pm, rupee is at 66.02 against dollar.
The BSE Sensex is at 18032.16, down 525.97 points, 2.83%. The Nifty is at 5298.35, down 178.15 points, 3.25%.
Ajay Marwaha of HDFC Bank told CNBC-TV18 that the RBI’s intervention in the forex market has been largely ineffective and attributed the fall in rupee to the fall in emerging market currencies.
12:11 PM:
‘Market in Catch-22 situation’
“The market is in a catch-22 situation, but it’s like catching a falling knife. Investors with 1-and a half to 2 years horizon may get into select frontline stocks where FII selling has been huge, Dilip Bhat of Prabhudas Lilladher told CNBC-TV18.
He said though the Nifty may bounce back to 5700 levels, the volatility in the markets will be killing.
The Sensex was 491 points down and the rupee hit a new low of 65.87.
Finance Minister had earlier allayed fears saying that the Food Security Bill will not have a negative impact on the fiscal deficit. “We will not cross the red line of 4.8 percent of GDP this fiscal,” he told at a press conference.
IT stocks are doing well in what is otherwise a weak day for markets. The rupee’s weakness may be helping tech stocks. Wipro is trading 0.63 percent up, Infosys is up 1 percent.
11:35 AM:
Rupee hits record low, Sensex down 500 pts
The Indian rupee hit a record low today at 65.68 against the dollar. The Indian currency fell nearly 4% in the last three trading sessions.
Meanwhile, reacting to the rupee fall, the markets also went in deep red. The BSE Sensex is at 18076.28, down 2.60 percent, nearly 500 points down. While the Nifty is at 5325.55, down 2.76%.
Ashutosh Raina of HDFC Bank attributed rupee weakness to general decline in all emerging market currencies across the globe. He said food security bill passed by the Lok Sabha yesterday added to already existing concerns about the twin deficits. He however said 70 levels may not be that near as 66 will have to be defended for some time.
11:25 AM
CLSA says Modi stock market’s greatest hope
Indian remains the most at risk of a sovereign debt crisis, though the country does not have a high foreign ownership of rupee debt, said CLSA in its GREED and Fear note.
That Congress President Sonia Gandhi’s rare speech was only to endorse the highly expensive Food Security Bill is clouding the hope that the Congress will at least now strive to improve the governance, it said.
“The Indian stock market’s greatest hope in this respect is the emergence of Gujarat Chief Minister Narendra Modi as the BJP’s prime ministerial candidate. While the odds are definitely stacked against him, GREED & fear’s view is simply that the worse the sense of crisis the better Modi’s chance of winning,” it said.
According to the brokerage, Modi has been increasingly attacking the direction-less government and the collapsing rupee of late. It expects the rhetoric to gain pitch as the election approaches.
10:40 AM:
Chidambaram says food bill won’t affect Fiscal deficit
Finance Minister P Chidambaram said that the ‘red line’ on fiscal deficit is 4.8 percent of GDP and that will not be breached even if Food Security Bill is implemented.
The Food Bill was passed in the Lok Sabha yesterday.
The Finance Minister reiterated that the rupee is undervalued and it will find its own level. “We have to be patient, firm. Rupee will find its appropriate level,” he said.
He said that the CCI has cleared Rs 1.83 lakh crore worth projects yesterday and the message that the government wants to send through this is that investment cycle has been revived and the government is pushing it.
10:20 AM:
‘Don’t be surprised if Nifty hits 4900′
Hiren Ved, Director & CIO Alchemy Capital says the recent pullback seen in the market was entirely due to short covering and given the way Indian’s macros are shaping up, one should not be surprised if Nifty hits 4900 going ahead.
His views come in line with Ridham Desai of Morgan Stanley. The market is likely to remain in a sideways range till the next Reserve Bank of India (RBI) monetary policy, which is scheduled in September, he told CNBC-TV18.
10.00 AM:
18303.76 -254.37 (-1.37%)
NIFTY 5395.10 -81.40 (-1.49%)
9.:45 AM:
Food Bill fans deficit concerns, rupee falls below 65
The rupee plunged near its all-time low and paring its gains in the last two sessions, as concerns weighed heavily in the financial markets on the expected increase in government’s subsidy burden following the passage of the food security Bill.
The rupee had ended down 110 paise or 1.74 percent at 64.30 against the US dollar after hitting an intra-day low of 64.75 in the previous session.
Forex dealers said besides strong demand for the American currency from importers and banks, dollar’s strength against other currencies overseas amid expectation that the Federal Reserve will soon taper its bond-buying programme weighed on the domestic currency.
They said several measures announced by the government and the RBI failed to check volatility in the rupee.
Weak domestic fundamentals such as record current account deficit concern too put pressure on the rupee, they said.
In order to arrest the rupee slide, RBI had announced measures such as restriction on Indian firms investing abroad and on outward remittances by resident Indians, triggering talks of return of capital control regime.
9:15 AM:
Rupee plunges below 65, Sensex down 200 pts
The rupee resumed its free fall and plunged to 65.22 in the opening trades today largely in line with the rout witnessed in the emerging market currencies globally.
Adding to the rupee’s worries was the month-end dollar demand from importers including oil marketing companies.
The experts spoke on the CNBC-TV18 said the rupee’s depreciation was linked to the wide current account deficit. “The rupee will continue to depreciate” Ray Farris of Credit Suisse told CNBC-TV18. He India may have to resort to monetary tightening to arrest the currency slide.
The rupee depreciation pulled down the Sensex and the Nifty, with both the benchmark indices opening down about 1 percent.
The BSE Sensex opened at 18323, down 1.5 percent, while the Nifty opened at 5399, 1.4 percent down.
On Monday night, Parliament approved the historic Food Security Law after just six hours of debate. Food minister KV Thomas tweaked several key proposals including assuring states that their existing schemes will not be tampered with and they will get to select the beneficiaries. The total food grain requirement is projected at 62 million tonnes for an estimated expenditure of around Rs 125000 crore this year.
Globally, Syria concerns led US stocks to reverse earlier gains in the last hour of trading with the Dow and S&P 500 ending about half a percent lower. In Europe, shares closed slightly lower with fears of a government collapse in Italy dragging down the Italian index.
Asian markets were trading lower today morning following a lackluster lead from Wall Street and fears of a possible confrontation with Syria.
Banking stocks have been badly hit with all BSE bankex components trading in red. Yes Bank , Indus Ind Bank and Canara Bank are all down more than 3 percent.
Sesa Goa is down 4%. On Monday, Sesa Goa announced it will replace Sterlite in the Sensex. Sesa Goa’s weight age will also increase in Nifty and FTSE.
IDFC is down 7.23% as Reserve Bank has notified the decrease in FII limit in IDFC to 54% from 74% earlier.
