Sensex slumps 414 pts on  global selloff, rupee crash

Weakness in global stock markets and a strong dollar pulled down the rupee by a whopping 63p to 61.18 on fears that the US Fed could hike interest rates sooner

Mumbai : Indian stocks plummeted to multi-week lows following global jitters after Wall Street’s sharp overnight sell-off and a sharp fall of rupee.

Weakness in global stock markets and a strong US currency pulled down the rupee by a whopping 63 paise to end at over four-month low of 61.18, logging its worst weekly loss since January 24. The dollar gained on hopes that positive economic data from US could prompt Federal Reserve to hike interest rates sooner. Further, a sharp fall in local share indices exacerbated the rupee’s fall.

Strong US employment data would strengthen the case for an early interest rate hike by the US Federal Reserve, whose easy monetary policy has helped fuel rally in global stocks.

Extending losses for the second day, the BSE 30-share Sensex fell by 414.13 points or 1.60 per cent to 25,480.84, its biggest drop since July 8 when it tanked 518 points. Selling was seen across-the-board as all 12 BSE sectoral indices closed in the red. Nifty tumbled by a hefty 118.70 points, or 1.54 per cent to finish at 7,602.60 on the National Stock Exchange (NSE).

Extreme caution resulted in intense profit-booking against the backdrop of geopolitical headwinds as US stocks posted worst one-day fall this year. Heightened worries about Europe’s economy in the midst of Argentine default sparked renewed fears about financial crisis in the region.

Continued selling by overseas investors and corporate earnings too weighed on the sentiment.

Index-based counters like RIL, HDFC, ITC, TCS, HDFC Bank, ONGC, Sun Pharma, Tata Motors, Infosys, M&M and Sesa Sterlite suffered heavy losses. They together accounted for over 350 points decline in the Sensex.

“The overall sentiment also remained downbeat after India’s fiscal deficit crossed half the budget estimate in the first three months of the fiscal,” said Jayant Manglik, President-retail distribution, Religare Securities. In oil markets, the benchmark West Texas Intermediate for September delivery fell 17 cents to USD 98.00 a barrel, while Brent crude for September was down 13 cents to USD 105.89. For the week, the Sensex and Nifty were down 646 points and 188 points respectively — snapping successive gains in the previous two weeks.

Importers and some banks bought dollars and short-sellers covered their positions on hopes of further hike in the dollar value after US Fed recently trimmed its monthly economic stimulus by USD 10 billion. The dollar too gained against most peers as the American economy grows stronger.

This is its weakest closing since 61.34 on March 20. In absolute term, this 63-paise fall is the biggest since January 24 (73 paise). On the drop in markets, RBI Governor Raghuram Rajan in Delhi said: “We are not immune to what is happening world markets.” For the week, the rupee slumped 108 paise — its worst drop since 112-paise plunge in the week ending January 24.

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