Sensex crashes 449; rupee slide, Q1 nos spook investors
The rupee hit a fresh record low of 61.80 to the dollar, as the RBI‘s efforts to boost the currency is having little effect in a face of a strengthening dollar.
Stocks were hammered yet again Tuesday as a lethal cocktail of sliding rupee, worsening economic data and dismal quarterly corporate earnings, had investors fleeing.
The rupee hit a fresh record low of 61.80 to the dollar, as the RBI’s efforts to boost the currency is having little effect in a face of a strengthening dollar.
The Sensex closed at 18733.04, down 449.22 points over its previous close and the Nifty closed at 5542.25, down 143.15 points over the previous close.
A weak dollar spells trouble for importers as well as companies with huge foreign foreign debt on their books.
“The market is concerned about the fact that the Fed is clearly shifting towards a more aggressive monetary policy on one side,” said Patrick Legland of Societe Generale in an interview to CNBC-TV18.
“We are just at the very beginning of money being pulled out from EMs and possibly India. If the investors do not see reforms being able to restructure the economy there is a risk of further downside on the rupee,” he said.
With the rupee failing to respond to the recent RBI moves, market players are worried that the central bank and government may come out with more drastic measures to protect the rupee. And that could spell more bad news for the stock market and the economy.
In the last couple of months, FIIs have pulled out nearly Rs 17,000 crore from the stock market and around Rs 44,000 crore from the debt market. Also, many brokerages and rating agencies have trimmed their GDP growth forecast for the current fiscal, with some even expecting it to fall below 5 percent.
Morgan Stanley chief economist Chetan Ahya said the pressure on the rupee would continue due to high consumer inflation, wide current account deficit and a strong US dollar.
“We don't think CPI inflation will come down to 7 percent soon in the next six months and at the same time we don't expect the CAD to go down to 2.5 percent,” he said in an interview to CNBC-TV18 today.
BHEL, BPCL, OIL India, Yes Bank, Asian Paints, JP Power, and ING Vysya Bank were among the prominent losers, shedding between 7-14 percent.
Tata Power shares crashed 15 percent after reporting a loss of Rs 115 crore in June quarter as against profit of Rs 146 crore in a year ago period on higher interest payment and forex loss.
Shares of Financial Technologies, the promoter of National Spot Exchange, and group company MCX, continued to nosedive. FT founder Jignesh Shah has said that all outstanding trades on the NSEL will be settled over the next five months.
Financial Technologies fell around 20 percent and trading in MCX was frozen at the lower end of the 10 percent intra-day circuit filter after there were no buyers.
Banking, metal, realty and oil & gas shares were the worst performers, while shares from the IT and auto sectors fared better in comparison, falling to a lesser extent.