Sensex down 300 pts, Nifty below 25,950: Rupee at new record low among key factors behind market decline

Stock market today: Sensex, Nifty see profit booking in trade on December 3. 

The equity benchmarks fell for the fourth straight session on Wednesday as sustained foreign fund outflows and a record-low rupee weighed on investor sentiment.

At around, 10:20 a.m. the Sensex declined 332.16 points or 0.39 percent to 84,806.11, while the broader Nifty slipped to 25,912.70, down 119.50 points or 0.46 percent.

Max Healthcare Institute, Shriram Finance and Coal India were among the major laggards in the Nifty50 pack, declining up to 3 percent, while Wipro and Tata Consultancy Services were the major gainers, rising up to 2 percent. Market breadth was also negative as about 1145 shares advanced, 2113 shares declined and 160 shares unchanged.

Key factors behind market decline

1) Rupee hits all-time low: The rupee opened at a fresh low of 89.96 against the US dollar and slipped to 90.1325 in early trade on December 3, tracking persistent equity outflows and uncertainty around the India-US trade deal. The currency had ended the previous session at 89.87.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, noted "Rupee slipped below the 90-mark for the first time, pressured by the absence of a confirmed India–US trade deal and repeated delays in timelines. Markets now want concrete numbers rather than broad assurances, leading to accelerated selling in the rupee over the past few weeks."

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the rupee’s continued depreciation and concerns of further weakness "have contributed to the slow drifting down of the market", prompting FIIs to stay on the sell side.

Rupee falls to a new low, crosses 90-mark against US dollar

2) Persistent FII selling: Foreign Institutional Investors sold equities worth Rs 3,642.30 crore on Tuesday, marking the fourth consecutive session of outflows.

"FII outflows, a record-weak rupee and pressure on banking stocks keep sentiment fragile," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

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3) Banking stocks decline: Banking shares saw broad-based selling across private and PSU lenders, as well as financial services stocks.

PSU bank shares fell after the government clarified it has no plans to raise the foreign direct investment limit in state-owned lenders from 20 percent to 49 percent. The Nifty PSU Bank index was down nearly 2 percent at 10.10 am. Private sector banks also traded lower, with Bandhan Bank and Kotak Mahindra Bank slipping up to 1 percent. Bank Nifty declined 0.4 percent due to index rejig.

"Nifty’s correction of about 300 points from the record high can be seen as a technically driven move, influenced by the Bank Nifty rejig and concerns over the rupee’s depreciation," Vijayakumar said. He added that the reduction in the weight of HDFC Bank and ICICI Bank is a technical adjustment unrelated to fundamentals.

Technical view

Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty’s slide extended towards 26,060 on Tuesday with “no signs of regrouping by bulls”.

He said the 25,860–25,700 zone now stands exposed, with fears of a decline towards 25,300. On the upside, resistance is expected at 26,087–26,111, while a move above 26,200 would be needed to signal a recovery.

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