Hit by capital outflows, sustained stock market fall and worries over a deepening slowdown, the rupee on Thursday hit a fresh record intra-day low of 75.30 per dollar and closed at an all-time low of 75.12, a fall of 86 paise during the day.
Analysts said the rupee, which fell below the 75 level for the first time, is likely to remain under pressure and fall further to the 77 level in the coming days in the wake of capital outflows. Foreign investors have pulled out over Rs 45,000 crore from equity markets in March so far, putting severe pressure on the rupee.
The rupee has fallen 3.2 per cent from 72.74 on March 2.
Sugandha Sachdeva, vice president, Religare Broking, said, “The outlook for the rupee remains quite weak as it has breached the crucial support of 74.50 mark to test new record lows below 75 mark. The considerable amount of outflows from Indian equity and debt markets over the past few sessions suggests that investors are exiting all asset classes and chasing dollar due to the coronavirus scare, which has soared to highs seen since March 2017.”
According to analysts, a weak rupee is likely to benefit exporters and IT companies as they get more Indian rupees on conversion. “It’s bad news for travellers and students studying abroad,” said an analyst.
On the other hand, the sell-off in the stock markets continued with the Sensex plunging another 581.28 points to 28,288.23 and the Nifty Index falling 205.35 points at 8,263.45.
The BSE metal, capital goods, auto, energy and industrials indices cracked up to 7.17 per cent, while telecom was the only gainer. The broader midcap and smallcap indices plunged up to 4.53 per cent.
Narendra Solanki, head- equity research (fundamental), Anand Rathi Shares & Stock Brokers, said, “Indian benchmark indices opened in negative following subdued trades in its Asian peer markets and US markets. The global markets continued to trade with negative bias and high volatility amid fears over the economic impact of the coronavirus pandemic which continues to weigh on investor sentiments.”
During the afternoon session, the markets showed marginal pullback but it largely remained short-lived as exporters body Federation of Indian Export Organisations (FIEO) said export sector has started feeling the pinch of the outbreak of coronavirus as international buyers are asking to hold back shipments. The data on total government liabilities also raised concerned as it rose 3.2 per cent to Rs 93.89 lakh crore till December 2019. On the sectoral front, almost all the sectors, led by cyclical, commodities, IT, media and financials, traded in the red.