After gaining strength in the last three sessions, the rupee on Tuesday turned shaky once again and fell by 43 paise to end at 67.86 against the dollar due to heavy month-end dollar demand from importers and capital outflows.
Dealers said a sharp sell-off in domestic stock market also largely led to weaker rupee sentiment. However, suspected currency market intervention by the Reserve Bank of India stemmed the rupee’s fall. The 30-share Sensex ended at 34,949.24, falling over 216 points after investors queued up to book profits in banking counters, among others, amid weak global cues and foreign fund outflows. The index touched a low of 34,922.18 in intra-day. The Sensex had risen 820.57 points in the previous three sessions.
BSE Sensex opened strongly at 35,213.14 and advanced to hit a high of 35,234.14 on intense buying by domestic institutional investors and retail participants. NSE Nifty finished 55.35 points, or 0.52 per cent, lower at 10,633.30 after hitting the day’s high of 10,717.25 and a low of 10,616.10.
The foreign exchange market sentiment turned bearish after tracking losses in most Asian and emerging market currencies and political developments in Italy. Deepening political crisis in Italy, the euro zone’s third biggest economy, provoked selling of Italian assets and the euro that was reminiscent of the euro zone debt crisis of 2010-2012.
The Indian currency was given some reprieve after plunging to a fresh 18-month low of 68.42 last week, staging an impressive recovery fuelled by a sudden crash in global crude prices. It had appreciated by a whopping 1.47 per cent in the last three trading sessions.
Similarly, fresh bouts of selling was seen on bond market with the benchmark 10-year yield rising to 7.76 per cent from 7.74 per cent. While the decline in crude prices hasn’t helped the rupee, the forex market was unnerved by a wave of political uncertainty in Italy and Spain, a forex dealer said. “Strong demand for the greenback from oil companies and gold traders to meet their import demand also weighed on trade.”
Meanwhile, crude prices rebounded, paring some losses triggered by expectations that Saudi Arabia and Russia could pump more crude to compensate for a potential shortfall in supply. Brent crude futures was trading higher at $ 76.03 a barrel, in early Asian trade.
“Market turned to profit-booking on weak global cues and PSU banks under-performed after recent rally. Consolidation in market may continue due to fear of downgrade in FY19 numbers and worsening domestic macros. Additionally, higher retail fuel price is adding inflationary pressures. Investors are expecting volatility ahead of F&O expiry which may direct them to stay cautious,” said Vinod Nair, Head of Research, Geojit Financial Services.
ICICI Bank (2.87 per cent), SBI (2.70 per cent), IndusInd Bank (2.08 per cent), Yes Bank (1.78 per cent), Kotak Bank (1.63 per cent), Asian Paint (1.49 per cent), HDFC Ltd (1.10 per cent), NTPC (1.02 per cent), Coal India (0.98 per cent) and HUL (0.62 per cent) declined.