The rupee on Friday fell by 30 paise to close at 69.80 against the US currency, hit by strengthening dollar and rising crude oil prices. With investors rushing to the exit door, the BSE Sensex also followed suit and fell 289 points amid weak global cues.
The rupee had settled at 69.50 against the US dollar Thursday. “The rupee weakened for a second day against US dollar, taking cues from the other Asian currencies,” said V K Sharma, head-PCG & Capital Market Strategy, HDFC Securities. Brent crude futures rose over 4 per cent over the past two days. The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.10 per cent to 97.11.
Meanwhile, after a subdued opening, the benchmark faced sudden selling pressure in the last half-hour of trade to close at 39,452.07, down by 289.29 points, or 0.73 per cent. The NSE Nifty tumbled 90.75 points, or 0.76 per cent, to finish at 11,823.30.
On the global front, investors scurried to safe-haven assets after China’s industrial output growth in May sank to more than 17-year lows, highlighting risks to world growth. Flaring up of geopolitical tensions in the Middle East following attacks on two oil tankers and continued uncertainty over US-China trade talks also weighed on risk sentiment.
Jayant Manglik, president, Religare Broking, said, “Markets traded volatile and ended lower, tracking weak global cues. The sentiment dampened on the news of geopolitical tension, after the attack on two oil tankers in Gulf of Oman. After the initial fall, Nifty hovered in a range for most part of the session but sharp fall in the last half an hour pushed the index to 11,800. Mostly sectoral indices traded in line with the benchmark index and closed lower.”
“The ripple effect from a weak global market while premium valuation and slow economy is hurting the market. Continuous exchange of words between US and Tehran regarding the oil tanker attack, progress of US-China trade war, Fed policy outcome on June 19 and progress of monsoon will be closely watched by the investors. The market is cautious today awaiting these important events while highly leveraged companies are being mostly impacted,” said Vinod Nair, head of research, Geojit Financial Services.
Sectorally, BSE realty, telecom, bankex, auto, finance and FMCG indices ended up to 2.11 per cent lower. Capital goods gained 0.21 per cent. The broader BSE midcap and smallcap indices followed the benchmarks, shedding up to 1.02 per cent. “Markets were in narrow range as stable inflation, decent IIP growth print and falling crude prices supported markets even as fresh concerns related to the ADAG group and Dewan Housing led to selling pressure in banks. Also, the NBFC sector stocks were under pressure on fears of default and more regulatory measures from the RBI,” said Sanjeev Zarbade, vice president – PCG Research, Kotak Securities Ltd.
In Asia, while Tokyo stocks ended in the green, bourses in Shanghai, Hong Kong and Seoul closed lower. Exchanges in Europe were also trading in the red in early deals.