Continuing depreciation of rupee has placed those investors who have started looking at the equity markets as a ‘retreat’ for productive investments to offset the escalation in living costs in a tight spot.
The high currency volatility, with rupee once again been pushed below the psychological Rs. 60 against a dollar, has dragged down the stock market. On Wednesday itself, the stock market indexes like Sensex and Nifty slumped over 286.06 points and 86.65 points, respectively, both on weak rupee.
Because of the unexpected steep dip in the market during the last few months with only slight upward curves in between, those who have purchased stocks from the days prior to the beginning of the recent fall in rupee are feeling the pinch.
“The situation has made them to hold those stocks, the values of which have come down substantially, for more time expecting an upward trend.
In the case of fresh investments, many are now opting for wait and watch policy due to the present situation of the market,” N. Kumar, branch manager of Sharekhan Limited, a stock broking house, told The Hindu.
For the short-term investors, holding on to the stocks for uncertain periods are of course a burden considering that they opted for equity market over the bank deposits mostly because of the expectations to get good returns in quick time. “Bank interests have been low in the recent times and hence, invested in the stocks after observing and studying the market,” a few investors said.
S. Dhananjayan, a market analyst, said that unless some constructive monetary steps were initiated, the investor confidence in stock markets could not be regained. Mr. Kumar was of the opinion that investors need not have to worry too much as RBI would come out with monetary policies to build investor confidence in case Nifty comes down to 5,500 points