While the rupee touched an all-time low of 56.22 against the U.S. dollar, the equities closed low as the Bombay Stock Exchange (BSE) 30-share sensitive index, Sensex, closed below the psychological 16000-mark on Wednesday. The rupee fell to a low of 56.2250 intra-day, registering a fall for the sixth consecutive trading day. It closed at 55.9950 / 56.0050.
Continuation of uncertainty in the eurozone economic crisis and global risk aversion dragged rupee further down as investors preferred a safe dollar compared to any other assets. The rupee lost more than 13 per cent since its peak in February. A sharp weakening of the rupee unnerved markets and the fall encompassed equity markets also.
The BSE Sensex lost 78.31 points to close at 15948.10 after touching an intra-day low of 15847.03. Except healthcare and IT, all other BSE sectoral indices ended in the red led by consumer durables (2.08 per cent) followed by capital goods (0.89 per cent), realty (0.86 per cent), metal (0.72 per cent), automobiles (0.68 per cent) and power (0.60 per cent).
On the National Stock Exchange, a broader 50-share Nifty closed at 4835.65, down by 24.85 points. Foreign institutional investors were net sellers of around Rs. 1,100 crore in April.
“The current move of petrol price hike is going to give some support to the rupee as it reduces concerns about fiscal deficit,” said Varun Goel, Head, portfolio management services of Karvy Stock Broking. However, he said that the overhang of the European situation remained.
“We believe that the true value of the rupee lies around 53 levels and any major global risk-off event might see rupee turning volatile in the short-term,” Mr. Goel added.
“Stock markets were volatile during the day and were under constant pressure. Market players were also waiting for the outcome of the informal EU summit later in the day,” said Dipen Shah, Head of Fundamental Research, Kotak Securities. Continuing concerns about the outcome and the potential impact on Greece, weighed on sentiment.
“Markets are hoping for reforms initiatives to start soon as the budget session has ended,” said Mr. Shah, adding, “Initiation of the reforms is a pre-requisite for the markets to stabilise and move up from the current levels, according to us.”
