Weak rupee makes Sensex lose 440 points

Mumbai: The equity markets extended their fall for the sixth straight session as further weakness in rupee against the US dollar triggered another round of heavy selling by FPIs.

According to market participants, it’s a double whammy for overseas investors in the equity markets as a slide in share prices along with a depreciating rupee have taken a severe toll on their portfolio. 

While the 30-share BSE Sensex has lost 3.83 per cent over the last six trading sessions, the BSE Dollex 30, a dollar-linked version of the Sensex has slumped 6.28 per cent during the same period suggesting that overseas investors have incurred higher losses on account of the rupee depreciation.  

The rupee slipped further to a fresh six-month low of 65.76 level mark against the US dollar and ended the day at 65.72, down 0.40 per cent from its Tuesday’s close of 65.45. 

Meanwhile, both the Sensex and Nifty fell over 2 per cent in the intra-day trade from their days high. The Nifty slumped 205.6 points from its days high of 9,920 to hit a low of 9,714.40 before ending the day at 9,735.75, down 135.75 points or 1.38 per cent. Similarly, the Sensex plunged 696.66 points in the intra-day trade before closing the session at 31,159.81, down 439.95 points or 1.39 per cent from its previous close.   

According to the provisional data released by the stock exchanges, FPIs sold equities worth Rs 856 crore on Wednesday after offloading shares worth Rs 1,900 crore in the previous day. 

Analysts at Nomura Financial Services believe that the local currency would remain under pressure in the near term while it is expected to gain strength over the medium term. 

“The current combination of external risks from developed market policy normalisation and local negatives from fiscal and current account deficits and slower growth keep us on the side lines with respect to Indian rupee. However, as the market continues to price in a December 2017 US Fed hike (now around 70 per cent probability from 53 per cent before the September 20, FOMC) and the market largely prices in a possible fiscal deterioration, we believe the Indian rupee appreciation will re-emerge,” Nomura said. 

Vinod Nair, head of research at Geojit Financial Services said that reports about a slowdown in collection of GST also dented market sentiments as it has given an impression that the GST led disruption is likely to extend further, which is expected to hurt the earnings growth of corporates for the next few quarters. 

The selling was broad-based on Wednesday with 2010 stocks traded on the BSE closing lower as against just 539 stocks that advanced.