Weak global cues amid worries that the conflict in Ukraine could worsen, caused havoc in the stock market on Wednesday while ontinued strength in US economy affected the rupee sentiment as result it plunged 65 paise in its biggest single-day drop in over six months to end at 61.49 against the greenback.
logging the first drop in three days, Sensex today slumped 243 points led by losses in ITC, ICICI Bank and Tata Motors shares in line with weak global cues. Besides profit-booking in metal, banking, realty and oil & gas shares, the rupee slumping to near five-month lows of 61.41 (intra-day) against dollar also soured sentiment.
In oil trade, the benchmark West Texas Intermediate (WTI) for September delivery rose 10 cents to $97.48 while Brent crude gained 25 cents to $104.86 in afternoon trades. The BSE Sensex index, which rose over 427 points in previous two sessions, started the day on a negative note and continued to decline as selling in blue-chips weighed. It settled 242.74 points down, or 0.94 per cent, at 25,665.27.
Intra-day, the index touched a high of 25,901.68 and a low of 25,621.85. Overall, 23 constituents of 30-share Sensex fell while seven like RIl, BHEl, Hero Moto and Hindustan Unilever rose. The 50-share NSE index Nifty dipped below the 7,700-mark by falling 74.50 points, or 0.96 per cent, to end at 7,672.05 after moving between 7,740.95 and 7,658.95 during the day.
Asian stocks dropped following a sharp fall on Wall Street over fears of a market correction and concerns the conflict in Ukraine could escalate. European indices were down 1-1.4 per cent in afternoon. Banking counters, including SBI, ICICI Bank, Axis Bank, HDFC Bank, retreated largely on profit-booking at prevailing levels and worries that a sell-off in government bonds would hit portfolio value of their debt holdings.
As regards rupee, it plunged 65 paise in its biggest single-day drop in over six months to end at 61.49 against the greenback. Continued strength in US economy lifted the American dollar after data on Tuesday showed US services sector activity hit an 8-1/2 year high last month and June factory orders surged. This affected the rupee sentiment, say dealers.
Besides, a global sell-off in equities hit Indian stocks dragging the rupee to over five-month lows, they said. Dollar demand from importers on fears of rise in global oil prices amid worries that the Ukraine crisis could escalate, also impacted the rupee, they added. At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced weak at 61.06 and immediately touched a high of 61.03.
As reports filtered in that Russia is building up troops on Ukraine border despite sanctions by US and Europe, emerging currencies and stocks were hit. Importers and some banks bought dollars buying on hopes of further rise in this safe haven unit while forex dealers rushed to cover their short dollar positions, leading to deep losses for the rupee.
The rupee continued its down-slide and touched a low of 61.53, before concluding at 61.49 -- level not seen since March 5, 2014 when it had settled at 61.75. For the day, it logged a fall of 65 paise or 1.07 per cent -- the biggest single-day drop since the 73 paise plunge on January 24, 2014. FIIs had bought shares worth Rs 52.85 crore yesterday. The dollar index was last trading up by 0.19 per cent against a basket of six major global rivals.
Pramit Brahmbhatt, CEO, Veracity Group, said: “Rupee depreciated for the first time in this week and broke all the immediate supports. Corporate dollar demand was seen in the market which forced the rupee to fall near 5-month lows. Fall in local equities also dented the rupee sentiment.”