Rupee again depreciated against US dollar in Monday’s session and closed after sliding 110 paise, once again below the 64 per dollar mark. The currency depreciation again has raised eye brows over how competent the Government has been at putting at end to this free fall of currency.
The currency fell by 1.74 per cent to 64.30 per dollar, losing all the gains of Friday’s session amid heavy month-end dollar demand from importers and the growing pressure from the continuous outflow of capital.
On Saturday, Finance Minister held a meeting with foreign institution and banks and tried to reassure them that the Government had the economic situation completely under control. FM further added that the Government is working on measures to attract more deposits and would work on clearing large projects in the shortest possible time. Despite all the promises, the fact remain that rupee has been falling.
The Government till now has announced multiple steps but none have been able to put a stop on the currency weakness and again ultimately Reserve Bank again had to intervene. As a last desperate measure, the RBI stepped in through State- run banks towards the end of the seesion and it was because of this, rupee recovered a little from the day low of 64.75 per dollar.
On the other hand, right after FM’s meeting with foreign institutions, the global rating agency, Fitch expressed concerns over the country’s fiscal numbers and warned of a downgrade if the country is unable to meet the fiscal deficit target. Also it seems the assurance given by the Finance Minister had no impact on FIIs as they again continued selling their stake in the equity markets. As per provisional data by the NSE, FIIs sold stocks worth Rs607.43 crore on Monday.
The benchmark S&P Sensex erased early gains and closed up 39 points, a gain of 0.21 per cent. Foreign institutional investors withdrew a net Rs148.57 crore of stocks on Friday, as per provisional data with the stock exchanges.
In the wake of the rupee’s depreciation, experts expressed concerned over the Government’s promise of reducing the current account deficit, If the current depreciation prevails along with the continuous outflow of funds, it would become very difficult to reduce country’s CAD.
Stock markets close in green
Indian stock markets continued to close in positive on the third consecutive session on Monday, Sensex rose by 38.69 points and closed at 18,558.13 while Nifty closed flattish after rising nearly 5 point at 5,476.50.
Amid a choppy session, Indian markets got support for the fresh buying in power, capital goods and healthcare shares. While FIIs continued with their selling, domestic investors were seen again buying beaten down shares. Out of the 30 shares comprising the Sensex, 19 stocks closed with gains and on Nifty, out of the 50 shares, 30 managed to close in positive.
As far as sector indices are concerned, power, capital goods and healthcare indices rose by 1.56 per cent, 1.25 per cent and 1.12 per cent respectively. Banking index continued to trade with pressure and finally closed after falling over 1 per cent.
Experts said that the market had completely ignored rupee weakness as investors have again started to show interest in all the heavily correct shares. Fresh buying was seen in some of the sectors which were trading in oversold territory and most of the shares had fallen to attractive values.
Among star performers, Sesa Goa spurted by 9.39 per cent to Rs167.25 ahead of its inclusion in Sensex on Tuesday, while l&T gained 0.79 per cent to Rs744 as reports said foreign brokerage Barclays upgraded the stock to “overweight”.