Geopolitical tensions in the Middle East affected Indian markets so much on Thursday that Sensex tanked over 650 points, its worst fall in almost three months, and the rupee fell 34 paise against US dollar while gold sparkled on safe-haven appeal. A bout of risk-aversion on Saudi Arabia launching strikes against Yemen rebels triggered a global sell-off. Oil prices rose by a hefty
5 per cent on supply concerns. This had a rub-off effect on Indian stocks and rupee, said analysts. In the local share market, investors were also seen squaring up their positions on the last day of March month expiry in the derivatives segment, exacerbating selling pressure, they added. The BSE 30-share Sensex remained in the red through out the session as selling pressure gathered momentum in the last one hour. Finally, it ended 654.25 points, or 2.33 per cent down, at 27,457.58, its weakest closing since January 14.
The index has now lost 1,278.80 points in seven straight sessions. The index’s drop today was its steepest since 854.85-point fall on January 6. The 50-share NSE Nifty also slipped below the 8,400-level by plunging 2.21 per cent, or 188.65 points, to close at 8,342.15. Selling pressure was broad-based as IT, banking, metal and healthcare stocks were amongst the worst hit. In tandem with stock markets, the rupee too continued its yesterday’s weakness and depreciated by another 34 paise to close at 62.67 against the dollar at the forex market. Capital outflow worries amid heavy demand for the US currency from importers also weighed on the sentiment.
Other Asian markets, Hong Kong’s Hang Seng closed 0.13 per cent, while Japan’s Nikkei plunged 1.39 per cent. Gold soared as its safe-haven appeal rose over Middle-East unrest. The commodity closed at Rs 26,950 per 10 gm in Delhi’s bullion market after the precious metal climbed above $1,200 an ounce to trade at $1,208.60. In Mumbai, standard gold (99.5 purity) shot up by Rs390 to end at Rs26,690 per 10 grams from overnight closing level of Rs26,300.
Geo-political tension is driving up precious metals prices, along with speculation that the Federal Reserve will delay raising interest rates. Meanwhile. tracking steep losses in local stocks, the Indian rupee slipped 34 paise -- its worst drop in two weeks -- to close at 62.67 against the US dollar amid month-end demand for the American currency.
Crude prices jumped on reports that Saudi Arabian air strikes in Yemen raised concerns of supply disruptions, leading to higher dollar demand from importers, including oil firms. On the New York Mercantile Exchange, light, sweet crude futures for delivery in May climbed $1.93, or 3.9 per cent, to $51.12 a barrel in the Globex electronic session.
The yen strengthened against its major rivals, hitting a one-month high against the dollar in Asian trade Thursday, with investors buying the Japanese currency after overnight US and Eurozone stock market weakness spread into Asia. The Indian rupee resumed lower at 62.55 per dollar as against the last closing level of 62.33 per dollar at the Interbank Foreign Exchange (Forex) market today. It dropped further to 62.78 before concluding at 62.67, showing a loss of 34 paise or 0.55 per cent from last close.
The domestic currency touched a intraday high of 62.5350. The rupee fell for the second straight session on Thursday.The Indian stock benchmark Sensex tumbled by 654.25 points or 2.33 per cent to close at 27,457.58 on rising geopolitical tension and capital outflow worries. “losses in shares amid speculation that foreign portfolio investors may be exiting markets also weighed on the currency. Traders settling futures contract ahead of expiry is pushed the currency pair higher,” said Suresh Nair, Director, Admisi Forex India.
Pramit Brahmbhatt, Veracity Group, CEO said: “The tradingrange for the Spot USD/INR pair is expected to be within 62.20 to 63.20.” Meanwhile, the forward premia declined further on sustained receipts by exporters.The benchmark six-month premium payable in August moved down further to 215-217 paise from 221-1/2-223-1/2 paise yesterday. Forward contracts maturing in February 2016 also dropped further to 443-445 paise from 453-1/2-455-1/2 paise previously.