Strong dollar buying initiated by domestic banks, oil manufacturing companies (OMS) and other importers pushed rupee down by 73 paise to its two-month low of Rs 62.66 per dollar. Weak currency coupled with profit booking before Reserve Bank of India’s monetary policy review dented the Indian stock markets as Sensex slipped from its record closing to 21,133.56 after losing 240.1 points during Friday’s session.
While most of the stocks traded under immense pressure from weak currency, Ranbaxy laboratories was the biggest loser on BSE as it crashed 19.54 per cent on the news of import ban by US Food and Drug Administration on company’s fourth plant based in Toansa, Punjab.
As per forex dealers, domestic currency fell to its lowest since November 22, 2013 due to the month end dollar demand by OMCs and fresh dollar buying by banks. “The month-end dollar demand, downbeat data from China and Fed’s tapering plan are all seen putting pressure on the rupee,” said Abhishek Goenka, CEO of India Forex Advisors. This is the biggest one-day fall in rupee since November 11, 2013 when it had tumbled by 77 paise. Foreign institutional investors injected $75.81 million yesterday, as per Sebi data. The dollar index was down by 0.30 per cent against a basket of six major global rivals.
On the other hand, the benchmark Sensex snapped its four days rally and fell by 240.10 points from record high to close to its one-week low of 21,133.5 after RBI Governor Raghuram Rajan’s comments on inflation dashed hopes of a rate cut in next week’s monetary policy review. As per market analysts, stock markets also came under selling pressure as foreign institutional investors (FII) also went for profit booking due to steep depreciation in rupee. Experts further added that weak global cues due to poor Chinese manufacturing data put pressure on markets.
The NSE 50-share Nifty dropped by 78.90 points to finish at 6,266.75. Clearing the central bank’s view on the economic condition, Rajan said at an event on Thursday evening, “Inflation is a destructive disease. Industrialists complain about high interest rate but we don’t have a choice but to keep interest at high rate because inflation is high at 8 per cent.”
An RBI expert panel has also recommended that the central bank should start consumer price inflation target to determine the monetary policy. The Reserve Bank of India’s (RBI) monetary policy review is scheduled for January 28. All the 12 sectoral indices on BSE ended the day with losses led by real estate index which fell by 3.19 per cent. Other major losers included capital goods, consumer durables, bank and automobile indices which slid by 2.68 per cent, 2.65 per cent, 1.88 per cent and 1.57 per cent respectively. The market breadth remained negative as 1,759 stocks ended in red, while 890 finished in green.