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| A customer counts Indian rupee notes over a tray of sugar at a wholesale market in New Delhi. The rupee fell to a 10-week low against the dollar yesterday, weighed down by weak local stocks and dollar demand from importers to settle month-end bills, but likely intervention by the central bank in late trade limited the downside |
Indian shares closed sharply lower yesterday, mainly because of sustained selling ahead of the March derivatives expiry due Thursday.
The Bombay Stock Exchange’s Sensitive Index lost 308.96 points, or 1.8%, to close at 17,052.78, after trading in a range of 17,021.85-17,337.59. The index gave up more than what it gained on Friday.
On the National Stock Exchange, the 50-stock index Nifty fell 93.95 points, or 1.8%, to finish at 5184.25.
Trading volume in the BSE’s cash segment increased to Rs36.95bn from Friday’s Rs23.38bn. Losers outnumbered gainers by more than twice at 1,945 to 920, while 122 stocks were unchanged.
Analysts say the uncertainty created by a federal budget proposal to change a tax law with retrospective effect, which could override a recent Supreme Court judgement favouring the UK’s Vodafone Group, has further added to caution and is keeping away overseas investors.
“There is uncertainty on the future, and investors’ sentiment is down after the budget,” said Jiten J Chheda, managing director at Magnum Equity Broking.
“Investors are waiting for clarity on various government policies, including the general anti-avoidance rules on taxation,” said Chheda.
All 30 Sensex shares and all 13 BSE sector indexes fell.
ICICI Bank slumped 4.3% to Rs871.85, while State Bank of India declined 2.2% to Rs2,118.30.
Software companies slipped despite the prospect of higher export earnings in rupees due to a stronger dollar. Infosys fell 1.4% to Rs2,831.45, while larger rival Tata Consultancy shed 1.8% to Rs1,163.80.
The rupee fell to a 10-week low against the dollar, weighed down by weak local stocks and dollar demand from importers to settle month-end bills, but likely intervention by the central bank in late trade limited the downside.
The dollar was at Rs51.27 late yesterday, up from Rs51.17 late on Thursday and after touching a high of Rs51.49, a level last seen January 16.
Local currency and bond markets were closed on Friday for a holiday.
The Reserve Bank of India is believed to have sold dollars in small amounts through the afternoon session, but the most significant intervention likely came when the greenback was trading around Rs51.37, four dealers told Dow Jones Newswires.
Two of the dealers said the RBI is also likely to have sold forward contracts to smoothen its intervention effort.
“The outlook for the rupee seems weak on likely foreign fund outflows and weak local stocks. We may see the dollar touching Rs52soon,” said Sudarshan Bhatt, head of currency trading at Corporation Bank.