Sensex snaps 2-day gains; rupee drops
December 28 2012 12:00 AM

Indian stocks fell for the first time in three days amid expiry of the futures contracts, led by industrials and consumer companies.
The BSE India Sensitive Index, or Sensex, lost 0.5% to 19,323.80 at the close in Mumbai, after changing directions at least 15 times. Volumes on the 30-stock index exceeded the 30-day average by 21%.
“The market volatility was typical of an expiry day,” Manish Sonthalia, who manages $255mn in equities at Motilal Oswal Asset Management Co in Mumbai, said by telephone yesterday. “The medium-term direction remains positive and will be determined by how the US addresses the fiscal cliff.”
Overseas funds were net buyers of domestic stocks for a 29th day on Wednesday, the longest stretch of purchases since a record 41-day streak through October 27, 2010. They have bought a net $24.2bn of local shares this year, the highest among 10 Asian markets tracked by Bloomberg, excluding China.
The rupee gave up its early gains and dropped against the dollar as oil importers bought the greenback and as local shares ended lower.
The dollar was at Rs54.93 late yesterday, compared with Rs54.84 in late Asian trade on Wednesday.
Developments over US budget negotiations remain the near-term trigger for the rupee and most other currencies.
“It seems unlikely that any legislation to address the main fiscal cliff policies will be passed before the end of the year,” a recent note by Nomura said.
“It may take the imminent threat of a breach of the debt limit in February, or March at the latest, to force an agreement,” but “the longer uncertainty persists, the greater the negative impact on the [US] economy,” Nomura said.
Currency market volume has been thin this week as most traders are away due to Christmas.

Last updated:

There are no comments.

LEAVE A COMMENT Your email address will not be published. Required fields are marked*