The rupee closed at 61.8350/8450 per dollar yesterday, after touching 61.93 in intra-day trade.
Reuters/Mumbai
Indian shares fell for a second consecutive session yesterday, as companies seen most exposed to the global economy such as Hindalco Industries and Sesa Sterlite declined tracking a downturn in global markets.
Markets across the world remained weak on worries about global economic growth and the end of US stimulus.
Adding to the concerns, overseas investors sold a net $113mn on Tuesday, their third consecutive session of sales, raising fears they were turning more cautious about emerging markets after purchasing Indian shares through the year.
However, following exit polls after Maharashtra and Haryana elections, traders expect the ruling Bharatiya Janata Party (BJP) to form governments in the two states, giving a further push to Prime Minister Narendra Modi’s reforms agenda.
The BJP is set to emerge as the largest party in the two state legislatures where it has traditionally been weak, exit polls showed.
“Today, the global cues were so bad and we have been seeing one-sided selling from overseas investors. However, we are expecting positive outcome from the two state elections, which will bring back some confidence among investors,” said Suresh Parmar, head, institutional investors at KJMC Capital Markets.
The benchmark BSE index closed 1.33% lower at 25,999.34, while the broader NSE index fell 1.47% to 7,748.20.
Markets were closed on Wednesday for state elections.
Metals and mining companies led the losses. Hindalco closed down 5.7% and Tata Steel ended 3.7% down on weak international prices. Sesa Sterlite closed 4.2% lower.
London copper hit a six-month low while iron ore futures in China and Singapore extended losses with mounting concerns over global growth.
Oil and gas explorers such as Oil and Natural Gas Corp and Reliance Industries fell after international crude prices hit a four-year low.
Reliance fell 3.2%, while ONGC closed down 1.3%.
Sell-off was also seen in heavyweights as investors preferred to take profits. Larsen & Toubro ended 1.1% lower and Bharat Heavy Electricals closed down 2.8%.
However, DLF rebounded and closed up 5.2%, on value-buying after slumping 28.6% to a record low on Tuesday after the securities regulator banned it from the capital markets for three years over violations related to disclosures for its 2007 listing.
Meanwhile the rupee posted its biggest single-day loss in a month, hurt by data showing a widening trade deficit and a slump in local shares as part of a global market sell-off, but intervention from the central bank prevented steeper losses.
The local unit fell nearly 0.72% yesterday and was the worst performer among Asian currencies as trading resumed after a holiday on Wednesday for state elections.
Worries that foreign investors would reduce their exposure are starting to weigh on sentiment, after strong buying in shares and debt had helped support the rupee so far this year.
The central bank had been active in the market for most of the day, but stepped up intervention as the rupee threatened to breach the 62-mark, traders said.
“The rupee is playing catch-up with other Asian currencies as it was outperforming them some days ago,” said Anindya Banerjee, currency analyst at Kotak Securities in Mumbai.
“When they have catching up to do, the rupee and stocks traditionally overdo it,” he added, pointing out that the rupee and shares would continue to be under pressure in the coming sessions.
The partially convertible rupee closed at 61.8350/8450 per dollar compared with 61.41/42 on Tuesday, after touching 61.93 in intra-day trade. The fall was the biggest since September 15.
The rupee was hurt after data on Tuesday showed India’s trade deficit widened to $14.25bn in September from $10.84bn in August due to a jump in oil and gold imports.
