Rupee logs worst day in nearly 19 months
At the interbank forex market, the local unit opened at 72.43 against the greenback, then lost further ground to touch an intra-day low of 73.51
Mumbai: The Indian rupee on Friday posted its biggest single-day fall in nearly 19 months, tumbling 104 paise to close at 73.47 against the US dollar as a rout in global bond markets weighed on investor sentiments. Besides, rising geopolitical tensions between the US and Syria also led to weaker appetite among investors in domestic forex markets, analysts said.
At the interbank forex market, the local unit opened at 72.43 against the greenback, then lost further ground to touch an intra-day low of 73.51. It finally ended at 73.47 against the American currency, registering a massive fall of 104 paise over its previous close – the biggest single-day fall for the rupee since August 5, 2019.
On Thursday, the rupee had settled at 72.43 against the American currency. On a weekly basis, the rupee has tumbled 82 paise against the US dollar. The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.43 per cent to 90.52.
“US bond yields have surged on worries about inflationary pressures due to unprecedented liquidity infusion in the system and a series of economic data, which is indicating that the economy is on the path to normalcy. This has in-turn led to a rebound in the dollar index and prompted a selloff in risk assets,” Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking, said.
However, it is too early to term this as a weakening bias for the domestic currency, and unless it sustains levels below 73.50 comfortably, the scope for appreciation remains, she added.
Jateen Trivedi, Senior Research Analyst at LKP Securities, said, “Rupee traded very weak with a gap down opening near 73.00 of around more than 0.50p mainly on the back of an uptick in dollar index which touched 90.50 along with the steep rise in US Treasury Yield. FED Chair Powell’s statement of confidence on higher bond gave the dollar the push. Crude prices also trade higher which keeps the pressure on the rupee. The current spike can keep the rupee below 72.75 going ahead.” Rupee fell sharply against the US dollar following surge in US 10-year yields and rise in geopolitical tension between US and Syria, said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The United States launched airstrikes in Syria on Thursday, targeting facilities near the Iraqi border used by Iranian-backed militia groups. In the Asian session, the dollar has rebounded sharply against its major crosses and escalation of the same could trigger further volatility for the currency, Somaiyaa noted.
Meanwhile, Brent crude futures, the global oil benchmark, fell 0.99 per cent to $66.22 per barrel. On the domestic equity market front, the BSE Sensex ended 1,939.32 points or 3.80 per cent lower at 49,099.99, while the broader NSE Nifty slumped 568.20 points or 3.76 per cent to 14,529.15.
Market crash wipes off Rs 5.3 lakh cr of investor wealth
Investor wealth slumped by a whopping Rs 5.3 lakh crore on Friday as the benchmark BSE Sensex crashed more than 1,900 points to post its biggest single-day fall in nearly ten months. At the close of trade, the total market capitalisation of BSE-listed companies eroded by Rs 5,37,375.94 crore to Rs 2,00,81,095.73 crore.
The total market capitalisation of these companies stood at Rs 2,06,18,471.67 crore on February 25. On Friday, the 30-share BSE Sensex settled 1,939.32 points or 3.80 per cent lower at 49,099.99 — its worst one-day fall since May 4 last year.
Similarly, the broader NSE Nifty plunged 568.20 points or 3.76 per cent to close the session at 14,529.15. It was the biggest single-day drop since March 23 last year. “Going ahead the market may continue with its consolidation given weak global cues. Investors would closely track bond yields, geopolitical tensions and inflation data for further market direction and would monitor developments around new US stimulus announcement,” Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd said.
He noted that even high valuations does not provide much comfort and thus correction was long overdue. “Investors should take this opportunity to buy on dips while traders should trade cautiously with stock-specific action and book profits in regular intervals,” he said.
Sector wise, banking index suffered the maximum loss with a decline of over 4.8 per cent. Financial and telecom indices too fell sharply by 4.9 per cent and 3.85 per cent, respectively.
