Rupee slips below 62 vs USD, posts biggest weekly loss in five; Sensex down 210 points
Mumbai: The rupee slipped 29 paise to end below the 62 level against the dollar on Friday as rate hike fears led stocks lower, clocking its biggest weekly loss in five.
The rupee is at the lowest level since December 3 after holding above the 62 level over a six-day stretch. It lost 71 paise decline over the past five sessions. There was pressure on the rupee after the dollar strengthened overseas as US retail sales gained momentum in November and ignited expectations the Federal Reserve would taper its bond-buying programme.
The dollar index, a gauge of six major global rivals, was up 0.21 per cent. Stocks fell after government data yesterday showed retail inflation soared to a nine-month high of 11.24 per cent in November and factory output shrank 1.8 per cent in October.
At the interbank foreign exchange market, the rupee opened weak at 62.10 a dollar from the previous close of 61.83 and logged an intra-day high of 62.05. It fell to a low of 62.28 before ending at 62.12, a loss of 29 paise or 0.47 per cent.
In the past three days, it has tumbled 108 paise or 1.77 per cent.
"Poor data from India and robust report coming out from the US seem to have contributed to the weakness in the rupee today. The RBI has stated that the current elevated inflation rate is out of their comfort zone. This gives a hint that the central bank might take a hawkish stance once again," said Abhishek Goenka, CEO of India Forex Advisors.
The 30-share benchmark S&P BSE Sensex plunged 210 points. Wholesale price index inflation data is scheduled for release on Monday, ahead of the Reserve Bank's policy review on December 18. Foreign institutional investors bought a net Rs 187.81 crore of shares yesterday, according to provisional data from the stock exchanges.
"Local equities closed down by 1 per cent, taking cues from the disappointing industrial production data," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
Forward dollar premiums recovered on fresh payments from banks and corporates. The benchmark six-month forward dollar premium payable in May edged up to 246-248 paise from 245-247 paise previously and far-forward contracts maturing in November firmed up to 489-491 paise from 484-1/2 to 486-1/2 paise.
The RBI fixed the reference rate for the dollar at 62.1266 and for the euro at 85.4135. The rupee bounced back to 101.14 against the pound from the overnight close of 101.38 and recouped to 59.92 per 100 Japanese yen from 60.15. It, however, moved down to 85.31 per euro from 85.14.
Next: Sensex down 210 points on rate hike fears as inflation rises
Sensex down 210 points on rate hike fears as inflation rises
Mumbai: The benchmark Sensex fell for the fourth straight day today and dropped 210 points on expectations interest rates would be hiked after inflation continued to rise.
Rate-sensitive bank stocks suffered the most, sending the BSE S&P Bankex down 2.25 per cent, the top loser among the sectoral indices. ICICI Bank, HDFC and State Bank of India were among the shares that were a drag on the Sensex.
Eleven of the 12 sectoral indices, including power, realty and capital goods, closed lower. The 30-share S&P BSE Sensex resumed lower and continued to slide, closing at 20,715.58, a drop of 210.03 points or 1 per cent.
In four consecutive days, it has plunged 611 points from a record closing high on December 9. The Sensex was at its lowest level since December 4. With a slide of 281 points since last Friday, the index had its biggest loss in five weeks.
"While Fed taper fears led to declines in the middle of the week, strong CPI inflation data further dampened sentiments," said Dipen Shah, Head - Private Client Group Research at Kotak Securities. "We expect the RBI to increase rates by 25 bps on December 18."
The 50-share CNX Nifty on the National Stock Exchange dropped 68.65 points, or 1.1 per cent, to end at a one-week low of 6,168.40. The SX40 on the MCX Stock Exchange shed 117.37 points to 12,315.20.
Inflation as measured by the consumer price index (CPI) rose to a nine-month high of 11.24 per cent in November from a revised 10.17 in October, making it harder for the Reserve Bank to lower interest rates at its next monetary policy meeting on December 18.
HSBC and Bank of America-Merrill Lynch said in separate notes they expect the central bank to raise the key policy rate by 25 basis points. A change of 1 per cent is equal to 100 basis points. The government yesterday also said industrial production contracted 1.8 per cent in October compared with an expansion of 1.96 per cent in September and 8.4 per cent a year earlier.
Most Asian stocks ended higher in choppy trade after a report showed US retail sales in November exceeded market expectations and the US House of Representatives passed a federal budget plan on Thursday.
Key indices in Hong Kong, Japan, Singapore and Taiwan moved up while they fell in China and South Korea. European stocks markets were trading marginally higher ahead of next week's US Federal Reserve meeting.
In the domestic markets, 24 Sensex stocks fell, led by ICICI Bank (-4.12 pc), BHEL (-4.06 pc), Hero MotoCorp (-2.98 pc), Tata Power (-2.52 pc), GAIL India (-2.47 pc), HDFC (-2.42 pc), Bajaj Auto (-2.24 pc) and State Bank of India (-1.96 pc).
The gainers on the index included Tata Motors, which rose 2.68 pc, followed by Wipro 1.63 pc and Tata Steel 0.72 pc.
"Markets anticipate some hawkish stance from RBI in the form of increase in interest rates during its review meeting next week. A weak rupee also added to the negative trend," said Jignesh Chaudhary, Head of Research at Veracity Broking Services.
Among the S&P BSE sectoral indices, Bankex dropped 2.25 pc, Power 2.22 pc, Realty 2.1 pc, Capital Goods 1.86 pc, Oil & Gas 1.1 pc and Consumer Durables 0.93 pc. The market breadth remained negative as 1,575 stocks ended with losses, 883 finished with gains and 152 ruled steady. Total turnover dropped to Rs 1,750.30 crore from Rs 1,835.49 crore on Thursday.
