Talk of deferred US rate hike spooks global markets
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MUMBAI: The rupee slumped sharply on Thursday to hits its lowest level since September 2013 amidst broader weakness in emerging market currencies as increasing demand for dollar from importers and heavy selling by foreign portfolio investors (FPI) dented sentiments.
The rupee slipped below its psychological 65.50 level mark against the US dollar to end the session at 65.54 as compared to its previous days close of 65.26. The equity markets also came under fresh selling pressure following concerns about global growth prospects due to a slowdown in China.
“Seeing a drop in the dollar index on Wednesday, a lot of traders had anticipated the rupee to stage a smart bounce back on Thursday which led to a build up of short positions in he dollar. However, when the rupee started showing weakness amidst a sharp sell-off in emerging market currencies, stop losses in short dollar positions got triggered, which added pressure on the rupee,” said Hemal Doshi, chief currency strategist, Geofin Comtrade Ltd.
According to him, the rupee is in an oversold territory and could witness some sort of bounce back in the near term. Meanwhile, mirroring the broader weakness in the global markets, the Sensex slumped 323.82 points or 1.16 per cent to close the day at 27,607.82 while the Nifty closed the session at 8,372.75, losing 122.40 or 1.44 per cent.
FPIs sold equities worth Rs 1,007.26 crore.
“India was outperforming emerging markets in the last 2-3 months. We are likely to continue our out-performance, but the absolute return would be at risk due to global factors. As expected, due to increase in risk, investors are shifting their exposure to defensive sectors like pharma, IT and FMCG,” said Vinod Nair, head of fundamental research, Geojit BNP Paribas.
( Source : deccan chronicle )
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