Sensex, Rupee Fall Amid Roller-Coaster Ride: 10 Developments

BSE Sensex and Nifty were lower in afternoon trade on Wednesday amid a fall in the rupee. A fall in the major European markets in early trade also impacted the sentiment. Despite policy moves by the China central bank on Tuesday to support the economy, global markets remained jittery, worrying that the fresh rate cuts would not be enough to stabilise the world’s second largest economy.

1) At its day’s low, the Sensex fell as much as 344 points while Nifty hit 7,785. But a recovery in China markets helped Sensex come off lows. The Sensex at its day’s high rose to 26,156 – a recovery of nearly 470 points from the day’s lows. At 12:54 p.m., the Sensex was off nearly 100 points 25,933 while Nifty edged lower by 17 points to 7,863.

2) China’s stock markets ended over 1.3 per cent lower today amid volatile trade. At its day’s low, its benchmark index Shanghai Composite fell nearly 4 per cent. This takes losses in China markets to nearly 22 per cent in six days. Other Asian markets ended mixed today.

3) The rupee slipped to 66.36/dollar at its day’s low after opening at 66.22. In recent trade, rupee was trading at 66.28. Analysts say that besides global markets, the value of the rupee holds key to the fortunes of Indian markets. Yesterday, the rupee posted its biggest gain of the year to close at 66.10/dollar. The rebound in rupee and renewed hopes on the GST Bill had helped Sensex rise nearly 300 points on Tuesday.

4) Foreign institutional investors sold Indian stocks worth Rs 2,080 crore on Tuesday. They have been heavy sellers of Indian stocks in the past four days, putting pressure on Sensex. In the past four days, they sold Indian stocks worth over Rs 11,000 crore. A fall in the rupee impacts their dollar-adjusted returns.

5) Analysts say that unless selling pressure from foreign institutional investors abates, Indian markets are unlikely to gain a steady footing.

6) Foreign institutional investors hold nearly 25 per cent of BSE 200 stocks.

7) In contrast, domestic investors bought stocks worth Rs 1,963 crore on Tuesday. They have been big buyers of Indian stocks for the last four days, offering some support to Sensex and Nifty.

8) Following a near 20 per cent plunge in stock prices in past three days, the People’s Bank of China on Tuesday cut interest rates and lowered the amount of reserves banks in a much-anticipated move that some economists said was long overdue.

9) China’s policy moves to prop up the economy were initially cheered by markets around the world but the impact didn’t last long as investors quickly resumed their focus on the deteriorating outlook for China and the global economy.

10) In European markets, London’s FTSE 100 index and Paris’ CAC 40 were down nearly 2 per cent in early trade.