Shillong, August 17: Amidst prevailing negative sentiments in stock markets, the Indian rupee edged closer to a 10-month low at 83.14 against the dollar.
The recent outflow of nearly Rs 10,000 crore by Foreign Institutional Investors (FIIs) in August has contributed to selling at elevated levels, according to Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services.
As per IANS, local equities continued to face downward pressure, influenced by weak global cues. The Nifty commenced on a lower note and sustained losses throughout the session, ultimately concluding with a decline of 100 points (-0.5%) at 19,365 levels. The Sensex followed suit, registering a drop of 388.40 points or 0.59% to settle at 65,151.02.
However, focus shifted to the broader market, where the Nifty Midcap 100 managed a modest 0.2% gain, and the Nifty Smallcap 100 saw a slight uptick of 0.1%. All sectors, except PSU banks and consumer durables, ended the day in negative territory.
The volatility in global markets, triggered by the hawkish stance observed in the Federal Open Market Committee (FOMC) meeting minutes and concerns surrounding a potential credit rating downgrade for China by Fitch, exerted pressure on Indian equities, as noted by Khemka.
Geojit Financial Services’ Head of Research, Vinod Nair, highlighted that the persistent influence of weak global cues hindered the domestic market’s recovery prospects, leading to sustained selling. The release of the FOMC minutes revealed divided opinions among members regarding the necessity of additional rate hikes, diverging from earlier expectations of a rate pause.
Nair added that the Indian rupee’s decline was attributed to the dollar index surpassing 103.5. However, potential intervention by the Reserve Bank of India (RBI) provided some support. Additionally, the rise in US bond yields is anticipated to curtail foreign investments into the Indian market, further impacting its dynamics.
In the market, 1,777 shares witnessed gains, while 1,696 experienced losses, and 152 remained steady. Notable losers on the Nifty included ITC, LTIMindtree, Divis Lab, Power Grid, and Reliance Industries, whereas Adani Ports, Titan Company, Adani Enterprises, Bajaj Auto, and SBI emerged as top gainers, according to Omkar Kamtekar, Research Analyst at Bonanza Portfolio.
The rupee’s decline to a 10-month low was driven by a robust dollar and sluggish domestic market conditions. Moreover, India’s inflation rate surged to 7.44% in July, up from June’s 4.87%, overshooting the predicted 6.4%.
