Market falls in a highly volatile week as rupee continues to slide

ABSTRACT: Rupee continues to fall, touching a fresh ow of 79.96 dollars.

Over the week ended July 15, Indian benchmark indices fell amid weak global and domestic cues, such as weak GDP and inflation data, the continued depreciation of the rupee, and selling by foreign institutional investors (FIIs). However, the progress of the monsoon and falling crude oil prices lent some support.

The BSE Sensex shed 721.06 points (1.32 percent) to close at 53,760.78 while the Nifty50 fell 171.4 points (1.05 percent) to end at 16,049.2 for the week.

The BSE Small-cap index was up 0.5 percent with PC Jeweller, ITI, Butterfly Gandhimathi Appliances, Mahanagar Telephone Nigam, Parag Milk Foods, and GTL Infrastructure up 20-52 percent. Whereas industries shed 10-14 percent that including KBC Global, DB Realty, Kriti Industries (India), Shakti Pumps (India), Tanla Platforms and Axtel

 Dilip Parmar, Research Analyst, HDFC Securities

According to Dilip Parmar, Research Analyst, HDFC Securities, “The rebound in crude oil prices and risk-averse sentiments could weigh on the rupee along with the weaker regional currencies. On Wednesday, spot USDINR gained 3 paise to 79.6350, another record high close this week. The view remains bullish for the pair as long as it trades above 78.80 while on the higher side it could face stiff resistance of 80.”

Rahul Kalantri, VP Commodities, Mehta Equities.

“We expect the dollar index to remain volatile in today’s session and continue to hold its key support level of 106.40 on a daily closing basis. On the other hand, the rupee slipped to lifetime lows on Wednesday. The euro is trading at 20-year lows, the Japanese yen slipped to 27-year lows and other currencies are also struggling against the dollar. The rupee also plunged amid further weakness in the domestic equity markets and continuous FPI outflows. We expect the rupee to remain volatile this week and could hold its key support level of 80.05,” said Rahul Kalantri, VP Commodities, Mehta Equities.

Santosh Meena, Head of Research, Swastika Investmart.

.“The rupee has been under pressure and trading at its all-time low as the higher-than-expected June US Inflation data has increased the probability of a 100-bps rate hike by the Fed, further, the relentless FIIs selling has exacerbated the issue. Another point to note is that the Indian forex reserves fell to the lowest level in over 14 months, making it an impediment for the RBI to control the further downside on the rupee. Recently, RBI allowed banks and traders to invoice and settle global transactions in rupees. This is a longer-term step to make the rupee more international nevertheless, we don’t expect any short-term respite due to this move,” said Santosh Meena, Head of Research, Swastika Investmart

Depreciation of the Indian rupee continued in the last week as the currency touched a fresh low of 79.96 per dollar. The rupee declined 62 paise to end at 79.87 per dollar on July 15 against its July 8 closing of 79.25.