Domestic equity indices declined substantially in the opening session of Wednesday due to consistent depreciation of rupee, foreign fund outflows, prevailing inflation concerns, among others. Indian currency rupee has been consistently hitting fresh all-time lows. The renewed rise in global crude oil prices too have a negative bearing on the market sentiments, said analysts.
On Tuesday, the indices closed steady, while they have declined during the majority of the sessions so far in June. At 9.40 a.m on Wednesday, Sensex was at 52,739.81points, down 437.64 points or 0.82 per cent, whereas Nifty at15,721.60 points, down 128.60 points or 0.81 per cent.
Among the individual stocks, Indusind Bank, Bajaj Finserv, Hindustan Unilever, Titan, and Bajaj Finance were the top five losers among the Nifty 50 companies, while Shree Cement, Dr Reddys, Tata Steel, Nestle India, and Ultratech Cement the top five gainers, National Stock Exchange data showed. Stocks dropped in Asian markets on Wednesday on account of renewed worries about a gloomy economic outlook as monetary policy tightened in much of the world to fight high inflation, said Deepak Jasani, Head of Retail Research at HDFC Securities.
On rupee depreciation, Sugandha Sachdeva, Vice President – Commodity and Currency Research at Religare Broking, said: “The Indian rupee has plummeted to fresh lows, depreciating by around half a percent against the dollar owing to a muted trend in domestic equities, and strong gains in crude oil prices.” Going ahead, Sachdeva foresees the rupee-dollar exchange rate to remain weak in the near-term, where it can test 79.20 against the US dollar. Currently, rupee is valued at 78.97 against the US dollar.
“However, RBI is likely to keep using its FX reserves to curb excess volatility in the Indian rupee, which will provide some cushion to the domestic currency,” Sachdeva added.