Sensex sheds 175 points; rupee weakens to fresh low against the dollar

The Indian benchmark indices BSE Sensex and the NSE’s Nifty 50 closed lower after a volatile session yesterday dragged mainly by FMCG and auto stocks. Tata Motors shares plunged over 13% after Jaguar Land Rover reported a decline in global sales and a shutdown of its UK plant for two weeks. The rupee plunged to a fresh record low against the US dollar, tracking losses in global currencies due to deepening trade tensions between the US and China. The IMF yesterday maintained India’s growth forecast for 2018-19 unchanged and called for further tightening of monetary policy.The BSE Sensex closed 174.91 points, or 0.51%, lower at 34,299.47, while the Nifty 50 ended 47 points, or 0.45%, to down at 10,301.05. The BSE MidCap and SmallCap indices fell 0.16% and 0.45%, respectively.Fourteen out of 19 sectoral indices on the BSE ended lower with consumer durables and auto losing most at 3.91% and 2.62%, respectively. On the other side, metal and healthcare gained over 1%.Adani Ports, HDFC, Vedanta, Dr Reddy’s, Bajaj Finance and Tata Steel were among the major gainers, whereas Tata Motors, Asian Paints, Titan, HPCL, Maruti Suzuki and Hindustan Unilever were major losers.European stocks gained lifted by oil and banking stocks, while Asian shares slumped to a 17-month low after China briefly allowed its currency to slip past a psychological bulwark. On Wall Street, futures were pointing lower again. Oil prices rose above $84 a barrel as more evidence emerged that crude exports from Iran are declining in the run-up to the re-imposition of US sanction. The IMF downgraded its global growth forecast for the first time since 2016.Meanwhile the rupee yesterday closed at a fresh low of 74.39 against the US dollar amid high crude oil prices, strengthening of the greenback and unabated foreign fund outflows.At the Interbank Foreign Exchange, the rupee made a cautious recovery of 18 paise to 73.88 against the dollar in early trade on fresh selling of the American currency by banks and exporters. It finally closed at 74.39 against the greenback, down 32 paise, marking its sixth straight session of decline.The domestic currency failed to sustain the momentum after Brent crude breached the $84-per-barrel-mark again and the US dollar strengthened overseas. Traders said unabated foreign fund outflows, too, weighed on the rupee. Foreign institutional investors sold shares worth a net of Rs 1,805 crore on Monday, provisional data showed. Foreign exchange dealers said concerns over rising fiscal deficit and capital outflows impacted the domestic currency.The global brokerage said policy responses to the depreciating currency have been muted so far and with limited policy response, concerns on the rupee have risen significantly. “We believe a fall in oil prices will only possibly help stabilise the rupee.”Traders said higher US bonds yields resulted in the weak Indian currency. “Interest rates are headed higher in the US. The US 10-year bond yields surged to 3.26%. Fears that global investors will withdraw their funds from global markets and park in US Treasuries is affecting the global markets,” said VK Sharma, head PCG and capital markets strategy at HDFC Securities.