Sensex on roller-coaster as Re dives
The BSE Sensex witnessed yet another day of mayhem, crashing over 660 points from the day's high as the rupee hit yet another low against the US dollar. The rupee broke past 64.50, surpassing the previous lows of 64.11. Weighed down by global headwinds, the rupee also hit a new intra-day low of Rs 101.3 against the British pound and closed below Rs 100level for the first time in history.
The rupee could even touch the 70 level against the US dollar in a month's time, Deutsche Bank, meanwhile, said in an alarming research note on Wednesday.
Enthused by RBI's overnight measures to ease liquidity, the Sensex had begun the day on a positive note and jumped over 321 points to 18,567.70. However, as rupee started its southward journey, stocks fell. Led by losses in metal, oil and gas, FMCG and heath care stocks, Sensex plunged by 340.13, or 1.85 per cent, to 17,905.91, a level
last seen on September 11, 2012. Markets have fallen despite steps taken by the government and the Reserve Bank to support the beaten-down bond market on Tuesday. The RBI had relaxed rules on mandatory bond holdings for banks, which would help protect lenders from large mark-to-market losses and said it would buy long-dated government bonds worth Rs. 8,000 crore. The Sensex has now lost over 1461.13 points in 4 days. On similar lines, the broad-based National Stock Exchange index Nifty dropped by 98.90 points, or 1.83 per cent to 5,302.55 as companies having exposure to overseas markets such as IT suffered losses. Twenty-five of the Sensex stocks closed with losses. Amid the crash, Finance Minister P Chidambaram for the third day in a row held meeting with top officials and Reserve Bank Governor-designate Raghuram Rajan to take stock of the situation. The minister also met with India's executive directors at the three multilateral agencies — Mukesh Prasad (World Bank), Rakesh Mohan (International Monetary Fund) and Umesh Kumar (Asian Development Bank) – igniting speculation that the country might approach IMF for funds. Analysts said world stock markets were choppy as traders are waiting for hints from the US central bank about when it might begin to reduce its massive stimulus effort in the soonto-be-released minutes of its July meeting.