Sensex drops; rupee weakens

Indian benchmark indices BSE Sensex and NSE’s Nifty 50 declined yesterday after Parliament speaker admits noconfidence motion against the Modi government. The Indian rupee weakened against the US dollar, tracking losses in Asian currencies after US Federal Reserve chairman Jerome Powell’s positive assessment of the US economy boosted the dollar.

Shares in Europe advanced after a mixed session in Asia. Foreign investors sold shares worth a net of Rs673.99 crore on Tuesday, while local investors bought shares worth a net Rs840.06 crore, provisional data showed.

The BSE Sensex closed lower by 146.52 points, or 0.40%, to 36,373.44, while the Nifty 50 fell 27.60 points, or 0.25%, to close at 10,980.45. BSE MidCap and SmallCap fell 1.27% and 0.95%, respectively.

All the sectoral indices on BSE, except oil and gas, declined with metal falling most at 3.12% followed by realty, basic materials, telecom, industrials and auto. Oil and gas gained 1.07%. ONGC, BPCL, Asian Paints, Yes Bank and HDFC were among the top gainers, whereas Tata Steel, Vedanta, Axis Bank, Tata Motors and Hindustan Unilever were among the top losers.

Meanwhile the rupee yesterday weakened against the US dollar, tracking losses in Asian currencies after US Federal Reserve chairman Jerome Powell’s positive assessment of the US economy boosted the dollar. The rupee closed at 68.62 a dollar, down 0.24% from its previous close of 68.46. The currency opened at 68.39 a dollar and touched a high and a low of 68.38 and 68.65, respectively.

So far this year, the rupee has weakened 6.7%, while foreign investors have sold $878mn and $6.34bn in equity and debt markets, respectively.

Powell was generally upbeat on the prospects for the US economy and told a Senate committee the Fed will continue to gradually raise interest rates “for now,” suggesting it may reconsider its tightening path next year. However, he also warned that trade protectionism could hurt economic growth and potentially undermine wages.

Asian currencies declined. South Korean won was down 0.73%, China Offshore 0.48%, Singapore dollar 0.37%, Malaysian ringgit 0.35%, Taiwan dollar 0.33%, Philippines peso 0.32%, Indonesian rupiah 0.22%, China renminbi 0.19%, Japanese yen 0.16%, Thai baht 0.1%. The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.343, up 0.37% from its previous close of 94.985. Bond prices erased gains. Earlier in morning it fell after the Reserve Bank of India announced open market operation (OMO) purchase.

Late on Tuesday, RBI said it will buy Rs10,000 crore of bonds via OMO today citing an assessment of liquidity conditions. The 10-year bond yield stood at 7.752%, from its Monday’s close of 7.744%. Bond yields and prices move in opposite directions.