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Sensex snaps winning streak; rupee falls
India’s shares fell as higher crude prices and confusing signals over the US-China trade talks snapped the benchmark’s longest run of gains in four months. Investors are also awaiting the outcome of state election results to assess the political mood before a national ballot in 2019.
The S&P BSE Sensex dropped 0.3% to 36,134.31 points in Mumbai, while the NSE Nifty 50 Index declined 0.1%. The states of Rajasthan and Telangana will go to polls on December 7.
Twelve of the 19 sector sub-gauges compiled by BSE Ltd slipped, led by the consumer goods index’s 0.7% loss. Housing Development Finance Corp Ltd and HDFC Bank Ltd were the biggest drags on the Sensex.
Sun Pharmaceutical Industries Ltd was among the worst performers on the main gauge.
“We will have to see how oil prices react in the coming weeks and what is the stance of the oil-producing countries to the production cuts,” said Chokkalingam G, managing director at Equinomics Research & Advisory in Mumbai.
Price of Brent crude, India’s biggest import, climbed to $62.28 a barrel yesterday after slipping into bear territory last month. The main event is elections, and investors wish to understand in which direction the political wind is blowing,” said A K Prabhakar, head of research at IDBI Capital Market Services Ltd in Mumbai.
Vote counting for all five Indian states will be held on December 11. The exit polls will be out in the evening of December 7.
Meanwhile the rupee fell beyond 70.50 a dollar amid rising oil prices. The rupee settled at 70.51 a dollar, down 5 paise from Monday’s close. On Monday, the rupee had closed at 70.46 against the US dollar, dropping by 88 paise, its biggest single-day loss in more than three months.
Weak domestic equity markets also weighed on the rupee. Market benchmark indices Sensex and Nifty broke their six-session rising streak as cautious investors weighed a host of factors like depreciating rupee, rising crude prices and weak global cues.
The dollar weakened against its ma- jor peers yesterday after the US-China trade truce calmed global markets. The 10-year government bond yield stood at 7.615% from its previous close of 7.626%. Bond yields and prices move in opposite directions.
Traders are cautious ahead of RBI’s monetary policy decision. Analysts believe the outcome may be a non-event on the key rate front, but the focus will be on RBI’s communication and stance.
So far this year, the rupee has declined 9.33%, while foreign investors have sold $4.89bn and $7.57bn in the equity and debt markets, respectively.
Asian currencies were trading higher on continued dollar weakness even amid signs it will be difficult for the US and China to resolve their trade war.
China renminbi was up 0.33%, Japanese yen 0.31%, China Offshore 0.24%, Thai baht 0.22%, Singapore dollar 0.15%, Taiwan dollar 0.14%, Hong Kong dollar 0.08%, South Korean won 0.05%. However, Philippines peso was down 0.48%, Indonesian rupiah 0.32%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.816, down 0.23% from its previous close of 97.04.