Stocks were hammered yet again Tuesday as a lethal cocktail of sliding rupee, worsening economic data and dismal quarterly corporate earnings, had investors fleeing.
The rupee hit a fresh record low of 61.80 to the dollar, as the RBI’s efforts to boost the currency is having little effect in a face of a strengthening dollar.
The Sensex closed at 18733.04, down 449.22 points over its previous close and the Nifty closed at 5542.25, down 143.15 points over the previous close.
A weak dollar spells trouble for importers as well as companies with huge foreign foreign debt on their books.
“The market is concerned about the fact that the Fed is clearly shifting towards a more aggressive monetary policy on one side,” said Patrick Legland of Societe Generale in an interview to CNBC-TV18.
“We are just at the very beginning of money being pulled out from EMs and possibly India. If the investors do not see reforms being able to restructure the economy there is a risk of further downside on the rupee,” he said.
With the rupee failing to respond to the recent RBI moves, market players are worried that the central bank and government may come out with more drastic measures to protect the rupee. And that could spell more bad news for the stock market and the economy.
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