Sensex falls over 400 points as rupee approaches 63/$

Mangalore Today/NDTV

MUmbai, Aug 19: The Sensex traded off the day’s low after earlier dropping over 450 points on Monday, while the 50-share Nifty regained the key 5,400 mark. The Indian rupee also traded off the lows after earlier hitting a record low of 62.82.

Earlier, the Nifty broke the 5,400 levels after 11 months tracking the plunge in the Indian rupee. The rupee fell 1.75 per cent to a record low surpassing the previous record low of 62.03 hit last week.

Monday’s trade seems to be a repeat of Friday, when the Sensex fell 769 points, the most in four years. The Sensex has now lost over 1,000 points or over 5 per cent in just two sessions.

The sharp fall in the rupee - the worst performing currency in Asia- has spooked market sentiments. The rupee has fallen over 12 per cent since May leading to fears of increased inflation and has led to worries about financing of India’s record current account deficit.

Global investment bank Bank of America Merrill Lynch said the rupee has to stabilize before one should start buying.

KR Bharat of Advent Advisory told NDTV that markets are now resigned to the fact that India will take time to get its act together.

The central bank’s recent measures, aimed at tightening liquidity, have hit interest rate sensitive stocks such as banks, autos and realty.

The Bank Nifty fell around 3.5 per cent today, while the BSE Auto index traded with nearly 4 per cent losses.

Blue chips including ICICI Bank fell nearly 4 per cent on fears that foreign investors may pare their holdings in Indian stocks as the rupee hits a record low.

Raamdeo Agarwal, joint MD of Motilal Oswal told NDTV that markets have reached a situation that none of the government announcements are impacting market participants.

"The pessimism is so deep right now, that everybody is focussing on the negatives. A little push and markets fall. There is no support," he added.