Sensex drops 232 points on rupee slipping to 4-month low

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Mumbai: The BSE Sensex came under relentless selling pressure in early trade Friday, plunging almost 300 points on heavy selling in banking, financial, capital goods and FMCG stocks amid sustained foreign fund outflows and weak global cues. The move can potentially lead foreign portfolio investors (FPIs) away from emerging markets such as India.

The Sensex and Nifty were trading down by almost one per cent due to sustained foreign fund outflows and weak global cues.

The rupee - which plummeted by a whopping 53 paise to end at 64.80 a dollar on Thursday - dropped by 31 paise to a four-month low level of 65.12 intra-day trading against the U.S. dollar before closing at 64.79/80 on Friday amid frenetic dollar demand from importers and banks. "Investors are also fretting on the impact on fiscal deficit targets if the government were to go overdrive with economic revival plans". While the Sensex lost over 300 points to trade at an intra-day low of 32,023.37, the Nifty went below the 10,000 psychological barrier to trade at an intra-day low of 9,992.15.

After opening at 32,361.37, the Sensex traded in a range of 32,524.11 and 31,886.09 before closing the week at 31,922.44, showing a loss of 350.17, or 1.09 percent.

Reuters late Thursday reported that the additional spending was estimated to widen the fiscal deficit for the financial year ending March to 3.7% of the GDP from a budgeted aim of 3.2%.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) sold scrips worth Rs 1,241.73 crore while domestic institutional investors (DIIs) purchased stocks worth Rs 521.17 crore.

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In terms of the broader markets, the S&P BSE mid-cap index tanked by 2.71 per cent and the small-cap index by 2.93 per cent.

"The domestic currency hit 65 levels against the United States dollar for the first time in more than five months on the back of speculation about the government going in for a fiscal deficit relaxation, with talk of a Rs 40,000-Rs 50,000 crore stimulus". The Indian rupee opened flat at 64.80 per dollar on Friday against its previous close at 64.81 per dollar.

During the day, the rupee closed at 64.79-80 against the U.S. dollar.

Nifty Metal index melted up to 3 per cent, with Jindal Steel & Power plunging over 6 per cent.

Major Sensex gainers on Friday were: Wipro, up one per cent at Rs 294.05, and Coal India, up 0.12 per cent at Rs 253.90.

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