Sensex falls 175 points as rupee hits 63.44 per dollar
The BSE Sensex fell for a fifth consecutive session on Monday to a near one-month low tracking renewed weakness in the rupee and after better-than-expected US jobs data raised concerns that the Federal Reserve would start tapering its monetary stimulus as early as this year.
The Sensex has now shed around 750 points after hitting a record high on Diwali. The broader Nifty has declined over 230 points in the previous five sessions.
The rupee hit a low of 63.44 per dollar in intraday trade and closed at 63.24, down 1.22 per cent as against Friday's close. The sharp fall in the rupee hit sentiment on the Street.
Weakening rupee may force foreign investors to stay away from Indian stocks, currency expert AV Rajwade told NDTV.
(Read: Why the rupee hit a seven-week low)
FIIs have been the biggest driver of Indian equities and so far they have invested $16.7 billion in stock markets. Overseas funds have been buyers of Indian equities for the last 25 consecutive sessions.
However, FIIs sold Rs 1,000 crore of index futures on Friday, raising worries about a potential slowdown in their buying volume.
India's trade deficit jumped in October rose to $10.56 billion compared with $6.7 billion in September. Analysts said the October trade deficit came within expectations and continued to point to positive underlying trends, including a 13.47 per cent year-on-year rise in merchandise exports.
"I would say that the data is good. Exports have risen for the fourth month, while the rise in gold imports is expected due to the seasonality," said Rupa Rege Nitsure, chief economist at Bank of Baroda.
"The trade deficit will be controlled and $68-$70 billion deficit for the whole year may be feasible," she added.
Bond and forex markets were largely unmoved by the in-line trade data.
Blue chips were among the worst hit, with Larsen and Toubro falling 3.2 per cent, while Reliance Industries ended 1.4 per cent lower.
The benchmark BSE Sensex fell 0.85 per cent while the broader Nifty ended down 1 per cent, marking their lowest close since October 17.
Meanwhile, gold demand in India was muted on Monday as jewellers were on the sidelines as a weak rupee sent gold prices higher.
(Also read: Gold demand remains muted as weak rupee raises price)
The most-active gold contract for December delivery was 0.36 per cent higher at Rs 29,811 per 10 gram 4.16 p.m. on the Multi Commodity Exchange (MCX).
(With inputs from Reuters)