Rupee tumbles to record low
The rupee fell to a record low against the dollar on Thursday even as it recovered later tracking gains in the equity markets and foreign fund inflows.
At the interbank foreign exchange market, the local currency opened higher at 76.11, but witnessed heavy volatility and slid to its all-time intra-day low of 76.55 against the American currency. The rupee later recovered ground to settle at 76.28 against the greenback, up 6 paise over its previous close.
The local unit had settled at an all-time low of 76.34 against the greenback on Wednesday. Forex traders said the rupee traded in a narrow range as gains in domestic equities supported the local unit.
The benchmark Sensex on Thursday scaled the 31000-mark and the Nifty settled above 9100 following a strong rally on hopes of a second relief package from the government.
“Fragile market sentiments over Covid-19 will continue to keep the rupee under pressure. Further pressure will come from the uptick in crude and a surge in the dollar index,” said Rahul Gupta, head of research — currency, Emkay Global Financial Services.
Thursday’s gain in stock prices comes amid a rise in the number of coronavirus cases in India and the possibility of an extension in the lockdown. Market experts pointed out that it was too early to say if this spike on the bourses was an indication of a stability in equity prices. Some warn that this is only a “bear market rally”.
On the BSE, the 30-share Sensex opened above the 30500-mark at 30571.19 and touched an intra-day high of 31225.20. It later ended at 31159.62 — a gain of 1265.66 points, or 4.23 per cent. Around 26 stocks were in the green and the rally was led by Mahindra & Mahindra whose shares galloped around 17 per cent to end at Rs 381.20. It was followed by Maruti Suzuki which gained over 13 per cent at Rs 5,315.55. Banking stocks also posted good gains.
The NSE Nifty gained 363.15 points, or 4.15 per cent, to 9111.90.
During the holiday-shortened week, the Sensex has rallied 3568.67 points, or 12.93 per cent, while the Nifty has risen 1028.10 points, or 12.71 per cent. The markets will remain closed on Friday on account of Good Friday.
“The Indian equity markets rebounded after taking a pause on Wednesday on hopes that the coronavirus pandemic was nearing its peak globally and a second stimulus package from the government is likely to be announced in the coming days.
“However, investors are worried that the lockdown in the country could be extended considering the rising cases in India. Thus, the market would continue to remain volatile with a swing on either side as it would track global developments around the trend in coronavirus cases and stimulus. So any update on the national lockdown would impact the markets either ways,” Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, said.
Foreign institutional investors (FIIs) remained net buyers in the capital market, as they bought equity shares worth Rs 1,943.41 crore on Wednesday, according to provisional exchange data
Equity mutual funds
Inflows into equity mutual funds surged to Rs 11,485 crore in March, the highest in a year, even as the broader market witnessed extreme volatility amid concerns over the impact of the coronavirus pandemic.
Overall, the mutual fund industry witnessed a net outflow of Rs 2.13 lakh crore across all segments, mainly owing to withdrawal from liquid or the money market category, data from the Association of Mutual Funds in India (Amfi) showed on Thursday.
In comparison, an outflow of just Rs 1,985 crore was seen in February.
According to the data, inflows into equity and equity-linked open-ended schemes were at Rs 11,723 crore, while an outflow of Rs 238 crore was seen from close-ended funds, taking the net inflow to Rs 11,485 crore.
This was much higher than a net infusion of Rs 10,760 crore as seen in February. This is the highest level since March 2019, when equity schemes attracted inflows of Rs 11,756 crore.
The Indian benchmark S&P BSE Sensex tumbled 23 per cent in March over fears of a deepening global economic slowdown due to the coronavirus pandemic.