Indian shares dropped; Rupee drops to near record low
Mumbai, Nov 24: Indian shares dropped on Thursday, heading for their first decline in three sessions, as a fall in the rupee to a near record low dented sentiment at a time when investors are already worried about how demonetisation will affect economic growth.
The rupee fell to as low as 68.8375 per dollar, almost surpassing its record low of 68.85 hit in August 2013, as the greenback remained strong over the prospect of higher U.S. interest rates. The local currency, however, rebounded sharply after heavy intervention by the central bank.
The fall in the rupee comes at a time when investors are souring on the government’s shock move to remove high-value notes from circulation, which came on the eve of the unexpected election of Donald Trump as U.S. President.
The NSE Nifty has slumped 6 percent since the demonetisation announcement on Nov. 8, compared with a fall of 2.8 percent in the MSCI Asia-Pacific index excluding Japan.
“The gloom in the market due to the lack of (cash) liquidity is unlikely to ease until February next year,” said Saurabh Jain, assistant vice-president of research at SMC Global Securities.
The Nifty was down 0.45 percent after gaining about 1 percent in the previous two sessions. The benchmark BSE Sensex was down 0.37 percent.
Auto makers, which could be hit by reduced consumer demand due to the demonetisation, were among the leading decliners. Tata Motors fell 3.7 percent.
But software exporters rose on the back of a weaker rupee. Tech Mahindra rose 2.2 percent.