The Indian rupee plunged to
fresh depths of 64.54 on Wednesday, dragging down the
stock markets for the fourth session and leading the BSE Sensex shed a whopping 340 points to close at a nearly one-year low.
Investors are worried that the government steps to lift the depreciating rupee may not be adequate to narrow the current account deficit. A weak rupee raises cost of imports like oil and adds to the risk of inflation as India prepares for the next general election by May 2014.
The four-day carnage at the stock markets
has left investors poorer by over $100 billion, while they suffered a loss of more than Rs one lakh crore in Wednesday's trade itself.
Measured in terms of total market capitalisation of all listed companies, the investor wealth in Indian stocks on Wednesday fell to Rs 58,60,000 crore - registering a loss of close to Rs 1,09,000 crore from Tuesday's level.
FROM THE MAGAZINE: How to gain from a falling rupee The Sensex has now lost over 1,400 points in the last four trading sessions. During the same period, the total market capitalisation has plunged by more than Rs 4.35 lakh crore.
The day began on a positive note
for the rupee and stocks as measures by the Reserve Bank of India (RBI), including an Rs 8,000 crore bond buyback, lifted investor sentiment.
The rupee rose to 63.10 against Tuesday's close of 63.25. The BSE benchmark Sensex also gained over 321 points, led by bank stocks. However, dollar strenghtening ahead of the much-awaited release of the minutes of the US Fed's July meeting weighed upon most currencies, including the battered rupee.
FROM THE MAGAZINE: Tweak your investment strategy to take in rupee fallThe Indian currency crashed to a yet another new low of 64.54 to the dollar and finally settled at 64.11, down 86 paise, on heavy dollar demand and capital outflows. In the past 5 days, it has lost 292 paise.
The rupee also closed below 100-level for the first time in its history against the British pound.
"Despite a slew of measures by RBI, rupee is seen giving a muted reaction to the same and going on with weak trend," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The loss in terms of US dollar is much sharper, given the depreciation in rupee's value in the past four trading days. In the US dollar terms, the total market capitalisation has fallen from $1,025 billion to little over $900 billion in the past four days.
"...Bears smelt blood with the spot rupee touching a new all-time low to dollar. This triggered a massive sell-off on Indian bourses," said Amar Ambani, Head of Research at IIFL.
FROM THE MAGAZINE: Factors that can drive stocks higher India was recently
edged out of the elite global league of stock markets with a trillion-dollar market capitalisation and its valuation continues to slip further below with persisting weakness in stocks and rupee values.
In the past one month, the Sensex has fallen by over 11 per cent, while it has dropped by more than 7 per cent in the last seven days.
The markets were
showing signs of strong revival early this year and the investors' wealth had topped Rs 70 lakh crore level, while moving closer to the record high level of about Rs 72 lakh crore scaled in January 2008.
After remaining mostly range-bound in the first five months of 2013, the markets started losing ground and the weakness continues amid concerns about domestic economy and adverse global cues.
There was
some respite for investors in gold as the yellow metal in Mumbai rose by Rs 75 to Rs 31,440 per 10 gms.
In the bond market, the yield on 10-year government securities maturing in 2023 dipped to 8.41 per cent from 8.90 per cent.
With inputs from PTI
PHOTO: Reuters 
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