According to Gaurang Shah, head investment strategist at Geojit Financial Services: “The fall will continue if the Reserve Bank of India (RBI) doesn’t intervene. We will have to wait a and watch for the next few days to see how the central bank responds to the drop, which will in turn also affect the stock markets.
Given the fall over the past few sessions, technical analysts say the rupee has some support at 69.3 levels.
“Absence of aggressive intervention by the RBI
has spooked the market. Since the rupee has plunged to 70 levels, 70.50 level will be the next short-term resistance while 71.00 will be the important level to watch out for. On the downside, immediate support is around 69.30 levels,” said Rushabh Maru, research analyst at Anand Rathi Shares in an emailed note.
As regards markets, apprehensions about turmoil in the Turkish economy that spooked sentiment globally also triggered a correction in the Indian stock markets, which slipped over 0.5 per cent on Monday. The consumer price inflation
(CPI) print for July at a nine-month low of 4.2%, however, propped up sentiment on Tuesday.
selling dollars and decrease in foreign investments are other factors besides the global rout in currencies that led to this fall in the rupee over the past few sessions,” says AK Prabhakar, head of research at IDBI Capital.
However, both Prabhakar and Shah expect the markets
to remain range-bound for the coming months ahead of the state elections. Among sectors, they expect information technology (IT) and pharma
to benefit from the fall in the rupee.
“Fall in rupee will lead to a rise in share prices of IT, pharma
and other import-related stocks, which will balance-out the fall in the markets.
Therefore, the market sentiment will remain neutral for the coming few months,” Prabhakar adds.