After dropping to a low of 74.22 against the dollar, the rupee ended at 73.77, down 0.25 per cent over the previous close of 73.58. The domestic currency extended its year-to-date fall to 13.7 per cent, making it the worst-performing major currency in Asia. The fall in the rupee unnerved overseas investors, who pulled out Rs 33.7 billion ($457 million) from the equity market, taking their year-to-date selling past the $3-billion mark.
Energy companies Reliance Industries (RIL) and ONGC were a big drag on the market performance. Shares of RIL fell 6.3 per cent and contributed 230 points to the Sensex fall. Shares of ONGC plunged 16 per cent, the most among Sensex components. Shares of oil marketing companies slumped between 16 per cent and 25 per cent to multi-year lows. The sharp drop in shares of energy companies comes after the government cut diesel and petrol prices, which has sparked fears the country is going back to the regime where prices were controlled by the Centre. Among financial stocks, State Bank of India declined 4.73 per cent and HDFC declined 3.2 per cent on fears that the RBI
would issue new stringent asset-liability guidelines.
The latest sell-off has erased all of 2018 gains for the Nifty, which is currently down 2 per cent on a year-to-date basis. The benchmark Sensex and Nifty are down around 12 per cent each from their all-time highs on August 28.
Since Wednesday, the index of 50 bluechip stocks has declined 6.3 per cent, the biggest three-day fall in over three years.
Soaring oil prices, a tumbling rupee, and the spike in bond yields have erased $300 billion in market capitalisation since August. India’s market capitalisation currently is $1.85 trillion, down $600 billion, or 25 per cent, since January.
Experts said the correction may not be done as valuations haven’t reached “attractive” levels.
“This is an evolving situation, so to say when things will stabilise is difficult. For some of the stocks, valuations had risen to very high levels. While they have come off but still are high from a historical perspective,” said Saion Mukherjee, head of equity research, Nomura India.
have corrected from expensive levels. We haven’t yet reached levels that are cheap or even attractive. There could be more downside from here,” added Gautam Chhaochharia, head of research, UBS India.