Rupee Slips and Sensex Flips

Putting sudden breaks on the sensex soaring higher to a lifetime high of 8221, the over -heated Indian equity market was taken aback with the sensex plunging by 80 points.

The rupee hit an 11-month low of 45.14 per dollar on Tuesday a day after the data showed India’s trade deficit in September had widened from $3.19 billion from $2.16 billion a year earlier.

The Indian rupee has been on a weak ground for quite some time against the US dollar. Bulls were driven out by bears in the last two weeks and there was virtually a free fall along with the Indian rupee. The decline was attributed to the outflow of FII funds and the strengthening of the dollar against other currencies. But since FIIS appear to be least interested in repatriating profits, hopes of a revival are still there, market analysts say.

Brokers said selling in the market on Tuesday was from hedge funds as they have started withdrawing funds from across the Asian markets. This is due to the firming of the dollar against various international currencies .The dollar also touched a two-year high against the yen. The yen crossed the 115 levels and touched a low of 115.90 against the dollar.

Economic giants like RIL, SBI, ONGC, ICICI Bank, Satyam Computers, Infosys Tech, Tata Steel, Tata Motor, Dr Reddy’s Lab, Grasim, Bajaj Auto and BHEL suffered a sharp setback.

The rupee dip is likely to affect the imports and exports arena, travelers and the pressure can be seen mounting on the forex kitty as well.