- India’s Sensex opens lower, tracking weak Asian stocks and Gift Nifty futures.
- Sensex hit fresh record highs above 74,000 last week but finished flat on Thursday.
- Markets stay cautious ahead of the US and Indian CPI inflation data on Tuesday.
The Sensex 30, one of India’s key benchmark indices, opened on the wrong side of the trade on Monday, having closed Thursday modestly flat after the correction from fresh record highs of 74,245.17.
The Indian stock index takes the negative lead from the mixed Asian stock markets and losses in the Gift Nifty futures. Traders are in a risk-averse position, refraining from placing any fresh bets on risky assets ahead of Tuesday’s Consumer Price Index (CPI) inflation data from India and the US.
At the time of writing, the Bombay Stock Exchange (BSE) Sensex 30 is dropping 0.16% on the day to 74,003.38. Indian markets were closed last Friday on account of Mahashivratri.
Stock market news
- The top gainers on Sensex so far are JSW Steel, ITC, Ultra Tech Cement, Bajaj FinServ and Bharti Airtel. Meanwhile, the top losers are Kotak Mahindra Bank, Tata Steel, HDFC Bank, Tata Motors and Infosys.
- SEBI bars JM Financial from acting as lead manager of any public debt issue.
- IndiGo co-founder Rakesh Gangwal likely to sell a higher stake of 5.8%, looks to raise Rs 6,600 crore.
- The US stock markets ended in the red on Friday, as investors resorted to profit-taking amid high valuations and gearing up for the critical US inflation report.
- On Friday, the headline NFP rose by 275K in February, compared to market forecasts of 200K while the January figure of 353K was revised down to 229K, a difference of 124K.
- Markets are currently pricing in about a 75% chance that the Fed could begin easing rates in June, higher than a 63% probability seen last Thursday, according to the CME FedWatch Tool.
- The main event risks for markets this week will be the inflation data releases from India and the US.
Indian economy FAQs
How does the Indian economy impact the Indian Rupee?
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
What is the impact of Oil prices on the Rupee?
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
How does inflation in India impact the Rupee?
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
How does seasonal US Dollar demand from importers and banks impact the Rupee?
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
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Editors’ Picks
AUD/USD weakens to test 0.6600 amid dour mood
AUD/USD is testing lows near 0.6600 in late Asian trading on Monday. The pair is weighed down by a pause in the US Dollar sell-off and a cautious mood, as markets turn anxious ahead of Tuesday’s US CPI report after the weekend’s upbeat Chinese CPI data.
