Stock markets in India are trading flat with a negative bias as investors remain cautious ahead of August F&O expiry, due later in the day today. Losses are largely seen in realty stocks and bank stocks.
The BSE Sensex is trading down by 25 points and the NSE Nifty is trading down by 12 points. Meanwhile, the BSE Mid Cap index is trading up by 0.6% while, the BSE Small Cap index is trading up by 0.4%.
Meanwhile, the Indian rupee today weakened to new all-time lows against the US dollar, tracking the losses from Asian currency market.
In the early trade, the rupee was trading at 70.68 a dollar, down from its previous close of 70.59. The currency opened at 70.69 a dollar and touched a fresh all-time low of 70.82 a dollar.
The 10-year bond yield stood at 7.929%, from its Wednesday’s close of 7.918%. Bond yields and prices move in opposite directions. Bank of America in a note on Wednesday said India’s sovereign bonds may be under pressure as oil hold gains near the highest level in a month.
The recent weakness in the rupee versus the US dollar indicates further trouble for the market ahead. As seen from the below chart, when the Sensex corrected to its multi-year lows in March 2009, the rupee had also weakened. Similarly, when Sensex hit an all-time high in January 2018, the rupee had been gradually strengthening over the past year. The Sensex was moderately lower in early trade today. Since January, it has gained nearly 15%. While BSE mid and Small cap indices have seen a healthy correction, large caps have remained almost intact during the same period.
Change in the Rupee and Sensex in the Past 10 Years
Post-January, the rupee has been on a constant decline versus the dollar.
So far this year, the rupee has weakened over 9%, the worst performer among Asian currencies. Reportedly, foreign investors have sold US$256.5 million and US$8 billion in equity and debt markets, respectively.
