After opening the day on a negative note, share markets in India continued their downtrend throughout the day and ended the day in the red. All sectoral indices traded in the red, with stocks in the consumer durables sector, banking sector and FMCG sector leading the losses.

At the closing bell, the BSE Sensex stood lower by 505 points (down 1.3%) and the NSE Nifty closed down by 137 points (down 1.2%). The BSE Mid Cap index ended the day down 0.8%, while the BSE Small Cap index ended the day down 0.1%.

The rupee was trading at Rs 72.46 against the US$ in the afternoon session.

Asian stock markets finished on a mixed note. As of the most recent closing prices, the Hang Seng was down by 1.3% and the Shanghai Composite was down by 1.1%. The Nikkei 225 was up by 1.2%. Meanwhile, European markets were trading on a negative note. The FTSE 100 was down by 0.2%. The DAX was down by 0.5%, while the CAC 40 was down by 0.3%

The Indian rupee witnessed selling pressure against the dollar today. Losses were seen despite an array of steps announced by the government on Friday to contain the widening current account deficit (CAD) and keep the rupee’s fall in check.

The rupee has been falling lately on the back of many factors such as rising current account deficit, rising global crude oil prices, and tepid export growth.

What does the fall in rupee mean for the Indian economy?

A depreciation in rupee means importers buying goods and services at a higher rate than earlier. This doesn’t bode well for a developing economy that relies heavily on imports.

Also, India imports most of its oil requirements. So, a fall in rupee leads to a consequent rise in the import bill. The depreciation of the rupee will also add to crude oil’s rising cost.

On the corporate side, companies who have taken foreign loans from abroad will be impacted. The repayment obligations in terms of principal and interest will rise, leading to a dent in the cash flows and financials.