The BSE sensex on Tuesday continued to drop for the fourth consecutive day, dipping below 34,000 mark in early trade, abated foreign funds outflows and selling by domestic institutional investors, making the Asian market fall weaker.
Further, the Indian rupee depreciated by another 23 paise to 73.79 against the dollar on Tuesday morning.
The 30-share index slipped dropped 204.78 points, or 0.60 per cent, to 33,929.60. The benchmark had lost 1,028 points in the previous three sessions.
All the sectoral indices led by oil&gas, FMCG, capital goods and PSU, were trading in the negative terrain by falling up to 1.80 per cent.
In the Sensex kitty, Asian Paints suffered the most by falling 5.21 per cent after the company reported a 14.76 per cent fall in its consolidated net profit at Rs 506 crore for the September quarter Monday.
Why Is Rupee Falling?
India's current account deficit has affected the Indian Rupee.
Countries that have a current account deficit get punished more where currencies are concerned followed by the non-deliverable forward (NDF) markets outside India for the rupee, which also creates volatility.
Over a long period of time, the rupee has been depreciating at 2-2.5 per cent per year. This trend was reversed over the past three or four years. So part of the weakness of the currency is normal and part of it is due to the global bond market sell-off.
India is also very vulnerable to high oil prices—when prices go up, the risk is seen as higher in India from the inflation point of view, the fiscal point of view and also in terms of the currency. When oil prices shoot up, we need more dollars to meet our import demand, and the value of the rupee is largely influenced by the demand and supply of dollars. (Read full story)
