Friday proved to be the day when bears ruled on the Dalal Street indefatigably. Spooked by rupee touching an all-time low of 62.03 against the dollar, panic selling gripped the markets with the BSE Sensex tanking by over 760 points while NSE Nifty dipping over 200 points. The rupee recovered a bit in the afternoon but that failed to cheer investors.
Ironically, the markets wilted just a day after the Prime Minister Manmohan Singh assured the nation in his Independence Day speech from the ramparts of the Red Fort that the growth would accelerate, new employment opportunities would be generated and that there would be improvements in the infrastructure sector.
Weak global cues coupled with oil prices touching 5-month high and bearish US markets on worries an early rollback of quantitative easing would trigger foreign investors to start selling acted as catalysts with all sectoral indices trading in the red. Nifty slipped below its crucial psychological level of 5550.
Rupee continues to be a major headwind for the markets despite RBI taking a series of steps to curb its freefall by minimising dollar outflows. Among them include measures to rationalize forex outflows by resident Indians from $200,000 to $75,000 per financial year, deregulating NRE deposit rates offered by banks, prohibiting investments in overseas property and capping the limit for overseas direct investment (ODI) by domestic companies.