MUMBAI: Rupee closed at a record low of 79.59, down 14 paise from its previous close, as the dollar index touched a 20-year high of 108.56 intra-day Tuesday and FIIs sold shares worth a provisional Rs 1,566 crore. Before closing, the local unit fell to an intraday low of 79.66 to the greenback whose strength has brought the euro to parity with the dollar amid fears of a recession in Europe driven by rising gas prices and the ongoing war. The rising prices could force the ECB to raise its policy rate even as Europe stares at a potential recession.
Back in the US itself, financial market analysts expect the Fed rate-setting body to raise the Fed Funds Rate by another 75 bps later this month after it raised the rate by three-quarters of a percentage point in June, taking it to 1.5-1.75% to tame decadal high retail price inflation. The rate increases in the US are strengthening the dollar, in turn weakening Emerging Market currencies like the rupee as foreign portfolio investors pull out funds from riskier EM shares and bonds to invest back in the safer USD.
On Tuesday, FPIs sold a provisional Rs 1566 crore worth of shares as the dollar index advanced to a fresh high, dragging down benchmark indices such as the Nifty and Sensex by almost a per cent. So far this fiscal year (April - July 11), FIIs have sold shares worth a whopping Rs 1.1 lakh crore. The start to the Q1 earnings on Friday was marred by TCS’ tepid showing on EBIT margin versus Street expectations amid rising supply-side pressures and attrition. The earnings will set the tone for markets, going forward.
The bulls will try and protect 16000, with the Nifty closing at 16058.3 on Tuesday. A breach of the support could witness the market potentially testing 15700 this week. The key resistance is at 16200 for the week. “Technically, on daily charts, the index has formed a small bearish candle and a lower high formation on intraday charts which supports further weakness from the current levels,” said Shrikant Chouhan, equity research head (retail), Kotak Securities.
“For the traders now, below 16150/54200 the short-term texture is weak. Below which, the index could retest the level of 16000-15950/53700-53500. On the flip side, if the index succeeds to trade above 16150/54200 then it could touch the level of 16225-16250/54500-54600.”