The rupee’s slide to 74 worsened stock market sentiments on Friday. Foreign portfolio investors (FPIs) offloaded stocks worth more than $1 billion in just two trading days, the largest sellout so far in 2018 in the cash and futures market, provisional data suggested.
The RBI’s signal that it was still not in a hurry to rescue the falling rupee by tightening lending rates has surprised investors.
The BSE benchmark index Sensex declined 792 points or 2.2 per cent to close at 34,376 on Friday. The broader index CNX Nifty of the National Stock Exchange was down 282 points or 2.6 per cent at 13,316. Both indices are down over 10 per cent from their peak.
Yield shock in the US, which caused the dollar to rally against all developed and emerging market currencies, has FPIs in a panic. US Treasuries surged to a near 7-year high on robust economic data and comments from the Federal Reserve.
Foreign funds sold stocks worth more than ₹ 5,000 crore in a single trading session in both the cash and futures market combined on Thursday. The selling continued on Friday as FPIs offloaded shares worth more than ₹3,300 crore in the cash segment alone.
Oil firms worst hit
The rout in domestic oil and gas stocks continued for the second day after the government said oil companies would absorb the losses from the cut in excise duty on petrol and diesel.
HPCL was the worst hit, with the stock falling 25 per cent. BPCL was down 21 per cent and IOC fell 16 per cent. ONGC fell 16 per cent while shares of refining major Reliance Industries declined 6.31 per cent.