Mumbai: The BSE Sensex and NSE Nifty fell as much as 1.1 per cent each on Tuesday, weighed down by sharp depreciation in the rupee. However, the global markets stayed positive, even after Fitch downgraded Japan to A+ from AA.
Indian equities underperformed global peers on Tuesday. The BSE benchmark lost 156.85 points or 0.97 per cent, to close at 16,026.41 led by 26 components. The NSE benchmark touched intraday high of 4,956.35, before closing down 45.55 points at 4,860.50 (a fall of 96 points from day's high).
However, global markets saw value punting on speculation that European leaders would agree on fresh action to tackle the region's debt crisis. Even the statement from Chinese Premier Wen Jiabao saying need to give priority to maintaining growth also helped markets. Asian markets were down 0.6-1.6 per cent at close. European markets were trading 0.6-0.8 per cent higher after paring some gains.
Japanese Yen fell after the Fitch downgraded Japan to A+ from AA due to growing risk of high public debt. The rating agency says the outlook is negative.
The Indian rupee touched a fresh record low of 55.38 to the dollar on Tuesday, down 35 paise from previous close of 55.03 a dollar. It has been fallen 24 per cent since April 4, 2011 (when it touched 44.50 a dollar) and over 6 per cent in one month.
Regan Homavazir of Darashaw and Company sees 56.5 a dollar as the worse case scenario. "We need to realize that the rupee has depreciated right from 45 to where it stands now, and people may just be complacently bearish on the rupee," he said.
His worst case scenario for the market is that the Nifty could move lower to retest its December lows (4,531).
The Bank Nifty fell over 1.5 per cent as country's largest lender State Bank of India tanked 3.4 per cent. Private sector lenders ICICI Bank and HDFC Bank were down 1.23 per cent and 1.7 per cent, respectively.
Engineering and construction major by sales Larsen & Toubro tumbled over 2 per cent whereas state-owned capital goods company BHEL gained 1 per cent.
Index heavyweight ITC dropped over 1 per cent and FMCG company HUL slipped 1 per cent. Oil & gas producers Reliance Industries and ONGC were down over 0.6 per cent.
Private power producer Tata Power topped the selling list, falling over 5 per cent ahead of fourth quarter numbers.
Country's largest car maker Maruti Suzuki tumbled 4.5 per cent on fears that rising rupee may increase royalty payments and import cost. M&M, Hero Motocorp and Bajaj Auto fell 0.5-1 per cent whereas Tata Motors went up 1 per cent.
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