On Friday, Indian stocks ended a three-session of victory, while the rupee tanked to an 18-month low versus the dollar ahead of US inflation data that might set the stage for faster Fed rate hikes.
The blue-chip NSE Nifty 50 index fell 0.61% to 17,412.30 by 1245 IST and the benchmark S&P BSE Sensex plummeted 0.64% to 58,430.30, overwhelmed by IT and banking stocks. For the week, the Nifty gained 1.6% while Sensex was up by 1.9%.
The rupee stood at 75.71 a dollar, at its nadir since June 2020, corresponding to Thursday’s close of 75.52.
“The U.S. Federal Reserve is keener in unwinding the stimulus and hiking rates, while the Reserve Bank of India is not keen in going for a hawkish stance. This divergence has created pressure on the rupee,” said Arnob Biswas, FX research head at SMC Global Securities, quoted Reuters.
In addition, he noted, the RBI is not acting aggressively to stop the rupee’s decline.
Data on US consumer price inflation, the Federal Reserve estimates shall be announced in the evening as per the Indian Standard Time on Friday.
As per the Reuters poll of economists, a rise of 6.8% year-on-year, up from a 6.2% increase in October is expected to come.
On the Nifty, the IT index tanked 0.82%. Tata Consultancy Services and Coforge Ltd were the only two sub-index that were trading higher, both up about 0.5%.
Most banking stocks plummeted, including RBL Bank and Axis Bank that fell 1.51% and 1.29% respectively. The Nifty Bank index tumbled 0.67%.
Shares of Dalal-street king Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Co opened at a 6% discount to the offering price on the debut day before reversing its path to gain 4.4%.