Drop in Indian Rupee, stocks not exceptional
The fall in Rupee against the US dollar is not exceptional as the Indian currency is doing well. Rupee fell 6.5 percent against the US dollar since April 2015. However, it rose against other major currencies. The Indian government has downplayed the latest drop in stocks. It was mayhem on Indian markets on Thursday as key indices Sensex and Nifty tumbled.
Though Rupee fell against the US dollar, but it strengthened against Euro, Sterling Pound and Yen, according to Economic Affairs Secretary Shaktikanta Das. Indian will present its Union Budget -2016-17 in the Parliament on 29 February.
Asia's third largest economy is not deterred by weaker global financial markets. The ongoing downfall in the Indian stocks markets eroded gains recorded after Narendra Modi assumed Prime Minister Office in May 2014. Das attributed the fall in the stocks to the global trends, while saying Indian markets are fundamentally doing well, as reported by Reuters.
India's economic growth is encouraging amid sluggish global economy. The global financial markets are suffering from uncertainty and losses. India's gross domestic product (GDP) is expected to grow 7.6 percent for the current financial year ending March 2016.
The sustained capital outflows impacted the Indian currency. However the dollar's weakness against other global currencies in fact limited the Rupee's fall further. Rupee fell eight paise to 67.93 per US dollar at the Interbank Foreign Exchange market. The demand for US dollars from the Indian importers rose. Das said: "The world is in turmoil." The Indian economy is mostly strengthened by the manufacturing sector, according to a report by NDTV Profit.
Meanwhile, Indian stock markets recorded another major bloodbath making it a black Thursday (11 February 2016). The benchmark indices broke multiple support levels indicating the worst losses since 24 August 2015. The selloff began in Hong Kong spreading India to European markets. The banking and mining stocks led the downfall. Investors became wary about the future course of direction.
The Economic Times reports that the S&P BSE Sensex tumbled 807 points or 3.40 percent to 22,951.83 points and 50-stock barometer Nifty50 fell 239 points or 3.23 percent to 6,976.35 points. The concerns gripped the Dalal Street. The selloff in banking stocks was witnessed across the global markets.
The ongoing concerns about the directionless global markets are likely to remain at the center stage. The growth concerns were badly hit the investor confidence and the market sentiment. Now, investors, analysts and corporate firms turned their focus to forthcoming Union Budget for the next financial year 2016-17. The India's Finance Minister has a major and a difficult task of supporting growth, while maintaining fiscal prudence.