The rupee depreciated 6 paise to touch 83.13 against the US dollar in the morning session, due to surging crude oil prices and dollar demand from importers. Forex traders noted that the domestic unit is trading in a narrow range after the support from positive equities was negated by foreign fund outflows. At the interbank foreign exchange, the Indian rupee opened at 83.11 against the greenback and fell to 83.13. In the previous trading session on Friday, the domestic rupee closed at 83.07 against the US dollar.
The stock markets opened on Tuesday with a strong rally. The BSE Sensex climbed over 300 points and was trading at 71,744.80 as of 10:15 AM, while the NSE Nifty50 gained nearly 100 points and stood at 21,666.55.
Background
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The stock market observed a trading holiday on Monday to celebrate the occasion of the Ram Mandir consecration ceremony in Ayodhya. The regulators announced an additional trading day on Saturday to make up for the holiday. The stock market opened on Tuesday and continued the rally from the last week. The two key equity benchmarks, Sensex and Nifty, on Tuesday climbed in early trade. The BSE Sensex gained over 500 points to trade near 72,000, while the NSE Nifty50 rose over 150 points to cross 21,700 mark.
The government is also scheduled to release the Interim Budget on February 1, 2024. The market will also be looking forward to the quarterly results from the firms regarding the third quarter. As of January 19, 2024, the foreign investors offloaded domestic equities worth Rs 13,000 crore in the first three weeks of the month. This development took place due to high valuations of Indian stocks and increasing US bond yields. However, foreign investors have remained bullish on the debt market and added Rs 15,647 crore into it during the reviewing period, official data from the depositories showed.
Prior to this, FPIs remained investors in the preceding months and poured in Rs 66,134 crore in December and Rs 9,000 crore in November. Explaining the reasons behind the change, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “There are two main reasons why FPIs turned sellers. One, the US bond yield started rising with the 10-year yield rising from the recent level of 3.9 per cent to 4.15 per cent triggering capital outflows from emerging markets. Second, since the valuations in India are high, FPIs used the excuse of less-than-expected results from HDFC Bank to press massive sales too.”
According to analysts, domestic equity markets are likely to witness subdued activity amid low participation from global as well as domestic investors. “As the breadth of the market is very strong, we expect the stock-specific bullish trend is likely to continue. In the near term, Nifty could face resistance at 21,850, while support is seen at 21,500,” Deepak Jasani, Head of Retail Research at HDFC Securities, said.