Sensex hammered to 17,196.47 as rupee weakens

Sensex plummeted to a two-week low of 17,196.47 on Thursday’s trading session as Indian currency, Rupee, lost its shine against dollar in response to increase in global oil demand. Currently, the global crude oil price is oscillating between $105 and $110 per barrel. The weak Industrial data from the Eurozone and China has also added to the weakening of rupee from 50.68 to 51.28 on Thursday.

In the domestic front, the partial rollback of railway fares during the latest railway budget has already dampened the market sentiment. In such a scenario, if there is hike in fuel price, following the global cue, it could inflate the prices of goods and services. On the other hand, if the current trend of global oil price rise is not matched with hike in fuel prices in India, there is a fear that the additional subsidy burden could add to the fiscal deficit and hurt Indian economy. All eyes are now on policy review meet next month when RBI is going to take its decision on interest rate cut.

This apart, a recent CAG report (the Comptroller and Auditor General) has revealed that the decision to allot coal blocks without auctioning them during the period 2004-2009 has not gone down well with the Indian economy. It has cost the Indian government a loss of Rs 10.67 lakh crore.

But experts are hopeful that as long as economic growth rate remains positive and foreign institutional investors (FIIs) continue to stay invested in Indian market, it should stay strong.