Re, Sensex tumble on global sell-off
The 30-share BSE index tumbled 426 points to close 2% lower at 20,707, while the rupee slumped 44 paise to end at 63.10—slipping below the 63 mark to a dollar for the first time in 10-months.business Updated: Jan 28, 2014 07:28 IST
The benchmark Sensex on Monday tumbled 426 points and the rupee hit a 10-month low, following a global sell-off. World markets fell on fears of a sharp deceleration in China and that the US Federal Reserve will hasten the roll-back of its monetary stimulus programme amid strong recovery signs.
The 30-share BSE index closed 2% lower at 20,707, while the broader Nifty ended at 6,135, or 131 points down, tracking weakness across world markets.
The rupee slumped 44 paise to end at 63.10—slipping below the 63 mark to a dollar for the first time in 10-months. Fears of a financial crisis inArgentina added to the gloom, with the Latin American nation reportedly withdrawing support to the Peso, the local currency.
The markets are waiting for cues on the US central bank’s next move amid anticipation that the Federal Open Market Committee (FOMC) will cut another $10 billion from its monthly asset purchases when it meets on Tuesday and Wednesday.
This would double the cut in asset purchases, and is will hit emerging market currencies. The FOMC said last month that it would cut bond-buying by $10 billion a month beginning January.
Emerging economies such as India have been receiving large slices of cheap money — $85 billion a month — that the Fed had been injecting into the system to revive the economy.
“The fear of the next round of US stimulus tapering is the key reason for the fall in the market,” said Rahul Shah, vice-president, Motilal Oswal Financial Services.
Also under watch is the Reserve Bank of India’s move on interest rates on Tuesday, with experts expecting the central bank to main a status quo on lending costs.