Mumbai: Tuesday started on a promising note, but the market lost its script halfway as the Indian rupee depreciated and Europe behaved erratically. The Sensex rallied more than 260 points in the first few hours of trade (it had crashed 664 points in previous two sessions) reacting to late recovery in US market on Monday; but the index fell more than 100 points intra-day amid extreme volatility.
Raamdeo Agrawal, director and co-founder of Motilal Oswal Financial Services feels the market is likely to continue being volatile in the near term. "I think uncomfortable time is going to continue for some more time. We are not seeing a stability. Everyday banks and some of these global stocks are looking very weak," he explained.
The 50-share NSE Nifty fell 5.85 points, to close at 4,940.95 and the 30-share BSE Sensex lost 34.30 points, to end at 16,467.44. The Indian rupee depreciated by 0.65 per cent to 47.53 per dollar. In the shorter-term, Pramit Brahmbhatt, CEO of Alpari India feels that it can go up to Rs 48.10 levels, but in the longer-term, it will come back to the earlier levels of Rs 45 per dollar.
"The uncertainty across in the European markets is troubling. The range for the dollar could be between Rs 47.75 and Rs 46.75 in the month of September. But post September, we can see some sort of stability come into the rupee prices, and equity market has a bigger role to play here. If there is a come back of FIIs in the equity markets, then we will see definitely see appreciation of dollar, and that can give some sort of support to rupee pricing," he explained.
European markets too slipped after initial gains. France's CAC plunged 2.6 per cent, at the time of closing of Indian equities. Germany's DAX was down 0.8 per cent and Britain's FTSE down 0.9 per cent. The Dow Jones futures lost 138 points.
Samir Arora of Helios Capital said, the main concern for the global market is the European debt crisis. "We continue to remain cautious," he said adding, "…globally investors remain short in the markets."
For India, Arora said, policy concerns along with global uncertainties remain a drag.
On the home turf, the fall was led by banks stocks that may be ahead of RBI policy meet to be held on September 16. Agrawal expects a 25 basis points hike in rates.
In the financial space, SBI tanked 1.6 per cent and ICICI Bank was down 0.92 per cent. HDFC and HDFC Bank were down 0.4-0.7 per cent.
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