Rupee falls 42 paise against U.S. dollar
Continuing its decline for the second day on Wednesday, the rupee depreciated sharply by 42 paise to 84.77 against the U.S. dollar – the biggest single day fall in a month on account of lingering geopolitical concerns and a stronger dollar index, analysts said.
'The easing of trade tensions has allowed the dollar to rebound, negatively impacting major currencies. Furthermore, consistent dollar demand from oil importers and hedgers have exerted downward pressure on the rupee over the past two days,' said Dilip Parmar, senior research analyst, HDFC Securities.
He said the spot USDINR is anticipated to trend upward, potentially reaching 85.70 if it holds above 85. Conversely, 84.25 presents a significant support level, he added. Meanwhile, benchmark stock indices ended with small gains amid Indo-Pak. tensions.
Nifty opened lower by 147 points as investors turned cautious following news of Operation Sindoor, a targeted strike by Indian forces on terror sites in response to the recent Pahalgam attack. However, it recovered more than 200 points from the early morning lows as markets digested the news.
'Dalal Street's resilience could be attributed to a substantial inflow of Foreign Institutional Investors (FII), with ₹43,940 crore in FII inflows over the past 14 days providing crucial support,' said Devarsh Vakil, Head of Prime Research, HDFC Securities.
The Nifty finally ended the day with 34 points, or 0.14% gains, at 24,414 levels. Trading volumes on the NSE cash market were higher by 11% compared with Tuesday.
Among the sectoral indices, Nifty Auto, Consumer Durables, and Realty were major gainers, while Nifty FMCG, Healthcare, and Pharma ended in the red. Auto companies staged a strong rally after the conclusion of the Free Trade Agreement (FTA) with the United Kingdom (U.K.) and a Double Contribution Convention.
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