The rupee breached the rs.50 mark on Wednesday to close at 50.05 to the dollar as the Sensex swung from positive to negative territory, losing nearly 400 points intra-day. The rupee had closed at 49.66/67 on Tuesday and its fall on Wednesday was gradual, said the chief dealer at Vrajlal Thakker & Co., forex brokers and consultants. The pressure on the rupee came from FII outflow. He said if the US markets open strong on Wednesday, then the rupee can rebound a bit. The rupee last saw this level on October 27 when it recorded a low of 50.29. Mr.Rugved Dhumale, associate Vice president, Macklai Financial & Commercial Services Ltd. said the rupee had been weakening over the last three days and the market was expecting some sort of intervention by the Reserve Bank of India (RBI) by the end of the week.
He said, "the correlation between the rupee and the stock market has been holding up well in the last five to six months," and added that "the rupee could move further northwards by the end of this year". Mr.Deven Choksey, managing Director, K.R.Ckoksey said "the rupee could touch 55 if the carnage on the stock market is not stopped. Investors will not come to the Indian markets and this could hurt the rupee apart from sending bedgetary estimates haywire." The Sensex gained 280 points within an hour of opening but by 2 pm the market came under the grip of short sellers and arbitrageurs. It closed down 163.42 points at 8773.78 while the Nifty was down 48.15 points at 2635.
"There is no participation from genuine buyers. The market is loaded with bear traders and the arbitrageurs who absorb the transactions of the bears and the financial institutional investors." said Mr.Choksey, adding that the market gave up all its gains when there was no buying seen. Mr.Ambareesh Baliga termed the market turning red in the afternoon as "a typical bear market rally, where every upside is used to sell."
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