Still, stocks advanced the most in April in 28 months after March had seen the biggest foreign fund exit in history. Broadest gauges fell up to 1.6% intraday before some short covering left them 0.8% lower at close.
The rupee, which breached 95 to the dollar to plummet to a historic low of 95.33, erased some of the losses to close at 94.90 after some backloaded interventions from the Reserve Bank of India (RBI) to prevent a rout, traders said.”The RBI stepped in as the rupee weakened, allowing the currency to trade in the 95.10/$ to 95.35/$ range for much of the session before coming in with heavy dollar sales in the final hour, helping it close at 94.90/$,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors. “The move suggests the central bank is keen to prevent the rupee from ending the day beyond the psychologically significant 95/$ mark.”
Stocks mimicked this pronounced weakness of the currency.
Sectoral Indices Down Too
The NSE Nifty 50 fell 0.7%, or 180.10 points, to close at 23,997.55, while the BSE Sensex declined 0.8%, or 582.86 points, to end at 76,913.50.
However, both indices climbed 7.5% and 7%, respectively in April- the highest monthly gains since December 2023 – after both gauges had retreated to multi-year lows in March.
Indian markets will remain shut on Friday on account of Maharashtra Day.
“There was some short covering that led the Nifty to erase some of the losses as traders didn’t want to take a risk on the short side ahead of the long weekend as oil prices are expected to be stretched and could see some cool-off if there is any positive announcement,” said Rajesh Palviya, Head of Research, Axis Securities.
If the state election results are in favour of the BJP, there could be a rally, he said.
Most sectoral indices ended lower apart from IT and pharma, which advanced marginally. Nifty Metal index dropped 2.1%. Nifty PSU Bank fell 1.7%. Nifty Realty and Consumer Durables moved around 1.5% lower each.
Caution Ahead
“The markets are not out of the woods yet given the long-term impact of the closure of Strait of Hormuz. However, some of the panic receded after the deep corrections witnessed recently,” said Sonam Srivastava, Founder and CEO, Wright Research.
Brent crude oil futures spiked to a four year high of $126 on Thursday, after reports suggested Trump received a briefing from the US Central Command on new plans for potential military action against Iran.
Asian markets remained weak. South Korea and Hong Kong fell 1.4% and 1.3% respectively. Japan and Taiwan declined around 1% each. China however, moved 0.1% higher.
India is not getting global attention compared to the performance of its emerging market peers like Japan and Taiwan due to lack of AI based opportunities and the concerns of inflationary pressure eroding earnings, she said.
