The Bombay Stock Exchange (BSE) stands in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Weekly Wrap: Sensex Extends Decline, Rupee Pares Losses After Hitting Record Low

Indian equity benchmarks extended their decline but capped losses in a truncated week and the rupee stabilised after hitting record lows against the dollar.

The S&P BSE Sensex fell 0.78 percent to 38,090.64 and the NSE Nifty 50 Index declined 0.64 percent to 11,515.20.

In first two days of the week, the benchmarks fell sharply, with the Sensex and Nifty declining over 2.5 percent to one-month lows after U.S. President Donald Trump threatened to impose higher tariffs on China’s goods, saying he’s ready to tax all imports from the world’s second-largest economy "at short notice".

However, on Wednesday the benchmarks rebounded after an official said the government may announce measures to support the rupee after a planned review of the economy by Prime Minister Narendra Modi this weekend.

Weekly Wrap: Sensex Extends Decline, Rupee Pares Losses After Hitting Record Low

This week, markets curtailed losses after the government announced that it will take measures to support the rupee. The lira strengthened after the Turkish central bank raised rates, helping emerging markets bounce back, AK Prabhakar, head of research at IDBI Capital Markets, told BloombergQuint over the phone.

"The next two-three months till elections will be volatile but the bias will be positive," Sumeet Bagadia, associate director at Choice Breaking, told BloombergQuint.

Any dip in Nifty towards 11,400, due to volatility, should be used as a buying opportunity for target of 11,700 and if it’s crossed, Nifty can go up to 12,000 as well, Bagadia said.

Barring the Nifty Metal Index, all sector gauges compiled by the National Stock Exchange ended lower dragged by the Nifty Auto Index’s 1.9 percent drop. The auto index declined led by losses in Hero MotoCorp Ltd. and Tata Motors Ltd.

The rupee fell for the third week but pared losses after hitting a record low as slowing inflation added to optimism that policymakers will take steps to stem a rout in Asia’s worst-performing currency.

Data released by the Central Statistics Office on Wednesday showed that retail inflation was at 3.69 percent in August compared with 4.17 percent in July. A Bloomberg poll of 41 economists had estimated inflation at 3.77 percent for August 2018.

For the week, rupee declined 0.17 percent to end at 71.85 per dollar after hitting record low of 72.91 on Wednesday.

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