Representative image
| Photo Credit: Reuters

Image for representative purposes only
| Photo Credit: Reuters

The rupee depreciated 16 paise to close at 86.56 (provisional) against the U.S. dollar on Thursday (January 16, 2025), dragged down by a strong American currency overseas, elevated crude oil prices and foreign fund outflows.

“However, positive domestic equity markets provided some cushion at the lower level,” forex traders said.

At the interbank foreign exchange, the rupee opened at 86.42 and touched the intraday high of 86.37 before ending the session at 86.56 (provisional) against the greenback, 16 paise lower from the previous close.

The local unit settled with a gain of 13 paise at 86.40 against the dollar on Wednesday (January 15, 2025), a day after rebounding 17 paise from its lowest-ever level.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee declined due to increased demand for dollars by importers.

“Importers may continue to buy dollars, which may further pressurise the rupee. Traders may take cues from retail sales and weekly unemployment claims data from the US. USD-INR spot price is expected to trade in a range of ₹86.35 to ₹86.75,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05% higher at 108.97.

Brent crude, the global oil benchmark, fell 0.12% but stayed elevated at ₹81.93 per barrel in futures trade.

Analysts said concerns over geopolitical uncertainties will likely add volatility in the dollar and crude until the U.S. gets a new administration under President Donald Trump next week.

In the domestic equity market, the 30-share BSE Sensex climbed 318.74 points, or 0.42%, to settle at 77,042.82 points, while the Nifty rose 98.60 points, or 0.42%, to 23,311.80 points.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,533.49 crore on Wednesday (January 15, 2025).

Image for representative purposes only
| Photo Credit: Reuters

The rupee rebounded from its lowest-ever level and settled 8 paise higher at 86.62 (provisional) against the U.S. dollar on Tuesday (January 14, 2025) as the American currency retreated from record high.

Some recovery in domestic equity markets after the release of macroeconomic numbers also supported the Indian currency even though it remained under pressure due to elevated crude oil prices and continuous outflow of foreign funds.

At the interbank foreign exchange, the rupee opened at 86.57 and touched the intra-day high of 86.45 before closing for the day at 86.62 (provisional) against the greenback, registering a gain of 8 paise from its previous close.

On Monday (January 13, 2025), the rupee logged its steepest single-day fall in nearly two years and ended the session 66 paise down at its historic low of 86.70 against the U.S. dollar. The currency’s previous record one-day fall of 68 paise was witnessed on February 6, 2023.

The local unit has plunged more than Re 1 in the past two weeks from the closing level of 85.52 on December 30. It had breached the 85-per-dollar mark for the first time on December 19, 2024.

The unit had depreciated 18 paise to settle at 86.04 against the U.S. dollar on Friday (January 10, 2025), a day after registering a marginal gain of 5 paise. In the preceding back-to-back sessions on Tuesday (January 7, 2025) and Wednesday (January 8, 2025), it had plunged 6 paise and 17 paise, respectively.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee recovered from all-time lows on a slight bounce back in the domestic markets and a weak U.S. dollar.

“Cooling retail inflation and easing dollar brought some respite to the falling rupee,” he said, but added that the Indian currency is expected to remain weak as crude oil prices continue to remain elevated, raising inflationary pressures.

“Traders may take cues from PPI (producer price index) data from US today and CPI data from US tomorrow. USD-INR spot price is expected to trade in a range of ₹86.40 to ₹86.85,” Mr. Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.39% lower at 109.38.

Brent crude, the global oil benchmark, rose 0.10% to $81.09 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex climbed 169.62 points, or 0.22%, to settle at 76,499.63 points, while the Nifty rose 90.10 points, or 0.39%, to 23,176.05 points.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,892.84 crore on Monday (January 13, 2025).

Government data released on Tuesday (January 14, 2025) showed, wholesale price inflation rose to 2.37% in December 2024, led by a spike in manufactured products even though prices of food items eased.

Retail inflation, however, declined to a four-month low of 5.22% in December amid easing of prices in the food basket, giving headroom to the Reserve Bank of India (RBI) to reduce the key interest rate in upcoming monetary policy reviews, according to the data released on Monday (January 13, 2025).

The inflation based on the Consumer Price Index (CPI) eased for the second month in a row after it breached the RBI’s upper tolerance level of 6% in October.

Image for representative purposes only
| Photo Credit: Reuters

Benchmark indices Sensex and Nifty traded lower in early trade on Wednesday (January 1, 2025), the first session of 2025, as unabated foreign fund outflows continued to dent investor sentiments.

Investors also remained cautious ahead of the start of earnings season next week.

The 30-share BSE benchmark Sensex declined 171.81 points to 77,967.20 even after a positive beginning to the trade. The NSE Nifty also dipped 46.4 points to 23,598.40 after a muted opening.

From the 30 blue-chip pack, ICICI Bank, UltraTech Cement, Adani Ports, Tata Steel, Axis Bank, Maruti and Kotak Mahindra Bank were among the laggards.

Asian Paints, Larsen & Toubro, Bajaj Finance, Infosys, HCL Tech and Bajaj Finserv were among the gainers.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹4,645.22 crore on Tuesday (December 31, 2024), according to exchange data.

“The New Year begins on a sombre note for the Indian equity market. The near-term trend appears weak with the macro construct dominated by weak GDP and earnings growth.”

“The headwinds from a strong dollar and high US bond yields will impact the market through more FII selling, at least in the early days of 2025. Even though FII selling is matched by DII buying, in this tug of war, in the near-term, sentiments are on the side of FIIs since valuations continue to be elevated and growth and earnings are yet to show signs of recovery,” V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

U.S. markets ended lower on Tuesday (December 31, 2024).

Global oil benchmark Brent crude climbed 0.88% to $74.64 a barrel.

The BSE benchmark Sensex declined 109.12 points or 0.14% to settle at 78,139.01 on Tuesday (December 31, 2024). The Nifty dipped marginally by 0.10 points to settle at 23,644.80.

In the entire 2024, the Sensex jumped 5,898.75 points or 8.16%, and the Nifty surged 1,913.4 points or 8.80%.

Image for representative purposes only
| Photo Credit: Reuters

Equity benchmark indices Sensex and Nifty ended lower on Monday (December 9, 2024), dragged down by selling in blue-chip stocks Reliance Industries, Hindustan Unilever, Axis Bank and mixed global trend.

After oscillating between highs and lows during the day, the 30-share BSE benchmark Sensex declined 200.66 points or 0.25% to settle at 81,508.46. During the day, it moved between the high of 81,783.28 and low of 81,411.55.

The NSE Nifty slipped 58.80 points or 0.24% to close at 24,619.

From the 30-share pack, Hindustan Unilever, Tata Motors, Axis Bank, Nestle India, Asian Paints, ITC, Reliance Industries, Mahindra & Mahindra, IndusInd Bank and State Bank of India were among the laggards.

Larsen & Toubro, Tata Steel, JSW Steel, HDFC Bank, Adani Ports, Kotak Mahindra Bank, Bharti Airtel and PowerGrid were among the gainers.

“Markets witnessed a range-bound session and mostly languished in negative territory due to lack of investors’ enthusiasm after last week’s rally,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

In Asian markets, Seoul and Shanghai settled lower, while Tokyo and Hong Kong ended in the green.

European markets were trading in higher. U.S. markets ended higher on Friday (December 6, 2024).

Global oil benchmark Brent crude rose 0.89% to $71.75 a barrel.

Foreign Institutional Investors (FIIs) turned sellers on Friday (December 6, 2024) after remaining net buyers for the past three straight session. They sold equities worth ₹1,830.31 crore, according to exchange data.

On Friday (December 6, 2024), the 30-share BSE benchmark Sensex declined 56.74 points or 0.07% to settle at 81,709.12, while NSE Nifty dipped 30.60 points to settle at 24,677.80.

Image used for representational purpose.
| Photo Credit: Reuters

The rupee rose 2 paise to 83.96 against the U.S. dollar in early trade on Wednesday (September 4, 2024) aided by a weakening dollar against major currencies overseas and a drop in crude oil prices.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.14% to 101.67.

Brent crude, the international oil benchmark, declined 0.62% to 73.29 in futures trade.

At the interbank foreign exchange market, the rupee opened at 83.96, higher by 2 paise from its previous close and stayed put. The unit had settled at 83.98 against the U.S. dollar on Tuesday.

“Amid the backdrop of this week’s jobs data, U.S. markets experienced a significant sell-off yesterday as investors sought refuge accompanied by a sharp drop in oil prices,” CR Forex Advisors Managing Director Amit Pabari said.

Meanwhile, in the domestic equity markets, Sensex tumbled 721.75 points to 81,833.69 in early trade, while Nifty tanked 196.05 points to 25,083.80.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth ₹1,029.25 crore, according to exchange data.

Gold price plunged ₹350 to ₹60,150 per 10 grams in the national capital on Monday amid weak cues in international markets, according to HDFC Securities.

The precious metal had closed at ₹60,500 per 10 grams in the previous trade.

Silver also declined ₹300 to ₹74,000 per kg.

In the global markets, both gold and silver were quoting lower at $1,912 per ounce and $22.50 per ounce, respectively.

“Gold failed to capitalise on the previous week’s strong gains as traders locked in their profits after a recent rally in prices,” Saumil Gandhi, senior analyst of commodities at HDFC Securities, said.

A policy brief argued for a rational trade policy to contain food inflation which takes into account both consumers and producers.
| Photo Credit: TRAVELLINGLIGHT

A policy brief issued by the Indian Council for Research on International Economic Relations said that the recent steps taken by the government to curb inflation, such as wheat and rice export bans and increasing export duties, were “knee-jerk approaches rather than a well-thought-out strategy”. It argued for a rational trade policy to contain food inflation which takes into account both consumers and producers.

In August 2023, retail inflation accelerated to 6.83%, which is higher than the ceiling of 6%. As food and beverages carry a 57% weightage in India’s retail inflation calculation, and food inflation was 9.94%, rapid acceleration in that segment had a severe impact on retail inflation (Chart 1).

Chart 1 | The chart shows the trend of retail inflation (dark blue) and food inflation (light blue) over time.

Chart appears incomplete? Click to remove AMP mode.

To date, the Indian government has implemented a series of actions aimed at controlling food inflation such as prohibiting the export of wheat in May 2022 and halting the export of broken rice in September 2022. Additionally, in June 2023, the government imposed stocking limits on wheat traders and millers. In July 2023, an export ban was placed on non-basmati white rice, followed by a 20% export duty on parboiled rice. In August 2023, a Minimum Export Price of $1,200 per tonne was set for basmati rice, along with a 40% export duty on onions.

Chart 2 | The chart shows the chronology of trade and domestic stock policy measures to tame the inflation of rice and wheat. 

Due to heatwaves, the production of wheat has suffered in the last two years. Wheat procurement by the government has also been low in the last two cycles. Wheat inflation was 9.22% in August. All this prompted the government to ban wheat exports in May 2022, argues the brief. “But this sudden ban on wheat exports, instead of bringing wheat inflation down, led to greater uncertainty in the market and wheat inflation surged to 15.7 per cent in August 2022, when GOI also banned exports of wheat flour (atta) products,” says the policy brief. Just before the harvest season, wheat inflation accelerated to 25.4% in February 2023. Following this, the government off-loaded wheat under the Open Market Sales Scheme at much cheaper prices and announced wheat stocking limits, according to the policy brief. While these measures did bring down inflation, the report argues that the implications of such measures on farmers who bore the brunt have to be taken into account.

Click to subscribe to our Data newsletter

Chart 3 | The chart shows trends in cereal exports in India. 

Data from the report shows that non-basmati exports increased from 1.38 MMT in FY20 to 6.40 MMT in FY23, by 363%. The report argues that in the fiscal year 2023, the per-tonne export value for non-basmati rice stood at $344, falling below India’s Minimum Support Price (MSP) for rice. This indicates that millers may be sourcing rice directly from farmers or that there could be an increase in rice supply due to potential distribution leakages from the expanded PMGKAY free rice programme. 

Chart 4 | The chart shows the offtake of rice and wheat under the National Food Security Act and PMGKY from the central pool. 

Chart 3 and Chart 4 underscore the growth in rice and wheat offtake within the last three years, as well as the significant rise in grain exports from India over the same time period.

In July 2023, when rice inflation was 13%, the government banned the export of non-basmati rice. Yet, inflation remained at 12.5%. Rather than imposing export duty and gradually increasing its impact, the government called for a ban which created panic among the African and Indian diaspora in the U.S., according to the report.

Source: A report called “Tackling food inflation: Is restricting exports and imposing stocking limits the optimal policy?” published by the Indian Council for Research on International Economic Relations

Also read | Data | Heat wave in Punjab may curtail India’s wheat exports

Listen to our podcast |A discussion on Madras HC judgment: Wife can claim a share in husband’s property | Data Point podcast

Equity benchmark indices Sensex and Nifty closed higher for the third straight day on Tuesday on gains in market heavyweights ITC, Reliance Industries and Infosys amid a bearish trend in global equities.

Besides, robust domestic macroeconomic data added to the positive momentum, traders said.

The BSE benchmark index climbed 152.12 points or 0.23% to settle at 65,780.26. During the day, it gained 203.56 points or 0.31% to 65,831.70.

The Nifty rose 46.10 points or 0.24% to end at 19,574.90.

“Strong domestic factors are providing crucial support for Indian equities, allowing them to maintain their strength despite attempts by weak global peers to disrupt the mood. India’s service PMI remains robust at 60.1, indicating sustained demand even in the face of inflationary pressures.

“Notably, small and mid-cap stocks have been standout performers, with both indices reaching all-time highs. Conversely, the weak Chinese service PMI has cast a shadow on hopes of an economic rebound in China, impacting global market sentiments,” said Vinod Nair, Head of Research at Geojit Financial Services.

Sun Pharma emerged as the biggest gainer from the Sensex pack, climbing 2.09%, followed by ITC, Titan, Bajaj Finance, Nestle, Infosys, L&T, JSW Steel, Reliance Industries and Kotak Mahindra Bank.

UltraTech Cement, Maruti, HDFC Bank, Wipro, State Bank of India and NTPC were among the laggards.

“Markets held on to gains for the 3rd straight day but strong follow-through buying was, however, missing albeit lack of positive Asian cues. The positive takeaway was that the benchmark Nifty stuck to gains as Nifty Mid-cap and Small-cap indices continued to scale fresh all-time highs.

“The risk mood has improved after Friday’s softer than expected US August payrolls report which suggests that September rate hike is off the table,” Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

In the broader market, the BSE midcap jumped 1.09%, and smallcap gained 0.61%.

Sectorally, healthcare rallied 1.29%, realty climbed 1.08%, energy (1.01%), consumer durables (0.90%), oil & gas (0.83%) and services (0.72%).

Financial Services, telecommunication and bankex were the laggards.

“Global equities mostly fell on Tuesday as higher Treasury yields weighed on growth stocks, while a slow pace of expansion in services activity in China (8-month low) stoked worries over demand in the world’s second-largest economy,” Deepak Jasani, Head of Retail Research, HDFC Securities, said.

In Asian markets, Tokyo settled in the green, while Seoul, Shanghai and Hong Kong ended in the negative territory.

European markets were trading on a mixed note in early deals. The U.S. markets were closed on Monday.

“While markets extended gains for the third straight session, the mood was more or less range-bound with a positive bias as U.S. markets were shut on Monday and investors preferred to take selective bets. One needs to be watchful about the sharp volatility in the rupee, which could impact FII flows going ahead,” Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said.

The rupee plunged by 35 paise to close at 83.06 (provisional) against the U.S. dollar on Tuesday, amid a strong American currency and higher crude oil prices.

According to a survey, manufacturing activities in India gained momentum in August.

Meanwhile, GST collections grew by 11% to over ₹1.59 lakh crore, and domestic passenger vehicle sales hit a record in August.

Global oil benchmark Brent crude declined 0.62% to $88.45 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹3,367.67 crore on Monday, according to exchange data.

The BSE benchmark had climbed 240.98 points or 0.37% to settle at 65,628.14 on Monday. The Nifty advanced 93.50 points or 0.48% to close at 19,528.80.

“We expect the broader market participation to continue to outperform and sector rotation is helping Nifty to stay elevated. On the upside we expect the Nifty to target levels of 19650. In terms of levels, 19490 – 19470 shall act as a crucial support and 19650 – 19700 shall act as an immediate hurdle,” Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas, said.