Indian equities, currency fall on economy slowdown fears

The Indian currency and equity market plummeted on Tuesday due to a lack of appetite for risk due to the US-China trade row, Brexit uncertainty, and a slowdown in the country's economic growth that kept investors at bay.
The rupee fell nearly one per cent to Dh19.71 versus dirham and 72.38 against the greenback on Tuesday, according to xe.com. The Indian currency has lost nearly 1.3 per cent against dirham in the past one week when it was trading at 19.44 on August 27 and has lost 3.74 per cent in the past one month when it was trading at 18.98 on August 4, 2019.
US bank JPMorgan Chase & Co. forecast in August that the Indian currency will hit 73/74 vs dollar (19.9/20.2 vs dirham) in the coming months, mainly due to waning internal and external growth.
Weak sentiments also spooked investor from India's equity markets as Sensex and NSE Nifty witnessed major sell-off on Tuesday. Both Sensex and NSE Nifty plunged over two per cent to close at 36,563 and 10,798 points, respectively. Livemint said total wealth of the investors fell Rs2.5 trillion after to plunge in equity markets.
Finance Minister, Nirmala Sitharaman, has, of late, announced a host of new measures to revive private investment, but investor confidence still remains subdued.
"The sharp fall in the Q1 GDP growth to five per cent and the weak core sector growth are the key factors that have caused a fall in the markets as it opened after a long weekend," said Joseph Thomas, Head of Research-Emkay Wealth Management.
Lukman Otunuga, research analyst at FXTM, said equity markets are falling victim to the lack of appetite for risk amid reports that the US and China are struggling to agree on the next meeting data to resume trade talks.
"The rising sense of caution and unease over trade developments is fuelling risk aversion, consequently hitting equities but supporting safe-haven assets like gold. Other geopolitical risk factors in the form of Brexit uncertainty and global growth concerns are seen weighing on global sentiment and accelerating the flight to safety," he said.
- waheedabbas@khaleejtimes.com