Uptick in COVID-19 cases weigh on Indian rupee, equity market

Agencies Mumbai The Indian rupee fell 18 paise to 73.53 against the US dollar (20.15 against the Qatari riyal) in opening trade on Tuesday due to weaker ...

Agencies Mumbai The Indian rupee fell 18 paise to 73.53 against the US dollar (20.15 against the Qatari riyal) in opening trade on Tuesday due to weaker domestic equity market and strengthening of the US currency.In addition, concerns over rising COVID-19 cases also weighed on the currency.The domestic unit started on a weaker note against the greenback tracking decline in Asian shares and currencies on concerns over rising US inflation expectations, Reliance Securities said in a research note.Most of the Asian currencies are trading weaker against the UD dollar and could weigh on sentiments, the note said.Markets would also await domestic Index of Industrial Production (IIP) and Consumer Price Index (CPI) data, which would be released this week, it added.Meanwhile, experts have said that the debilitating impact of the second wave of COVID-19 outbreak on India’s economy will have its inevitable ramifications on the stock markets, triggering an imminent correction as foreign portfolio investors continue to exit the scene in droves.On Tuesday, under sustained selling pressure, benchmark indices ended nearly 1 percent lower, tracking weakness in global markets and dragged primarily by finance and banking stocks.Analysts feel despite the market delivering positive returns in all four quarters of FY21 and going forward, India’s shares might witness more correction on account of rising bond yields and the second wave of COVID-19.“In the immediate future Indian markets could go in for some correction and consolidation phase but as time goes by it could recoup and standout,” said Rusmik Oza, executive vice president and head of Fundamental Research at Kotak Securities.Nippon India Mutual Fund, one of the top performing fund managers, noted that investors in India’s $2.8 trillion equity market are underestimating the economic impact from the world’s worst coronavirus outbreak, which will delay any recovery and could trigger a ‘correction’.Samir Rachh, who oversees $1.8 billion of assets at Nippon India Mutual Fund in Mumbai, said the market is completely ignoring the present situation, noting recent gains have been “driven by a huge amount of liquidity.”“While the country is rolling out vaccines, the virus has spread to places that do not have adequate facilities or the medical infrastructure to handle it,” Rachh said. “If we don’t see it peaking, as estimated, and given how the stocks have gained from last year, there could be a market correction,” Rachh was quoted as saying by Bloomberg.