Millennium Post

Stocks, rupee log losses for first time in Rajan era at RBI

Stocks and the rupee on Thursday fell for the first time in the six trading sessions since Raghuram Rajan took over as RBI Governor as markets adopted a cautious stance ahead of factory output and retail inflation data.

The S&P BSE benchmark Sensex fell 216 points to end at 19,781.88, while the rupee slid by 12 paise to 63.50 versus the dollar, snapping a five-day upmove that came on the back of hopes of big-bang financial sector reforms by Rajan.

After the former IMF economist assumed charge at the country's central bank, the Sensex galloped nearly 10 per cent or 1,762.9 points in the previous five sessions, in step with the rupee, which strengthened by 425 paise, or 6.28 per cent.
Thursday's fall may be a temporary blip as government data later in the day showed industrial production in July grew at 2.6 per cent. Factory output had contracted in the previous two months.

Inflation appeared to be easing as data showed prices at the retail level increased 9.52 per cent in August compared with a 9.64 per cent jump in July.

'Beyond this, the FOMC meeting scheduled on 17-18 September would be important. If the Fed tapering is on the lighter side than what was previously expected, markets could look at consolidating the recent gains,' said Sanjeev Zarbade, Vice President - Private Client Group Research, Kotak Securities.

Rajan postponed the mid-quarter policy review to 20 September from the initially scheduled September 18 as he wanted to consider all major developments, including the Fed announcements and their effects on the markets.
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