Double blow to growth story

The stock markets plunged below 16,000-mark on Wednesday for the first time in four months, as rupee took a severe beating further to touch a record low of 54.46 to a dollar after a spurt in capital outflow and problems in bourses over euro-zone crisis.

The total market value of stocks which plunged is about Rs 77,000 crore. Total investor wealth, measured in terms of cumulative market capitalisation (m-cap) of all listed companies in the country, dropped to Rs 57.48 lakh crore at the end of the day's trade.

The Bombay Stock Exchange benchmark Sensex dipped below 16,000 level for the first time since 12 January in mid-session trade on aggressive selling by foreign funds, as weak rupee raised concerns of slowing economic growth.

The Sensex, which had a brief recovery on Tuesday in last six sessions, fell further to trade 349.90 points, or 2.14 per cent, to 15,978.35 at 1215 hrs. Similarly, the broad-based National Stock Exchange index lost 101.65 points, or 2.05 per cent, to 4,841.15 with stocks of auto, metal and power suffering major losses.

Traders said said market sentiments were jolted by the fall in Asian markets after the euro was pegged at a four-month low on news that Greece will go to polls triggering fears it may exit the euro-zone.

Bad news came from another, however related, front. The rupee tumbled 67 paise to an all-time low of Rs 54.46 against the US dollar on the forex market during the mid-session on Wednesday on increased capital outflows and strong demand from importers.

Traders said the Reserve Bank of India's efforts to curb the falling rupee have failed to arrest the decline, and it has surpassed the previous low of Rs 54.32 set on 15 December.

They said strengthening of the dollar against major currencies in overseas markets, following renewed worries over deepening euro-zone sovereign debt crisis, and lower openings in equity markets world-wide put pressure on the rupee. 'Economic turmoil globally as well as domestic concerns over rising inflation and melting equities remain a major factor for the current record fall in rupee,' said a Delhi-based forex trader.
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