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INDIA: Indian Equities Tumble, Rupee Hits Fresh Low Amid Global Stock Sell-Off

INDIA
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The selloff global equities following a disappointing jobs report in the US on Friday have spurred worries of foreign outflows from India. In Japan, the Topix and Nikkei 225 tumbled 12%, with both entering bear markets. The deteriorating sentiment prompted further declines in Indian equities from July’s all-time highs, with the Sensex and Nifty indices both over 2.5% lower today and at levels not seen since the beginning of last month. For USD/INR, the pair recorded a fresh record high of 83.8538 overnight alongside broader weakness in the emerging markets space.

  • Separately, Bloomberg report that Indian government bonds eligible for index inclusion saw the highest-ever overseas inflows last week, suggesting the central bank’s curbs on the securities have done little to dampen investor sentiment.
  • Looking ahead, the RBI meets Thursday to decide their next move in policy. Following an extended period with a hawkish bias, commentators are expecting a return to a more neutral stance. Indian CPI had been moderating this year but an unanticipated jump in June was enough to warrant concern from voting members. Since the last meeting, the new coalition government has released their budget reinforcing their commitment to fiscal prudence. 
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The selloff global equities following a disappointing jobs report in the US on Friday have spurred worries of foreign outflows from India. In Japan, the Topix and Nikkei 225 tumbled 12%, with both entering bear markets. The deteriorating sentiment prompted further declines in Indian equities from July’s all-time highs, with the Sensex and Nifty indices both over 2.5% lower today and at levels not seen since the beginning of last month. For USD/INR, the pair recorded a fresh record high of 83.8538 overnight alongside broader weakness in the emerging markets space.

  • Separately, Bloomberg report that Indian government bonds eligible for index inclusion saw the highest-ever overseas inflows last week, suggesting the central bank’s curbs on the securities have done little to dampen investor sentiment.
  • Looking ahead, the RBI meets Thursday to decide their next move in policy. Following an extended period with a hawkish bias, commentators are expecting a return to a more neutral stance. Indian CPI had been moderating this year but an unanticipated jump in June was enough to warrant concern from voting members. Since the last meeting, the new coalition government has released their budget reinforcing their commitment to fiscal prudence.