(Reuters) - Indian shares opened 2% lower on Monday, with the rupee hitting a lifetime low as investors awaited inflation data later in the day, while global markets plunged over fears of aggressive policy tightening by the U.S. Federal Reserve later this week.
The NSE Nifty 50 index was down 2.3% at 15,833.45, as of 0351 GMT, after touching its lowest in nearly four weeks.
The S&P BSE Sensex fell 2.4% to 52,990.35.
The Indian rupee touched a lifetime low of 78.28 to the dollar while the benchmark 10-year bond yield hit 7.60%, its highest since Feb. 28, 2019.
The Nifty IT index was down 2.6%, while the NSE bank index fell nearly 3%.
Asian stocks dropped over fears that the Fed would tighten policy on Wednesday, after data last week showed the U.S. consumer price index hit its highest in over 40 years last month.
Rising COVID-19 cases in Beijing added to woes, only a short time after the city relaxed curbs to quell a recent outbreak.
Rupee
(Bloomberg) The Indian rupee declined to a new record low as a global risk off spurred by expectations of aggressive Federal Reserve tightening weighed on emerging-market assets and stoked fears of more equity outflows.
The local currency slid as much as 0.6% to 78.2825 per dollar on Monday, after having hit a series of lows in recent days. The benchmark S&P BSE Sensex Index slid as much as 2.1% as foreigners took out about $24 billion from local stocks. Bonds also declined.
The rupee has however been kept in a tight range in recent days by the central bank which has been using its large reserve stockpile of over $600 billion to curb any sharp depreciation.
“We continue to expect INR beta to a stronger USD to stay low, visible in muted weakness in the near term,” Barclays Plc. analysts including Ashish Agrawal wrote in a note. “The RBI is likely to lean against the depreciation pressure, also exacerbated by foreign investor selling in equities and a larger oil bill. That said, risks remain skewed towards a higher USD/INR in the near term.”