Stock market crashes and the rupee falters

Updated: Sep 04, 2019, 08:39 IST | Agencies |

The broader Nifty too sank 225.35 points, or 2.04 per cent, to settle at 10,797.90. The Indian rupee plunged 97 paise to close at 72.39 per US dollar on Tuesday

The Indian rupee plunged 97 paise to close at 72.39 per US dollar. File pic
The Indian rupee plunged 97 paise to close at 72.39 per US dollar. File pic

Benchmark stock indices on Tuesday crashed over 2 per cent and the rupee tumbled 97 paise to a level not seen in over 9 months as unpleasant news continued to flow in for the Indian economy. The BSE Sensex crashed about 770 points and the NSE Nifty dived over 225 points after investors indulged in panick selloffs as dismal GDP print, weak core sector growth and disappointing auto sale numbers pointed to deepening economic crisis in the country.

The benchmark indices also saw their biggest intra-day plunge in nearly 11 months. Massive selloffs in equities saw investor wealth eroding by Rs 2.55 lakh crore. Indian markets, after an extended weekend, opened on Tuesday sharply lower reacting to country's worsening macro-economic situation as well as weak global cues attributed to long-lasting US-China trade tiff. After plunging 867 points during the day, the 30-share index ended 769.88 points, or 2.06 per cent, lower at 36,562.91. The broader Nifty too sank 225.35 points, or 2.04 per cent, to settle at 10,797.90. The Indian rupee plunged 97 paise to close at 72.39 per US dollar on Tuesday.

Rs 9,300 cr infusion in IDBI
The government on Tuesday approved R9,300 crore fund infusion in IDBI Bank to help improve the bank's capital base and turn it profitable. Information and Broadcasting Minister Prakash Javadekar said it will help in completing the process of IDBI Bank's turnaround and enable it to return to profitability and normal lending, and give the government the option of recovering its investment at an opportune time. Of the R9,300 crore needed, LIC will meet 51 per cent (R4,743 crore), he said. The remaining 49 per cent, R4,557 crore, is proposed from the government as its share on one-time basis, he added.

IDBI Bank needs a one-time infusion of capital to complete the exercise of dealing with its legacy book. It has already substantially cleaned up, reducing net non-performing assets from a peak of 18.8 per cent in June 2018 to 8 per cent in June 2019. After this infusion, IDBI Bank expects to be able to subsequently raise further capital on its own and expects to come out of the RBI's Prompt Corrective Action (PCA) framework sometime next year, said an official statement.

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