Markets give UPA's Food Security Bill a thumbs down, fear its impact on economy
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A day after the Lok Sabha passed the UPA government's flagship Food Security Bill, the markets gave the mega welfare programme a huge thumbs down Tuesday over fears that it would further hurt the economy.
The rupee continued with its weakness and breached the 66 mark against the dollar, falling by 3 per cent during the day to close at a new low of 66.24. The benchmark Sensex at the Bombay Stock Exchange broke its three-day surge and fell by 590 points or 3.2 per cent to close below the 18,000 mark at 17,968.
The broader Nifty at the National Stock Exchange fell by 189 points or 3.45 per cent to fall below the 5,300 mark and close at an 11-month low of 5,287.5.
The fall was also precipitated by an outflow of foreign institutional investor funds as sentiment weakened. According to BSE data, they pulled out a net Rs 1,374 crore from the equity markets Tuesday.
Tuesday's intraday rupee fall of 3 per cent is the biggest in 18 years, and it was the biggest loser against the dollar during the day and a clear outlier with a 3 per cent fall. In comparison, the Mexican peso was down 1.24 per cent while the Brazilian real fell by 0.8 per cent against the dollar.
While the rupee continues to fall and make imports, foreign travel and education even more expensive for Indians, experts suggested that investors should stay away from the stock market as there was a lack of certainty on when and where the slide would stop. "It is hard to say how much more room there is to fall," said Jamal Mecklai, of Mecklai Financial Services.
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