Indian shares fell over 1 percent on Monday, after measures outlined by the government on Friday to stem the steep decline in the rupee failed to cheer markets, while declining Asian shares added to the gloom.
The government late on Friday said it would take measures to cut down “non-necessary” imports, ease overseas borrowing norms for the manufacturing sector and relax rules around banks raising masala bonds, or rupee-denominated overseas bonds.
However, analysts doubted if these steps would prevent the rupee’s declines.
“There were expectations that something substantial will be planned to hold the rupee, but the measures the government had in hand were limited and a little long term in nature. So they will take their own time to have an impact,” said Naveen Kulkarni, Head of Research at Reliance Securities.
The rupee fell more than 1 percent to 72.70 per dollar on Monday versus its previous close of 71.80. Having fallen nearly 12 percent, it is Asia’s worst performing currency against the dollar this year.
The broader NSE Nifty dropped 1.2 percent to 11,375.60 as of 0547 GMT, while the benchmark BSE Sensex slipped 1.3 percent to 37,599.81.
“Rest of the week, markets will likely be on the weaker front,” Kulkarni added.
Financials were the biggest drag, accounting for more than half the losses on the indexes. Housing Development Finance Corp fell 2.4 percent, while HDFC Bank Ltd dropped 1.6 percent.
Most Asian markets slipped amid reports Washington was about to announce a new round of tariffs on Chinese imports, setting the stage for possible reprisals by Beijing.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.2 percent, snapping three straight sessions of gains.