MUMBAI: The Indian rupee closed nearly flat on Tuesday as a fall in local equities and dollar bids from state-run banks ate into the currency’s early gains spurred by the cessation of military hostilities between India and Pakistan.
The rupee touched a peak of 84.6350 in early trading before ending at 85.33 against the US dollar, nearly unchanged from its close at 85.37 on Friday.
The benchmark equity indexes, the BSE Sensex and Nifty 50, fell about 1.5% each on fears of foreign flows moving to China after its trade pact with US and on profit booking after the previous day’s near 4% rally. India’s bond and currency markets were closed on Monday.
On Monday, US and China announced an agreement to reduce reciprocal tariff reductions for the next three months.
“A rally in China stocks might see modest near-term underperformance of India stocks,” Nomura said in a note, raising its allocation to Chinese equities to a “tactical overweight.”
The firm said that it maintains an overweight position on Indian equities but will fund its allocation to China by trimming exposure to India.
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