In tandem: Steady depreciation in rupee spells trouble for stock prices

Analysts say a currency depreciation creates an inflationary overhang in the economy, depressing equity valuation

A steady depreciation in the rupee spells trouble for the rally on D-Street. Historically, most rallies in the equity market have occurred either when the rupee has appreciated or has been stable. In contrast, a decline in the value of the rupee against the dollar has been accompanied by market decline.

For example, the BSE Sensex is down around 2.6 per cent since the beginning of November, against a similar 1.9 per cent fall in the value of the rupee against the dollar in the period.

On Wednesday, the equity market and the rupee ended in red. The Indian currency