Rupee fall: light at the end of the tunnel

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The recent weakness in the markets triggered by the decline in the rupee should not come as a shock to investors. Historically, stock market sell-offs have coincided with rupee falls. A study by BofA Merrill Lynch shows since August 1995 stocks have dropped 13 out of the 17 times the rupee has weakened. But, there is some good news, too. Stocks have rebounded by an average 11 per cent since August 1995 in the three months following the rupee's sharp fall. The study shows that of the 17 times, stocks have bounced back 13 times in the three-months ensuing the rupee's depreciation.