August 13, 2014 / 12:12 PM / in 3 years

Indian rupee falls on IIP, CPI disappointment

* Rupee ends at 61.215/225 per dlr vs 61.08/09

* Stock market gains avert any major slide

* Thursday is the last trading day of the week

By Gaurav Pai

MUMBAI, Aug 13 (Reuters) - The Indian rupee fell on Wednesday after higher-than-expected consumer inflation and dull June industrial output hit sentiment. Emerging market currencies were also subdued due to weaker retail sales data from China.

Broader losses were, however, capped as domestic shares managed to edge higher in late trade on the back of brighter corporate results.

Fund flows are expected to be key for the rupee going forward, especially in a fluctuating global risk aversion scenario.

Foreign investors have sold a net $84.14 million in shares and $966.62 million of debt in August so far, as per official data.

“Despite the weak IIP (industrial output) numbers, the outlook on foreign funds flows into India is not so bad. I expect the dollar-rupee to stabilize at these levels in the near term,” said Vishweshwara M., assistant general manager, treasury, at Karnataka Bank in Mumbai.

The partially convertible rupee closed at 61.215/225 per dollar, compared with Tuesday’s close of 61.08/09.

Sentiment was hit after retail inflation edged up to 7.96 percent in July from 7.31 percent a month earlier, according to data on Tuesday.

Traders will now wait for July Wholesale Price Inflation numbers due on Thursday. A Reuters poll predicts that WPI likely eased to 5.10 percent in July from 5.43 percent the month before.

In the offshore non-deliverable forwards, the one-month contract was at 61.53/58, while the three-month contract was at 62.13/62.23

FACTORS TO WATCH: * Sterling falls on BOE Inflation Report, wages data * Asian currencies slid on weaker China economic data * European shares rise on easier oil * Foreign institutional investor flows * For data on currency futures

DIARIES & DATA: Indian Data Watch European diary Indian diary US Diary (Editing by Biju Dwarakanath)

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