Markets slip to lowest point of the day; Realty drag

Markets are not getting any respite with major indices plunging to the lowest points of the day in late morning session. Down in red with loss of over two present, both Sensex and Nifty were trading below the psychological 27,250 and 8,250 levels respectively. There is selling across board and not only the bluchips, the broader markets too were suffering deeper cuts.  A weak trend at other Asian markets was the main trigger for the plunge as investor sentiment was dampened by fears of a possible Greece default. Greece had closed its banks and imposed capital controls on Sunday to check the growing strains on its crippled financial system, bringing the prospect of being forced out of the euro into plain sight. Further, the sentiments remained dampened with the observation of the Bank for International Settlements (BIS), who raising the red flag over interest rates remaining “extraordinarily low” globally has said that easy monetary regimes are resulting in a build-up of financial vulnerabilities. Depreciation in Indian rupee against dollar too weighed down sentiments. Investors failed to draw any relief from the Indian Meteorological Department (IMD) statement that the South-west Monsoon has covered the entire length and breadth of the country, way ahead of schedule in a year that saw a forecast of deficit rainfall for India.

On global front, Asian stocks tumbled as investors sought shelter in haven assets while they weighed a possible Greek exit from the euro zone. Further, shares in Shanghai sank even after the central bank cut interest rates. Back home, extending losses for the fifth consecutive day, the rupee shed 24 paise to trade at 63.88 against the US dollar in early trade due to continued demand for the American currency from importers.

Back on street, all BSE sectoral indices were trading in the red. Among them, realty index fell the most by 3.07 per cent, followed by Consumer Durables 2.70 per cent, Banking 2.67 per cent and Metal 2.63 per cent. Further, shares of companies having significant revenue exposure to the eurozone fell sharply as chances of Greece exiting the Euro zone increases with Greece set to default on its debt payment. In scrip specific development, shares of Cairn India declined after the report that the Rajasthan government laid claim on Cairn India’s Barmer gas, making it difficult for the Anil Agarwal Group Company to sell the fuel outside. Furthermore, HDFC Bank has declined after the bank exceeded the single-borrower limits prescribed by RBI in case of its credit exposure to Reliance Industries (RIL).

The market breadth on BSE was negative, out of 2169 stocks traded, 383 stocks advanced, while 1711 stocks declined on the BSE.

The BSE Sensex is currently trading at 27240.66, down by 571.18 points or 2.05% after trading in a range of 27213.01 and 27451.07. There were 0 stocks advancing against 30 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.43%, while Small cap index down by 2.38%.

The losing sectoral indices on the BSE were Realty down by 3.07%, Consumer Durables down by 2.70%, Bankex down by 2.67%, Metal down by 2.63%, Infrastructure down by 2.52%, while there were no gainers in the sectoral space.

The top losers on the Sensex were Hindalco down by 4.06%, Tata Motors down by 3.37%, SBI down by 3.23%, ICICI Bank down by 2.92% and Bharti Airtel down by 2.73%, while there were no gainers on the Sensex.

Meanwhile, the central bank of India clarifying the Governor Raghuram Rajan’s recent comments that referred to the Great Depression of the 1930s and triggered a major global debate, has said that Rajan did not imply or suggest that there was any risk of the world economy, which is in a steady recovery notwithstanding uncertainties like those in the Euro area, slipping into a new Great Depression. The RBI said in a statement that a section has 'mis-characterised Governor Raghuram Rajan’s remarks at the AQR conference at London Business School on June 25.

In its clarification, the RBI said that the Great Depression (in the 1930s, when there was a severe worldwide economic depression) was a period of great turmoil, caused by many factors and not just beggar-thy-neighbour policies. The RBI, however, added Rajan indeed said that “the policies followed by major central banks around the world were in danger of slipping into the kind of beggar-thy-neighbour strategies that were followed in the 1930s”. Beggar-thy-neighbour here means that a country’s attempts to set right its economic problems tend to worsen the economic problems of other countries.

The RBI further said, “What governor Rajan did say was that the policies followed by major central banks around the world were in danger of slipping into the kind of beggar-thy-neighbour strategies that were followed in the 1930s.

Rajan had asked central banks from across the world to revisit the “rules of the game” in the international monetary system. “I am not going to venture a guess as to how we establish new rules of the game. It has to be international discussion, international consensus built over time after much research and much action.”

Rajan, the former IMF Chief Economist, who has earlier warned against competitive monetary policy easing by central banks globally, had also predicted the 2008 financial crisis.

The CNX Nifty is currently trading at 8200.65, down by 180.45 points or 2.15% after trading in a range of 8195.65 and 8248.05. There were 1 stocks advancing against 49 stocks declining on the index.

The only gainer on Nifty was BPCL up by 0.64%, while Hindalco down by 4.15%, SBI down by 3.37%, HCL Tech down by 3.34%, ICICI Bank down by 3.21% and Tata Motors down by 3.11% were the top losers.

Asian markets were trading in red; Hang Seng was down by 3.38%, Nikkei 225 down by 2.43%, Taiwan Weighted down by 2.42%, Shanghai Composite down by 5.7%, Jakarta Composite down by 1.16%, Straits Times down by 1.46%, KOSPI Index down by 1.66% and FTSE Bursa Malaysia KLCI was down by 1.03%.