Benchmarks magnify losses; Sensex breaches 27,200 mark

Indian equity benchmarks have extended their losses with Sensex and Nifty breaching their crucial 27,200 and 8,250 levels in late morning session. Sentiments remained dampened after the rupee fell by another 27 paise to trade at fresh two-year low of 65.81 against the dollar today on sustained capital outflows by foreign funds even as the US currency weakened overseas. Investors failed to get any sense of relief with revenue secretary Shaktikanta Das’ statement who seeking to reassure foreign investors that it will not take any steps that “undermines the growth momentum”, participatory notes (P-Notes) “will not be banned overnight” and stakeholders will be consulted before a decision is taken, even as it was signaled that the know-your-customer (KYC) norms will be strengthened for such instruments.

Global cues too remained sluggish after a survey showed Chinese factories contracted at their fastest pace since the depth of the global financial crisis in 2009, sending investors scurrying to the safety of bonds and gold. Back home, selling was both brutal and wide-based as none of sectoral indices on BSE, barring IT, were spared. Counters, which featured in the list of worst performers include auto, capital goods and banking. Sectors like realty, infrastructure, consumer durables, metal, oil and gas and power too witnessed selling pressure. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 450 shares on the gaining side against 1,786 shares on the losing side while 64 shares remain unchanged.

The BSE Sensex is currently trading at 27183.09, down by 424.73 points or 1.54% after trading in a range of 27131.44 and 27442.82. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.64%, while Small cap index down by 1.66%.

The lone gaining sectoral index on the BSE was IT up by 0.17%, while Auto down by 2.43%, Capital Goods down by 2.33%, Bankex down by 2.28%, Realty down by 2.21% and Infrastructure down by 2.00% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 0.60%, Sun Pharma Inds. up by 0.26%, Lupin up by 0.15%, Hindustan Unilever up by 0.13% and TCS up by 0.03%. On the flip side, Vedanta down by 3.91%, GAIL India down by 3.85%, Tata Motors down by 3.77%, Hero MotoCorp down by 3.60% and SBI down by 3.49% were the top losers.

Meanwhile, amid the demand of another rate cut at the  next policy review on September 29, Reserve Bank of India (RBI) governor Raghuram Rajan, has said that 'It would be a 'great help' if realty developers sitting on unsold stock bring down prices…Once the prices stabilise, more people will be keen to buy houses.' Governor said that real estate prices need to come down in order to ease lending norms for home loans.

Rajan also said that builders should first bring down prices and clear the stock else easier home loans might keep realty rates high. He added that “I think we need the market to clear. With growing unsold stock, we need to see the ways to do it. Some of it might be by making loans easier, but we also don't want to create a situation where prices stay high at the level, which means demand can't pick up.”

RBI governor’s statement came after SBI chairman Arundhati Bhattacharya proposed that the RBI allow banks to provide home loans below the Base Rate. Such home loan schemes were available five years ago and were then described as “teaser” loans by the regulator. The governor's comments come at a time when unsold housing stocks are at a two-year-high and developers continue to hold on to prices despite a sharp fall in transactions.

Earlier, Rajan had said that Indian economy is showing signs of improvement, adding that a pick up in rural demand would further improve economic growth. He also said that the Reserve Bank of India continues to watch the progress of monsoon to assess the overall impact on inflation as well as global developments.

The CNX Nifty is currently trading at 8247.50, down by 125.25 points or 1.50% after trading in a range of 8225.05 and 8305.40. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 0.92%, Infosys up by 0.91%, Tech Mahindra up by 0.69%, HCL Tech. up by 0.67% and Hindustan Unilever up by 0.30%. On the flip side, Yes Bank down by 4.28%, Vedanta down by 4.11%, GAIL India down by 3.87%, Zee Entertainment down by 3.83% and Tata Motors down by 3.77% were the top losers.

Most of the Asian Equity indices were trading in red; Hang Seng tumbled 547.67 points or 2.41% to 22,209.80, Nikkei 225 dropped 547.36 points or 2.73% to 19,486.16, Taiwan Weighted declined 213.49 points or 2.66% to 7,816.32, Shanghai Composite crumbled 156.45 points or 4.27% to 3,507.84, Jakarta Composite decreased 91.16 points or 2.05% to 4,350.75, Straits Times shed 58.75 points or 1.95% to 2,951.03 and KOSPI Index was down by 33.58 points or 1.75% to 1,880.97. On the flip side, FTSE Bursa Malaysia KLCI was up by 4.93 points or 0.31% to 1,582.34.