Markets nosedives to 3 and 1/2 month lows; Nifty infringes 200-DMA of 5119.88

The three straight session southbound journey of Indian stock markets showed little signs of coming to a halt on Friday as there were absolutely no domestic triggers to take the markets higher. Apart from the gloomy global tidings, the exacerbating concerns over depreciating Indian rupee have taken the center stage, prompting investors to take profits off the table. It is turning out to be a freefall of sorts as the benchmark equity indices are struggling to find a bottom in noon trades and have already slipped closer to the psychological 5,100 (Nifty) and 16,900 (Sensex) levels after getting bludgeoned by over a percent. While, the benchmark equity indices have nosedived to the lowest levels in around three and half a month, the 50-share frontline index Nifty has breached its 200 day moving average of 5,119.88. The Indian rupee crashed to Rs 53.82 against the US dollar and is gradually closing in to all-time low levels as modest intervention by the country’s central bank yesterday failed to stem the rupee’s slide. The immediate trigger for the decline has been a rising dollar demand from importers, but a deteriorating macroeconomic situation, years of policy uncertainty and decades of fiscal mismanagement, coupled with renewed risk-aversion among global investors is leading to weak foreign fund inflows, which is in turn widening the country’s budgetary deficit and further corroding its currency’s value. Investors also fretted over weak cues from Asian markets which mostly fell following the overnight fall in US markets on the back of disappointing economic reports and weakness in commodities. The European bourses too are exhibiting somber trends ahead of a crucial US jobs data and a potentially tumultuous weekend for European politics, which sees elections in France and Greece. Back home, the Capital Goods counter got bludgeoned by over two and half a percent and remained the top laggard in the space while the rate sensitive banking and Realty pockets too bore the brutal brunt of hefty position squaring and plummeted by over two percent. The disappointing quarterly earnings announcement by bellwether Bank of Baroda did not go down well with investors. Amid the across the board carnage, the defensive Healthcare counter managed to keep its head above the water with moderate gains of around half a percent.

Moreover, the broader markets traded on a bleak note with large cuts of around a percent in the afternoon trades, underperforming their larger peers. The bourses declined on weak volumes of over Rs 0.5 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1599:838 while 109 scrips remained unchanged.

The BSE Sensex is currently trading at 16,954.31 down by 196.88 points or 1.15% after trading as high as 17,121.37 and as low as 16,928.31. There were 4 stocks advancing against 26 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index plunged 1.61% and Small cap sank 1.19%.

On the BSE sectoral space, Healthcare up 0.47% was the only gainer, while Capital Goods down 2.55%, Bankex down 2.08%, Realty down 2.02%, Metal down 1.61% and Power down 1.58% were the major laggards in the space.

Cipla up 2.68%, Wipro up 0.65%, Tata Power up 0.25% and Tata Motors up 0.02% were the only gainers on the Sensex, while BHEL down 4.66%, Hero Moto down 4.20%, Bajaj Auto down 3.69%, DLF down 3.25% and L&T down 2.80% were the major losers in the index.

Meanwhile, a Parliamentary panel has recommended that a marketing fund be set up to support the efforts of Micro, Small and Medium Enterprises (MSMEs) sector. It is of the opinion that a corpus of at least Rs 1,000 crore should be set up to subsidise the marketing efforts of these companies.

The Parliamentary Standing Committee on Commerce headed by Shanta Kumar has also demanded that the 2% interest subsidy given to handicraft, handloom, carpet and SME sector which has ended on March 31 be extended.

It is also of the opinion that maximum investment limit in plant and machinery of MSME units should be increased from Rs 10 crore to Rs 25 crore so that the export units can increase their competitiveness in the global market.

The MSME sector offers a substantial share of 40% in India's exports but suffers due to lack of infrastructure, marketing and technology. Hence it is important that these companies be supported if India wants to achieve the target of doubling its share in world trade by 2020.

The S&P CNX Nifty is currently trading at 5,127.15, lower by 61.25 points or 1.18% after trading as high as 5,177.20 and as low as 5,118.15. There were 8 stocks advancing against 42 declines on the index.

The top gainers on the Nifty were Cipla up 2.91%, Asian Paints up 1.12%, Wipro up 0.57%, Tata Power up 0.40% and Dr Reddy’s up 0.36%.

Bank of Baroda down 4.88%, BHEL down 4.64%, Hero Moto down 4.13%, Axis Bank down 3.92% and Bajaj Auto down 3.88% were the major losers on the index.

In the Asian space, Hang Seng declined 0.75%, Jakarta Composite fell 0.16%, Straits Times Index fell 0.15% and KOSPI Composite dropped 0.30%.

On the flipside Shanghai Composite gained 0.41%, KLSE Composite added 0.36% and Taiwan Weighted climbed 0.54%.

Stock markets in Japan remained closed on Friday on account of Greenery day.

The European markets got off to a negative start as France’s CAC 40 sank 0.55%, Germany’s DAX shed 0.62% and Britain’s FTSE 100 slipped 0.35%.