Sensex fails to hold day’s high levels as rupee tests 56 levels

Stock markets in India continued to trade on a disappointing note in Wednesday’s afternoon session as the benchmark equity indices traded on a choppy note with cuts of around half a percent. The frontline gauges showed smart recovery from the low point of the day and went on to recover almost all the ground that they lost in morning trades. However, the key indices faced stern resistance at the highpoint of the day around the psychological 16,000 (Sensex) and 4,850 (Nifty) levels and drifted lower. The disappointing global leads along with frustrating domestic headwinds continued to dissuade investors from investing in riskier asset classes like equities. Rupee, the worst performing Asian currency, searched for fresh bottom levels in the session as it hit fresh historical lows of about 56 against the US dollar despite the RBI’s repeated measures to rein in the beleaguered currency’s freefall. The widening fiscal and current account deficits, policy paralysis, stubborn inflation and wavering global growth have dampened India’s economic outlook and dissuaded foreign investors from investing in Indian markets. Moreover, cues from global markets too remained somber since morning. Most Asian equity indices went on to undo the good work they did in the last session and plunged over a percent following former Greek Prime Minister Lucas Papademos’ comments that plans for the debt laden nation’s exit from the single currency union are being considered. In addition, the European markets too got off to a depressing start with cuts of around one and half a percent as investors awaited the outcome of an informal meeting of leaders from Euro-zone from which some decisions on further measures to tackle the region’s onerous debt crisis are expected. Back home on the BSE sectoral space, investors squared off hefty positions from the Consumer Durables index which plunged close to two percent, being the top laggard in the space. The Auto, Power and Oil & Gas pockets traded with cuts of around half a percent each and restricted the benchmarks’ upside. However, some gains in Metal, PSU and rate sensitive Bankex counters helped the key indices cut their losses.

Moreover, the broader markets too came off the highs of the day and traded with moderate cuts of around half a percent, performing largely in tandem with their larger peers. The bourses declined on large volumes of over Rs 0.8 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1466:916 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 15,970.95 down by 55.46 points or 0.35% after trading as high as 16,001.76 and as low as 15,847.03. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index declined 0.43% and Small cap index fell 0.47%.

On the BSE sectoral space, there were no gainers, while Consumer Durables down 1.99%, Auto down 1.03%, Power down 0.71%, Realty down 0.53% and Healthcare down 0.50% were the major laggards in the space.

GAIL up 3.38%, SBI up 1.51%, BHEL up 1.15%, Hindalco up 0.98% and Wipro up 0.60% were the major gainers on the Sensex, while Tata Power down 2.21%, Maruti down 1.67%, Hero Moto down 1.44%, ONGC down 1.43% and Sun Pharma down 1.35% were the major losers in the index.

Meanwhile, imports of gold and silver have risen substantially during the period 2009-12, as per government data. Imports of the precious metals increased to $61.5 billion in FY ‘12 as compared to $42.5 billion in 2010-11 and $22.8 billion in FY ’09. This information was given by Minister of State for Finance, Namo Narain Meena in a written reply to the Rajya Sabha. Meena has also stated that the volatility in the prices of gold and silver have been noticed due to their volatility in the prices of these commodities in the international markets.

India is the largest consumer of gold in the world as per the World Gold Council and a net importer of the bullion. Of late the imports of the precious metal have been on the rise leading to the increase in the current account deficit (CAD) of the country. The CAD of India increased from 3.3% in Dec 2010 to 4% on Dec 2011.

Apart from petroleum products, imports of gold and silver were major contributors towards the deficit. In an attempt to discourage the imports of gold and silver, the Finance Minister in Budget for 2012-13 proposed to increase basic customs duty on standard gold bars, gold coins of purity exceeding 99.5% and platinum from 2% to 4%. Besides, customs duty on non-standard gold was increased to 10% from 5%. The RBI too has taken measures to curb the loans given out by NBFCs against gold.

The S&P CNX Nifty is currently trading at 4,838.90, lower by 21.60 points or 0.44% after trading as high as 4,853.75 and as low as 4,803.95. There were 14 stocks advancing against 36 declines on the index.

The top gainers on the Nifty were GAIL up 3.92%, IDFC up 1.73%, Ranbaxy up 1.53%, SBI up 1.26% and BHEL up 0.84%.

Tata Power down 2.38%, Kotak Bank down 2.24%, Bharti Airtel down 2.05%, Maruti down 2.03% and Bank of Baroda down 1.64% were the major losers on the index.

In the Asian space, Shanghai Composite declined 0.45%, Hang Seng plunged 1.28%, Jakarta Composite sank 1.27%, KLSE Composite fell 0.39%, Nikkei 225 got pounded by 1.98%, Straits Times Index plummeted 0.99%, KOSPI Composite slumped 1.10% and Taiwan Weighted dived 1.75%.

The European markets got off to a negative start as France’s CAC 40 fell 1.33%, Germany’s DAX sank 0.9% and United Kingdom’s FTSE plunged 1.13%.