Key gauges witness volatility amid depreciating rupee

Indian equity markets witnessed volatility amid depreciating rupee and pare most of their initial gains in late trade. The Indian Rupee hit new record low against the US dollar at 82.80 per dollar, down from 82.36 in the previous session. The local currency is down about 10% against the US dollar this year. However, markets managed to trade above water taking support with ICRA Ratings’ statement that after rising steeply for a month, the cost of market borrowing for states declined sharply on Tuesday with the weighted average cut-off falling by 11 basis points to 7.72 per cent from 7.83 per cent last week.

Weakness in European counters dampened sentiments as all the European counters were trading in red as investors fretted about runaway inflation and aggressive monetary policy tightening, even as upbeat corporate earnings soothed some fears about a recession. Asian markets ended mostly in red. Back home, defence stocks remained in focused after Prime Minister Shri Narendra Modi inaugurated DefExpo 2022 at Mahatma Mandir Convention and Exhibition Centre in Gandhinagar, Gujarat. DefExpo is a symbol of global trust towards India.

The BSE Sensex is currently trading at 59096.72, up by 136.12 points or 0.23% after trading in a range of 58961.77 and 59399.69. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.16%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Energy up by 0.53%, Oil & Gas up by 0.35%, FMCG up by 0.34%, Healthcare up by 0.05% and Capital Goods up by 0.04%, while Utilities down by 1.35%, Power down by 1.09%, IT down by 0.99%, Metal down by 0.92% and TECK down by 0.89% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.05%, Nestle up by 1.76%, ITC up by 1.70%, Reliance Industries up by 1.57% and Axis Bank up by 0.97%. On the flip side, Bajaj Finserv down by 1.90%, NTPC down by 1.77%, SBI down by 1.62%, HCL Tech down by 1.50% and Infosys down by 1.42% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that after rising steeply for a month, the cost of market borrowing for states declined sharply on October 18, 2022 with the weighted average cut-off falling by 11 basis points (bps) to 7.72 per cent from 7.83 per cent last week. The cost declined despite a rise in the weighted average tenor to 12 years from 11 years last week.

According to the report, the 10-year benchmark G-sec yield remaining stable at 7.43 per cent in the auction on this Tuesday from last Tuesday. Nine states raised Rs 16,900 crore through state government securities (SGS) on October 18 -- 10 per cent lower than the Rs 18,700 crore indicated for this week in the third quarter auction calendar. So far this year, bond sales by states are down 8 per cent over the year-ago period.

The agency said the weighted average cut-off of 10-year state bonds also declined by 10 bps to 7.73 per cent from 7.83 per cent, thus narrowing the spread with G-sec yield to 30 bps from 41 bps, respectively. States are drawing down lower from the market in spite of Reserve Bank data on the ways and means advances and the overdraft facilities for August indicating a sequential and on-year decline in the usage. This, the agency feels, could be on account of the comfortable cash flow position of states in August benefitting from the rise in the taxes devolved by the Centre, which doubled to Rs 1.2 lakh crore in August from Rs 0.6 lakh crore in the previous month.

The CNX Nifty is currently trading at 17506.30, up by 19.35 points or 0.11% after trading in a range of 17472.85 and 17607.60. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were HDFC up by 2.20%, ITC up by 1.78%, Nestle up by 1.74%, Reliance Industries up by 1.56% and HDFC Bank up by 1.09%. On the flip side, Bajaj Finserv down by 1.80%, NTPC down by 1.74%, Tata Consumer Product down by 1.69%, JSW Steel down by 1.66% and SBI down by 1.65% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 403.30 points or 2.38% to 16,511.28, Taiwan Weighted dropped 147.92 points or 1.13% to 12,976.76, Shanghai Composite declined 36.58 points or 1.19% to 3,044.38, KOSPI fell 12.51 points or 0.56% to 2,237.44 and Straits Times was down by 2.30 points or 0.08% to 3,023.58. On the flip side, Jakarta Composite soared 25.93 points or 0.38% to 6,860.42 and Nikkei 225 was up by 101.24 points or 0.37% to 27,257.38.

European markets were trading lower, UK’s FTSE 100 decreased 36.42 points or 0.53% to 6,900.32, France’s CAC decreased 10.18 points or 0.17% to 6,056.82 and Germany’s DAX was down by 39.10 points or 0.31% to 12,726.51.