Benchmarks open lower tracking weakness in rupee

Pressurized by weak cues from Asian peers, key domestic benchmarks have made a negative start with both the frontline gauges tumbling below their crucial 5,850 (Nifty) and 18,350 (Sensex) levels. All the Asian equity indices, barring KLSE Composite, were trading lower in Tuesday’s morning deals with Japanese Nikkei declining by about a percentage point after the Bank of Japan (BOJ) kept its policy unchanged. Though, the US markets ended a choppy session little changed overnight, after Standard & Poor’s Ratings Services revised its US credit-rating outlook to stable from negative.

Back home, weakness in rupee continue to hurt sentiments as it touched 58.66 in the early-morning deals versus previous close of 58.15. The government, however, tried to play down the rupee’s depreciation, calling the panic among investors unwarranted. Traders also remained sidelines ahead of April industrial output and consumer price index-based inflation data on June 12, which will help determine the Reserve Bank of India’s (RBI) stance on the June 17 monetary policy review. Some pressure also came in from selling in banking stocks after the RBI has imposed monetary penalty on Axis Bank, HDFC Bank and ICICI Bank for violating its instructions. Auto sector too witnessed selling in early trade after Society of Indian Automobile Manufacturers (SIAM) said that the car sales in India fell an annual 12.3% in May.

On the sectoral front, consumer durables witnessed the maximum loss in trade followed by realty and banking, while there were no gainers on the BSE sectoral space. The broader indices too were feeling the selling pressure, while the market breadth on the BSE was negative; there were 369 shares on the gaining side against 890 shares on the losing side while 70 shares remain unchanged.

The BSE Sensex opened at 19,382.22; about 58 points lower compared to its previous closing of 19,441.07, and has touched a high and a low of 19,418.74 and 19,315.30 respectively.

The index is currently trading at 19,318.64, down by 122.43 points or 0.63%. There were 9 stocks advancing against 21 declines on the index.

The overall market breadth has made a weak start with 27.77% stocks advancing against 66.97% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices down by 0.69% and 0.77% respectively. 

There were no gaining sectoral indices on the BSE while Consumer Durables down by 1.56%, Realty down by 1.48%, Bankex down by 1.33%, Metal down by 1.23% and Auto down by 0.80% were the top losers on the sectoral index.

The top gainers on the Sensex were Hero MotoCorp up by 0.88%, Cipla up by 0.87%, Infosys up by 0.77%, Wipro up by 0.58% and Dr Reddys Lab up by 0.43%.

On the flip side, Jindal Steel was down by 3.50%, ICICI Bank was down by 2.85%, Bharti Airtel was down by 2.64%, Mahindra & Mahindra was down by 1.68% and Tata Steel was down by 1.39% were the top losers on the Sensex.

Meanwhile, concerned over the fall in rupee value to lifetime low of over 57.50 against dollar, the finance ministry said that there is an unwarranted panic in the market and will settle down in some time. Raghuram Rajan, chief economic adviser at the finance ministry has said the weakness in rupee could be a temporary phenomenon and the government will continue to take measures to curb the current account deficit and does not want the rupee to be volatile.

Furthermore, Economic Affairs Secretary Arvind Mayaram said that presently, dollar is appreciating against all the currencies across the world and the rupee has not weakened as much as some of its peers. The central bank also stated that it will do everything to turn down the volatility, but will not disclose its strategy. The RBI has forex reserves of over USD 290 billion to deal with the situation on the external sector.

The rupee is depreciating mainly due to the high CAD, which widened due to rising gold import and high crude oil prices. Further, persistent dollar demand from importers and banks also added to the fall in rupee value. In May, India’s gold imports touched 162 tonnes, while in April, it was around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. While, the CAD widened to a record high of 6.7% in the third quarter of FY13.The CNX Nifty opened at 5,848.75; about 29 points lower as compared to its previous closing of 5,878.00, and has touched a high and a low of 5,868.05 and 5,842.45 respectively.

The index is currently trading at 5,843.40, down by 34.60 points or 0.59%. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were HCL Tech up by 2.14%, Hero MotoCorp up by 1.37%, Ranbaxy up by 1.29%, Infosys up by 0.82% and Cipla up by 0.76%.

On the flip side, Jindal Steel down by 3.63%, Bharti Airtel down by 2.70%, ICICI Bank down by 2.58%, IndusInd Bank down by 2.23% and Axis Bank down by 2.18% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 191.40 points or 0.89% to 21,423.69, Jakarta Composite tumbled 95.84 points or 2.01% to 4,681.52, Nikkei 225 dropped 107.44 points or 0.80% to 13,406.76, Straits Times crumbled 33.57 points or 1.05% to 3,166.94, KOSPI Composite decreased 18.73 points or 0.97% to 1,913.97 and Taiwan Weighted was down by 12.32 points or 0.15% to 8,148.23.

On the flip side, KLSE Composite was up by 1.42 points or 0.08% to 1,789.22.

Markets in China remained closed for the trade on account of Dragon Boat Festival holiday.