Persistent weakness in rupee drag benchmarks lower

Distressed markets clobbered out of shape in Tuesday’s trade with benchmarks ending the session with a cut of over one and half a percentage point, weighed down majorly due to depreciation in rupee. Indian rupee hit new low of almost Rs 59 per dollar, though recovered up to certain extent after Reserve Bank of India (RBI) reportedly intervened in the market. Traders also remained sidelines ahead of April industrial output and consumer price index-based inflation data on June 12, which will help determine the RBI’s stance on the June 17 monetary policy review. Selling was both brutal and wide based as none of the sectoral indices on BSE were spared and local bourses snapped the session below their crucial 5,800 (Nifty) and 19,200 (Sensex) levels.

However, slight recovery was witnessed in noon deals, but proved short lived as continued selling in Metal counter dragged the markets near day’s low by the end of session. Losses in Metal counters were led by Jindal Steel stocks, which plummeted over 15 per cent on coal scam woes. The Central Bureau of Investigation (CBI) has registered a case against Jindal Steel & Power over coal block allocation and is currently investigating alleged irregularities in awarding of coal mining rights potentially worth billions of dollars to private companies.

Sluggish global cues too dampened the sentiments as European markets traded lower in early deals on Tuesday ahead of a two-day public hearing in Germany’s constitutional court examining the legality of the ECB's bond-buying scheme. All the Asian equity indices shut shop in red with Japanese Nikkei declining by about one and a half percentage point after the Bank of Japan (BOJ) kept its policy unchanged.

Back home, some pressure also came in from selling in banking stocks after the RBI imposed monetary penalty on Axis Bank, HDFC Bank and ICICI Bank for violating its instructions. Auto sector too witnessed selling during the trade after Society of Indian Automobile Manufacturers (SIAM) said that the car sales in India fell an annual 12.3% in May. Shares of frontline jewellery companies remained under pressure during the trade. Stocks like, Titan Industries, Shree Ganesh Jewellery House, Tara Jewels, Gitanjali Gems and Tribhovandas Bhimji Zaveri (TBZ) on concerns that a frequent rise in gold import duty and the sustained depreciation of the rupee against the dollar may dampen the growth of the sector.

The NSE’s 50-share broadly followed index Nifty declined by about ninety points to end below the psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by about three hundred points to end below its crucial 19,200 mark. Moreover, broader markets too struggled during the trade and snapped the session with a cut of over one and a half percent.

The market breadth remained in favor of declines as there were 670 shares on the gaining side against 1,691 shares on the losing side while 125 shares remain unchanged.

Finally, the BSE Sensex shaved off 298.07 points or 1.53% to settle at 19,143.00, while the CNX Nifty plunged by 89.20 points or 1.52% to end at 5,788.80.

The BSE Sensex touched a high and a low of 19,418.74 and 19,121.18, respectively. The BSE Mid cap index down by 1.60% and Small cap index was down by 1.82%.

The top gainers on the Sensex were, Cipla up by 1.90%, Bajaj Auto up by 0.83%, Wipro up 0.69%, GAIL India up 0.39% and Hindustan Unilever up by 0.05%, while Jindal Steel down by 15.18%, Hindalco down 5.97%, Tata Power down 5.87%, ONGC down 3.91% and ICICI Bank down by 3.75% were the top losers on the index. 

There was no gainer on the BSE sectoral space, while Consumer Durables down 6.36%, Metal down 4.13%, Realty down 3.68%, Bankex down 2.24% and Power down 2.07% were the top losers on the sectoral space.

Meanwhile, buoyed by improved spending behaviour and easing inflation, Indian consumers' confidence level rose in the month of May as against the same month last year. The BluFin's Consumer Confidence Index (CCI), assessing the pulse of urban Indian consumers with regard to the economy, spending behaviour and employment, rose to 41.4 points in May, an increase of 3.4 points from January’13.

The index reflects pessimism at below 50 score and optimism above that and these two key components indicate improvement in the consumer sentiment. Further, a sub index of CCI, which rates inflation sentiment, rose from 23.9 points in January to 26.8 points in May, while the spending sentiment improved from 28.3 points to 30.5 points in the same period. However, employment sentiment declined to 50.2 points in May from 51.4 points in January. While, the score itself is encouraging as it is above the benchmark level of 50.

Further, BluFin noted that consumers were still pessimistic about the economy's prospects as CCI sub-index which measures future expectations, was at 40 points. In terms of region, consumers from North India, who are most sensitive to economic vagaries are showing increased propensity to spend as the consumer confidence in North India registered a rise of about two points to 39 points in May, after a steady decline since January 2013. 

The CNX Nifty touched a high and low of 5,868.05 and 5,780.35 respectively. 

The top gainers on the Nifty were Ambuja Cement up by 1.85%, Cipla up 1.84%, Bajaj Auto up 1.01%, GAIL up 0.61% and Ranbaxy up by 0.57%.

On the flip side, the top losers of the index were, Jindal Steel down 15.25%, Hindalco down 6.31%, Tata Power down 6.10%, DLF down 4.23% and ONGC down by 4.02%.

The European markets were trading in red, France’s CAC 40 down by 1.78%, Germany’s DAX down by 1.59% and the United Kingdom’s FTSE 100 down by 1.57%.

Asian markets closed the shop on a weak note after a fresh spike in US interest rates re-ignited concerns about capital flows from the region and forced investors to pare back their Asian portfolios. Japan’s Nikkei went home with red mark before the Bank of Japan's policy decision. South Korean market ended lower as decline in Samsung Electronics weighed on the market. Hong Kong’s Hang Seng closed lower, led by financial and real estate shares.

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