Post Session: Quick Review

Embroiled in the global glut, Indian equity markets collapsed to multi months lows, resulting into triple digit losses for benchmark indexes, Sensex and Nifty, which struggling to find a bottom finally settled sub 18700 and 5650 psychological levels respectively, marking their biggest single-day percentage fall since September 22, 2011. Fears of foreign inflows drying after Fed signaled rollback in QE3 mainly rattled investors’, who pressed sales on every possible stocks they held. The wave of ruthless selling pressure progressing with the session halted only with the session end, dragging the barometer gauges to day’s lowest point by the end of the trade.  The bourses were caught amid the pandemonium of ruthless risk aversion as discouraging global leads along with disappointing domestic tidings dissuaded investors from opening fresh positions. Indian currency plunged by a whopping 130 paise to hit life-time low of 60 against the US dollar in early trade on strong demand for the American currency from banks and importers.

Jitters were sensed across the globe after US Federal Reserve Chairman Ben Bernanke confirmed that Fed would begin winding down its stimulus measures later this year. Bernanke said the US economy is growing fast enough for the central bank to begin slowing the pace of its $85 billion monthly purchases of Treasuries and mortgage-backed securities, with the goal of ending it in mid-2014, although he said the Fed would hold off trimming its programme if the economy deteriorated again. Besides, slowing Chinese manufacturing activity exacerbated sentiment. The 'flash' HSBC China Purchasing Managers' Index contracted further to 48.3 in June, from May's final reading of 49.2, its weakest reading since September.

Closer home, with across the board selling pressure none of the sectoral indices were spared. Stocks from Realty, Metal and Banking counters capitulated the most to the selling pressure. Fears that weak rupee would once again restrict Reserve Bank of India (RBI) from slashing rates in its upcoming monetary policy in July, weighed on banking pivotal.  The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 639: 1666, while 107 scrips remained unchanged. (Provisional)

The BSE Sensex lost 546.15 points or 2.84 % to settle at 18699.55.The index touched a high and a low of 19069.20 and 18687.19 respectively. Among the 30-share Sensex pack, 2 stocks gained, while rest of 28 declined. (Provisional)

Broader indices concluded in red; BSE Mid cap and Small cap indices were down by 1.91% and 1.70% respectively. (Provisional) On the BSE Sectoral front, Realty down by 5.22%, Metal down by 4.75%, Bankex down by 4.12%, Power down by 3.34% and Capital Goods down by 3.08% were the top losers, while there were the no gainers in the space. (Provisional)

The only gainers on the Sensex were Wipro up by 0.71% and Sun Pharma up by 0.71%, while, Jindal Steel down by 10.50%, Tata Steel down by 6.61%, Hindalco Industries down by 6.43%, BHEL down by 4.94% and Sterlite Industries down by 4.93% were the top losers in the index. (Provisional)

Meanwhile, to address funding challenges of the telecom sector, the government will set-up the Telecom Finance Corporation (TFC) and infuse Rs 1,000 crore of the proposed authorised capital of Rs 10,000 crore in it. Further, the TFC is proposed to be set-up on the lines of sectoral finance bodies such as the Tourism Finance Corporation of India and Power Finance Corporation and will be registered as non-banking financial corporation and non deposit infrastructure finance company. The Cabinet has already approved for the creation of TFC under the National Telecom Policy 2012.  

Initially, the government of India will have 100 percent shareholding in TFC and initial equity capital is proposed to be sought through budgetary support. Banks and other financial institutions could be offered equity participation later in order to spread the financial burden and encourage broader participation of the financial community. The fund infusion for telecom finance body is proposed to be done through taxable as well as tax-free bonds, term loans from banks and other financial instruments, off-shore borrowings from multilateral agencies such as International Monetary Fund, World Bank and Asian Development Bank.

As per the government estimate, telecom sector debt market under the 12th Five Year Plan (2012-17) should be around Rs 7.55 lakh crore and TFC, which will initially target 5 percent of this debt market, will translate into a loan portfolio of Rs 38,000 crore in 5 years, approximately Rs 7,000 crore annually. Further, TFC will target to maintain debt equity ratio of 5 for first five year of its establishment and will operate in the interest margin of 200 to 250 basis points.

India VIX, a gauge for markets short term expectation of volatility gained 3.95% at 19.19 from its previous close of 18.46 on Wednesday. (Provisional)

The CNX Nifty lost 173.35 points or 2.98 % to settle at 5,648.90. The index touched high and low of 5,755.00 and 5,645.65 respectively. 2 stocks advanced against 48 declining on the index. (Provisional)

The only gainers on the Nifty were Sun Pharmaceuticals up by 0.60% and Ambuja Cements was up by 0.05%. On the other hand, Jindal Steel down by 10.82%, Jaiprakash Associates down by 7.34%, DLF down by 7.22%, Tata Steel down by 6.97% and Reliance Infrastructure down by 6.77% were the top losers. (Provisional)

The European markets were trading in red; France’s CAC 40 was down by 2.52%, Germany’s DAX was down by 2.38% and the United Kingdom’s FTSE 100 edged lower by 2.20%.