Feeble global cues drag benchmarks lower in early deals

Pressurized by feeble global cues, Indian equity benchmarks have made a gap-down opening with frontline gauges tumbling below their crucial 5,650 (Nifty) 18,600 (Sensex) levels. Global markets remained turbulent after the Fed announcement last week that the economy looked in good enough shape for it to start rowing back on its $85-billion-a-month bond-buying scheme. The US markets made a mixed closing on Friday, though there was nothing new either from the government or the economy front but traders remain concerned about the Fed pruning its stimulus measures soon. Asian markets were trading near their fresh nine and a half month low at this point of time led by the Chinese market amid cash crunch at the banks and after an investment banker lowered its 2013 growth estimates for the country, citing weaker economic indicators and tightening of financial conditions.

Back home, sentiments also got dented after Indian rupee weakened in early deals, hovering near a record low hit last week, as worries about China’s economic and financial stability hit global risk assets, while caution prevailed ahead of current account deficit data due this week. The rupee was trading at 59.65/67 to the dollar in early trade, compared to its close of 59.27/28 on Friday. Meanwhile, shares of the companies engaged in gems and jewellery business too remain under pressure on the bourses and trading lower by up to 20 percent, on concerns that the Reserve Bank of India and government initiative to curb gold imports may impact the sector’s growth.

On the sectoral front, metal remained the lone gainer on the BSE sectoral index, while consumer durables, realty and oil and gas remained the top losers on the BSE sectoral space. The broader indices too were bleeding badly, while the market breadth on the BSE was negative; there were 381 shares on the gaining side against 852 shares on the losing side while 48 shares remain unchanged.

The BSE Sensex opened at 18,714.06; about 60 points lower compared to its previous closing of 18,774.24, and has touched a high and a low of 18,714.06 and 18,596.24 respectively.

The index is currently trading at 18,596.97, down by 177.27 points or 0.94%. There were 6 stocks advancing against 23 declines, while one remains unchanged on the index.

The overall market breadth has made a weak start with 29.7429% stocks advancing against 66.51% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices up by 1.46% and 0.90% respectively. 

The only gaining sectoral indices on the BSE was, Metal up by 0.25%, while Consumer Durables down by 3.52%, Realty down by 2.14%, Oil & Gas down by 1.92%, Capital Goods down by 1.42% and Power down by 1.34% were the top losers on the sectoral index.

The top gainers on the Sensex were Hindalco Industries up by 2.24%, Tata Steel up by 0.61%, Sun Pharma up by 0.48%, Tata Power up by 0.37% and Maruti Suzuki up by 0.35%.

On the flip side, Gail India was down by 2.88%, Hero MotoCorp was down by 1.98%, BHEL was down by 1.90%, RIL was down by 1.62% and L&T was down by 1.35% were the top losers on the Sensex.

Meanwhile, as per the survey conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the falling rupee, inflation and its cascading effects on rise in prices of petroleum products, edible oil, studying abroad, foreign trips are going to impact the middle income group the most. The Indian rupee slumped to record low of 60 against US dollar after US Federal Reserve signaled an end to its monetary stimulus that would help in further strengthening of the greenback.

The inflation has badly impacted the middle and lower class consumers in metros and other major cities. People in metros have been considerably affected by rupee depreciation compared to tier-lll and semi-urban areas. 92% of the respondents of a survey reported an increase of 15-20% in monthly bills during the last month.

The bulk import of crude oil, fertilisers and iron ore became costlier due to the weakening of the rupee. As crude oil import is in large quantities, any rise in its price pressurizes the inflation. This indirectly impacts the finances even if these items are not for daily consumption, ultimately affecting the overall spending habit of the middle income group.

According to D S Rawat, Secretary General of ASSOCHAM, the rupee weakening results in the steady purchase of gold even in the higher price by Indian middle income group in part of societal traditions. That’s why the governmental effort to control the gold price through import restrictions is not at all an effective one.

The CNX Nifty opened at 5,638.05; about 29 points lower as compared to its previous closing of 5,667.65, and has touched a high and a low of 5,640.00 and 5,613.95 respectively.

The index is currently trading at 5,614.15, down by 53.50 points or 0.94%. There were 12 stocks advancing against 38 declines on the index.

The top gainers of the Nifty were Hindalco Industries up by 1.81%, Bank of Baroda up by 1.23%, Lupin up by 0.95%, HCL Technologies up by 0.75% and Sun Pharmaceuticals up by 0.59%.

On the flip side, JP Associate down by 10.15%, Cairn down by 4.48%, Ranbaxy down by 3.88%, BPCL down by 3.29% and Kotak Bank down by 2.85% were the major losers on the index.

All the Asian equity indices were trading in red; Shanghai Composite tumbled 62.32 points or 3.01% to 2,010.77, Hang Seng declined 316.81 points or 1.56% to 19,946.50, Jakarta Composite slipped 10.20 points or 0.23% to 4,505.18, KLSE Composite dropped 9.96 points or 0.57% to 1,745.89, Nikkei 225 contracted 57.69 points or 0.44% to 13,172.44, Straits Times decreased 22.12 points or 0.71% to 3,102.33, KOSPI Composite dropped 7.69 points or 0.42% to 1,815.14 and Taiwan Weighted was down by 3.29 points or 0.04% to 7,790.02.