Indian markets turns choppy as China shares hit 4-1/2 year low

Indian markets and the rupee turned choppy in the late morning session. After making a positive start and hovering around the neutral line for some time the markets dipped marginally in the red on tracking weakness in Asian markets. The Indian rupee opened higher, but could not sustain the momentum. It hit a high of 59.62 against the dollar before slipping to 59.77 against Monday's close of 59.68. On the global front, Chinese shares sank deeper, pulling down most other Asian stock markets, as worries spread that tight liquidity could threaten China's economic growth and take the shine off an emerging U.S. recovery.

Back home, the traders were seen piling up positions in Realty and PSU while selling was seen in Consumer Durables, Auto and Capital Goods sector. In scrip specific actions, GVK Power & Infrastructure tanked as recent floods in Uttarakhand could impact GVK Group's upcoming 330 MW Srinagar hydel project at Pauri district in the state and affect the ongoing works for at least two months. Parsvnath Developers dropped after the real estate major surrendered its IT special economic zone (SEZ) in Haryana. Gitanjali Gems slipped for second day in a row on Tuesday, as sharp fall in gold prices and the Reserve Bank of India's (RBI) measures to curb gold sales turned the investment sentiment bearish.

Meanwhile, the NSE Nifty and BSE Sensex were trading just below their psychological 5,600 and 18,600 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in ratio of 609:943. The BSE Sensex is currently trading at 18525.00, down by 15.89 points or 0.09% after trading in a range of 18630.25 and 18487.30. There were 16 stocks advancing against 14 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 1.16% and Small cap index was down by 0.47%.

The top gaining sectoral indices on the BSE were, Realty up by 0.75% and PSU up by 0.19% while Consumer Durables down by 1.75%, Auto down by 1.26%, Capital Goods down by 0.83%, FMCG down by 0.51%, and IT down by 0.49% were the top losers on the BSE.

The top gainers on the Sensex were ONGC up by 1.89%, Hindalco Industries up by 1.86%, HDFC Bank up by 1.26%, Bharti Airtel up by 1.20%, and RIL up by 0.82%. On the flip side, Tata Motors was down by 3.33%, Wipro was down by 2.48%, Maruti Suzuki was down by 2.44%, Jindal Steel was down by 1.69% and  Bajaj Auto was down by 1.67% were the top losers on the Sensex.

Meanwhile, As per Prime Minister's Economic Advisory Council (PMEAC) Chairman, C Rangarajan, India’s economy is likely to grow by more than 6 percent in the current fiscal. On the other hand, the Reserve Bank has projected the economy to grow at 5.7 percent, while the Finance Ministry has forecast 6.1-6.7 percent growth in the current fiscal. 

Referring to the current account deficit (CAD), Rangarajan said that country’s CAD would be around 4.7-4.8 percent of the GDP in FY14. Further, Rangarajan expressed the need to enhance the production of dry fuel to lower reliance on imports as higher coal imports have been impacting the CAD. He said that in the recent period the coal import into the country has increased almost by 40 percent and almost touched $18 billion, which is twice the value of the import a few years ago. The imported coal may remain more costly than the domestic coal, which further increases the need for enhancing the availability of domestic coal.

By adding further, he said that increasing the domestic production of coal and making the coal available for the power sector must be the first priority. In the third quarter of FY13, CAD widened to a record high of 6.7 percent of GDP. India is running a high CAD of more than five percent of GDP and further major fall in rupee value against dollar and high gold import are also putting pressure on the CAD. The government has also taken steps to rein in CAD by raising import duty of gold to 8%. The major portion of the imports arises from import of oil which needs to be reduced by increasing exploration in the domestic region.

The CNX Nifty is currently trading at 5,578.25 down by 12.00 points or 0.21% after trading in a range of 5,616.90 and 5,570.25. There were 24 stocks advancing against 25 declines while 1 stock remained unchanged on the index.

The top gainers of the Nifty were DLF up by 2.28%, Hindalco Industries up by 2.02%, ONGC up by 1.76%, Indusind Bank up by 1.55% and Bharti Airtel up by 1.23%. On the flip side, Tata Motors down by 3.42%, Ranbaxy down by 2.95%, JP Associate down by 2.75%, Maruti down by 2.49% and Lupin down by 2.32% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite tumbled 74.55 points or 3.80% to 1,888.68, Jakarta Composite crumbled 44.55 points or 1.01% to 4,384.91, Nikkei 225 clobbered 253.23 points or 1.94% to 12,804.91, KOSPI Composite Index decreased 22.52 points or 1.25% to 1,775.55, Hang Seng declined 358.24 points or 1.81% to 19,455.74, KLSE Composite dropped 9.76 points or 0.56% to 1,728.48, and Taiwan Weighted was down by 70.27 points or 0.91% to 7,686.95.

On the flip side, Straits Times up by 61.20 points or 1.77% to 3,393.17.