Sensex slips over 230 points; Nifty tumbles 75 points

Indian equity markets have extended early losses as weak Asian markets and a sliding rupee continued to hurt sentiments. Strong US jobs data increased the dependence on capital inflows to fund its record current account deficit and has hurt the market sentiments. Meanwhile, gold fell for a third session on Monday on fears the US Federal Reserve could soon begin tapering its bond-buying stimulus after a stronger-than-expected jobs report. Investors are waiting for the earnings season now, as better earnings could help revive market sentiment. In currency market, rupee extended losses, touching all-time low against the greenback, amid heavy demand for the American currency amid capital outflows. On sectoral front, realty, PSU, oil, automobile, metal and bank stocks were mostly down with sharp losses. Power, capital goods and consumer durables stocks were down as well. FMCG and healthcare stocks were finding modest support. Information technology stocks, which moved up on weak rupee, have retreated from their highs amid cautious trades.

On the global front, most Asian financial markets weakened on Monday after strong US jobs data raised expectations that the US Federal Reserve would ease its stimulus measures within a few months, maybe as early as September.  Back home, the market breadth was favoring negative trend; there were 778 shares on the gaining side against 1,106 shares on the losing side, while 85 shares remained unchanged.

The BSE Sensex is currently trading at 19,260.85, down by 234.97 points or 1.21% after trading in a range of 19,422.69 and 19,185.92. There were 7 stocks advancing against 23 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.47% and Small cap index was down by 0.50%.

The top gaining sectoral indices on the BSE were, TECk up by 0.70%, IT up by 0.42% and Health Care up by 0.031%, while PSU down by 2.61%, PSU down by 2.07%, Auto down by 1.99%, Oil & Gas down by 1.85% and Metal down by 1.69% were the top losers on the BSE.

The top gainers on the Sensex were Wipro up by 1.87%, Bharti Airtel up by 1.73%, Dr Reddys Lab up by 1.06%, Sun Pharma up by 0.80%, and Infosys up by 0.67%.

On the flip side, Tata Motors was down by 4.19%, HDFC was down by3.35%, Coal India was down by 3.01%, ONGC was down by 2.84% and ICICI Bank was down by 2.59% were the top losers on the Sensex.

Meanwhile, a survey conducted by Confederation of Indian Industry (CII) expects the rupee to remain volatile and perhaps even depreciate further if the government fails to tackle issues like dwindling FDI flow and high current account deficit (CAD).  Majority of the respondents in the survey, conducted among the chamber's economic policy members, expected the rupee to trade above 59 to a dollar by end of September.

The survey underscored that the government needs to accelerate next round of reforms by addressing constraints such as land acquisition and environment, which delay investments in industry and infrastructure. It also highlighted the need of easing curbs on foreign institutional investors (FIIs) and external commercial borrowing (ECB) by the government.

Large current account deficit (CAD) and growing vulnerabilities on the external front have largely contributed towards the secular decline and the current volatility of the rupee. Worryingly, the Indian currency has depreciated 9.8 per cent to 60.24 against a dollar since the start of 2013. The majority of respondents have cited the high CAD and burgeoning gold imports as the top reason for the rupee's recent slide, followed by expectations of tapering of its quantitative easing programme by the US Federal Reserve. While weak domestic sentiment and rising demand for dollars by importers, too have been blamed.

Further, the respondents were unanimous about the adverse impact of the rupee's decline on the economy. A majority were of the view that weak rupee would contribute towards imported inflation, due to a rise in the oil import bill, largely turning out to be a factor which would continue discouraging the central bank from cutting policy rates in the next monetary policy review. India’s Apex Bank, in its monetary policy review on June 17 kept its key rates unchanged and warned about the upward risks to inflation, posed by a falling rupee among other factor.

However, opinion remained at odds about RBI intervention to stem the slide. While, the majority of the respondents (53 per cent) felt RBI should not intervene in the foreign exchange market to arrest the fall, the others supported such intervention.

The CNX Nifty is currently trading at 5,792.10 down by 75.80 points or 1.29% after trading in a range of 5,833.85 and 5,775.55. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were HCL Tech up by 2.11%, Cairn up by 1.98%, Reliance Infra up by 1.89%, Bharti Airtel up by 0.92% and Sun Pharma up by 0.87.

On the flip side, JP Associate down by 4.78%, BPCL down by 4.65%, Tata Motors down by 4.25%, HDFC down by 3.39% and Coal India down by 3.07% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 2.16%, Hang Seng dropped 1.84%, Jakarta Composite slumped 2.60%, KLSE Composite decreased 0.32%, Nikkei 225 down by 1.20%., Straits Times contracted 0.81%, KOSPI Composite dropped 0.98%and Taiwan Weighted was down by 1.44%.