Benchmarks add losses; Sensex plunges below 19,400 mark

Indian equity markets added losses to continue their weak trade hovering near the lowest point of the day in the late afternoon session on account of selling in blue chip stocks and taking cues from European markets. Investors’ sentiments turned weak after the International Monetary Fund (IMF) lowered India's growth projections for 2013 to 5.6% from the 5.8% it projected in April. Further, weakening in rupee against dollar also dented the sentiments. The benchmarks were trading below their crucial 5,850 (Nifty) and 19,400 (Sensex). Traders were seen piling positions in Consumer durables, IT, Healthcare and banking stocks, while, selling was witnessed in Auto, FMCG, Oil and Gas and realty stocks. In scrip specific development, Wipro, Tata power and ICICI Bank were trading over 0.5 percent higher, while Reliance Industries, Hindustan Unilever, Bajaj Auto, Tata steel and Hindalco Industries were trading below over 1 percent higher.

The overall market breadth on BSE is in the favour of advances which thumped declines in the ratio of 1116: 1002; while 130 shares remained unchanged.

The BSE Sensex is currently trading at 19335.43, down by 104.05 points or 0.54% after trading in a range of 19505.93 and 19335.29. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading mixed; the BSE Mid cap down by 0.13% and Small cap indices trading up by 0.10%. The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.91%, IT up by 0.46%, Health Care up by 0.16% and TECk up by 0.14%, while FMCG down by 1.06%, Oil & Gas down by 0.92%, Auto down by 0.90%, Metal down by 0.84% and Capital Goods down by 0.79% were the top losers on the losers on the BSE.

The top gainers on the Sensex were Tata Power up by 1.17%, Wipro up by 1.12%, ICICI Bank up by 1.00%, Infosys up by 0.54% and SBI up by 0.51%. On the flip side, HUL down by 2.03%, Hindalco Industries down by 1.59%, Tata Steel down by 1.59%, Bajaj Auto down by 1.53% and Tata Motors down by 1.28% were the top losers on the Sensex.

Meanwhile, in a move to reduce subsidy burden, the government may change the pricing methodology of diesel and LPG rates as the rupee depreciation is making it difficult to curb the burgeoning subsidies. The total subsidy for selling diesel, kerosene at LPG at rates below cost was put at Rs 80,000 crore in April’13, which has now climbed to Rs 125,000 crore owing to the major fall in rupee value, which has made imports costlier.

Meanwhile, In order to control the fall in rupee, the Reserve Bank of India (RBI) has imposed restriction on banks with regard to trading in currency Futures and Options (F&O) with immediate effect. The RBI move is aimed at checking the declining value of rupee which recently touched its life-time low of 61.21 per dollar on account of heavy demand for the American currency.

As per the RBI new norms, the banks have been barred from trading in currency futures and exchange traded currency options market on their own. However, be allowed to trade on behalf of their clients. It is felt that large-scale speculations on currency future movements might be adding downward pressure on the Indian currency as derivative trading on currency allows investors to take forward views on various currency pairs, including rupee-dollar.  

Market regulator, the Securities and Exchange Board of India (SEBI) also tightened the exposure norms for currency derivatives to check large scale speculations in the market. SEBI increased the margin requirement on the domestic dollar-rupee forward trade to 100% of the traded amount.

In a related move, RBI met oil retailers to discuss options to ease pressure on the rupee, including accessing dollars at market rates from a special central bank window and later asked each state-run oil company to buy dollars from a single bank to check the rupee's fall.

The government is concerned over the falling rupee value and wants a harmonious relationship between the finance ministry, the RBI and SEBI so that possible coordinated steps can be taken to stem the rupee's slide.

The CNX Nifty is currently trading at 5,843.55, down by 15.45 points or 0.26% after trading in a range of 5,879.35 and 5,840.40. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were Lupin up by 2.93%, NMDC up by 1.75%, Utra Tech Cement up by 1.74%, Kotak Bank up by 1.52% and Asian Paint up by 1.21%. On the flip side, Cairn India down by 2.65%, BPCL down by 2.31%, HUL down by 2.07%, Tata Steel down by 1.74% and Hindalco Industries down by 1.73% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 2.17%, Hang Seng increased 1.07%, Jakarta Composite added 1.70%, Straits Times was up by 0.34%, Taiwan Weighted was up by 0.51% and KLSE Composite was up by 0.13%.

On the flip side, Nikkei 225 was down by 0.39% and KOSPI Composite was down by 0.34%.

Most of the European markets were trading in red with, Germany’s DAX down by 0.67%, the United Kingdom’s FTSE 100 down by 0.40% and France’s CAC 40 down by 0.25%.