Benchmarks plunge after RBI acts to defend rupee

Snapping three days winning streak, Indian equity benchmarks have made a gap-down opening and are trading with a cut of over a percentage point as sentiments remained dampened after the Reserve Bank of India (RBI) last night came out with a slew of measures, including hiking the lending rates for banks and sucking up Rs 12,000 crore to stem the rupee volatility. This also hurt the banking stocks badly. Other rate sensitives such as realty and infra related stocks too were trading with deep cuts. Sentiments also got clobbered after Asian Development Bank (ADB) for the second time this year, lowered its growth forecast for the South Asia’s largest economy to 5.8 percent from its April estimate of 6.0 percent, with growth still constrained by supply-side bottlenecks and sluggish progress in pushing through structural reforms. 

On the global front, the US markets continued their gaining momentum with the start of new week on getting mixed batch of economic reports, though the buying remained somewhat subdued but the disappointing retail sales data seems to have offset recent concerns about the outlook for the Fed’s stimulus program. However, most of the Asian equity indices were trading in the red at this point of time after ADB lowered its growth forecast for developing Asia by 0.3 percentage point to 6.3 percent in 2013 and 6.4 percent in 2014. Back home, on the sectoral front, fast moving consumer goods witnessed the maximum gains in trade followed by software and healthcare, while banking, realty and capital goods remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the market breadth on the BSE was negative; there were 364 shares on the gaining side against 809 shares on the losing side while 51 shares remain unchanged.

The BSE Sensex opened at 19,788.09; about 246 points lower compared to its previous closing of 20034.48, and has touched a high and a low of 19,811.47 and 19,649.58 respectively. The index is currently trading at 19784.29, down by 250.19 points or 1.25%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a weak start with 29.45% stocks advancing against 66.83% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices were down by 1.11% and 0.65% respectively. 

The top gaining sectoral indices on the BSE were, FMCG up by 0.54%, IT up by 0.36%, Health Care up by 0.34%, Teck up by 0.17% and Oil & Gas up by 0.17%, while Bankex down by 4.21%, Realty down by 3.62%, Capital Goods down by 1.88%, Consumer Durables down by 1.71% and Metal down by 1.18% were the top losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 1.58%, ONGC up by 1.23%, Hindustan Unilever up by 1.01% and TCS up by 0.71%. On the flip side, ICICI Bank was down by 5.34%, HDFC was down by 4.47%, SBI was down by 4.44%, L&T was down by 3.07% and HDFC Bank was down by 2.72% were the top losers on the Sensex.

Meanwhile, the Foreign Investment Promotion Board (FIPB), the government body that approves foreign direct investments (FDI) has rejected four foreign direct investments FDI proposals and deferred one in its last meeting held on June 14, because there was no clarity about sources of funds and beneficiaries of investments.

FIPB rejected proposals of Multi-Commodity Exchange of India (MCX), SNAP Networks, Alliance Insurance Brokers and Mauritius-based Highdell Investment for non-disclosure of beneficial ownership. Meanwhile, FIPB deferred a decision on Rs. 2,000-crore Jet-Etihad deal, the largest foreign investment in the Indian aviation sector, and sought clarity on control and ownership.

The Multi-Commodity Exchange of India (MCX) had in June sought FIPB nod for investment made into the company in 2008 by Alexandra Mauritius Limited, a subsidiary of Alexandra Global Master Fund, a company resident in British Virgin Island. FIBP rejected its proposal after taking note of the fact that those details of ultimate beneficiaries and sources of funds were unknown. The department of revenue even noted that the investment made in MCX is not reflected in the financial statement of Alexandra Mauritius.

In most cases, the authorities fail to trace the investor. So, finance ministry, which houses the FIPB, has been working on new disclosure norms on source of funds and beneficial ownership to eliminate any suspicious investment at the first stage itself. 

The CNX Nifty opened at 5,930.80; about 100 points lower as compared to its previous closing of 6,030.80, and has touched a high and a low of 5,954.00 and 5,910.95 respectively.

The index is currently trading at 5,946.50, down by 84.30 points or 1.40%. There were 12 stocks advancing against 37 declines and one remains unchanged on the index.

The top gainers of the Nifty were BPCL up by 2.20%, Sun Pharmaceuticals up by 1.26%, Ranbaxy up by 1.10%, Hindustan Unilever up by 0.99% and ONGC up by 0.89%. On the flip side, IDFC down by 5.80%, ICICI Bank down by 5.27%, IndusInd Bank down by 5.03%, PNB down by 4.52% and DLF down by 4.49% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 13.99 points or 0.68% to 2,045.40, Hang Seng dipped 15.87 points or 0.07% to 21,287.44, Straits Times slipped 11.01 points or 0.34% to 3,225.81, Seoul Composite decreased 8.12 points or 0.43% to 1,867.04 and Taiwan Weighted was down by 9.92 points or 0.12% to 8,244.76.

On the flip side, Jakarta Composite rose 8.96 points or 0.19% to 4,644.69, KLSE Composite increased 0.33 points or 0.02% to 1,787.00 and Nikkei 225 was up by 81.32 points or 0.56% to 14,587.57.