Benchmarks continue to reel in red on RBI measures to arrest rupee's fall

Key benchmark have slipped further as the yields on government bonds rose after the Reserve Bank of India (RBI) after market hours on Monday, 15 July 2013, announced a slew of measures to address exchange rate volatility. While the rupee surged after the RBI measures, bond prices fell. The rupee was hovering at 59.44 versus dollar, against Monday's close of 59.89/90. In the debt market, the yield on the most traded 8.33 GS 2026 was hovering at 8.0904%, sharply higher than its close at 7.6656% on Monday. Bond yield and bond prices are inversely related. Meanwhile, sentiments were also weakened as foreign institutional investors (FIIs) sold shares worth a net Rs 227.26 crore on Monday, 15 July 2013, as per provisional data from the stock exchanges. Fresh spell of selling by participants with RBI’s slew of measures, including hiking the lending rates for banks and sucking up Rs 12,000 crore to stem the rupee volatility was weighing on the markets.

On the global front, the Asian equity indices were trading mixed 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, the traders were seen piling up positions in Oil & Gas, FMCG and Health Care, while selling was seen in Bankex, Realty and Capital Goods sector. In scrip specific developments, banking stocks slumped after the RBI’s move of tightening liquidity and making it costlier for banks to access funds from the central bank. Meanwhile, the NSE Nifty and BSE Sensex were trading near the psychological 5,900 and 19,700 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in ratio of 534: 1006. The BSE Sensex is currently trading at 19750.93, down by 283.55 points or 1.42% after trading in a range of 19811.47 and 19649.58. There were 8 stocks advancing against 22 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.08% and Small cap index was up by 0.62%.

The BSE Sensex is currently trading at 19750.93, down by 283.55 points or 1.42% after trading in a range of 19811.47 and 19649.58. There were 8 stocks advancing against 22 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.08% and Small cap index lost 0.62%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 0.58%, FMCG up by 0.47% and Health Care up by 0.14%, while Bankex down by 4.52%, Realty down by 4.08%, Capital Goods down by 2.10%, Metal down by 1.63% and Auto down by 1.32% were the top losers on the BSE.

The top gainers on the Sensex were ONGC up by 1.86%, Sun Pharma up by 1.30%, ITC up by 0.64%, Hindustan Unilever up by 0.54% and TCS up by 0.53% On the flip side, ICICI Bank was down by 5.59%, HDFC was down by 4.71%, SBI was down by 4.58%, L&T was down by 3.36% and HDFC Bank was down by 2.90% were the top losers on the Sensex.

Meanwhile, expressing hopes that Indian economy will pick up pace in coming quarters, Planning Commission Deputy Chairman Montek Singh Ahluwalia is expecting a better economic growth in current year, as compared to last year’s 5 percent growth. India’s growth rate declined to 5 percent, a decade low, in 2012-13 on account of global economic slowdown as well as domestic factors. Ahluwalia said that the nation is expected to see a normal growth process as euro zone will move towards positive growth by 2014.

By adding further he said the country is likely to grow, if not 8 percent then the best is at something about 7 percent, however, the 8 percent is also achievable as it is a long term projection. Though, there has been no change in official estimates of economic growth projection for 2013-14 so far, which was 6.5 percent factored by Finance Minister while presenting budget.The government in its efforts formed the Cabinet Committee of Investment (CCI) to tackle the domestic supply side problems which are impacting Indian economy.

Earlier in April this year, Ahluwalia had said that India can grow by 6.5 percent in the current fiscal during which big projects are likely to get clearances from CCI and the decision to set up CCI would have a big impact on the economic growth in the current fiscal. He added that nation’s economy will begin to see the turnaround in coming two - three quarters as the government has taken a number of measures recently to revive investment, including the setting up of CCI.

 The CNX Nifty is currently trading at 5,941.60 down by 89.20 points or 1.48% after trading in a range of 5,954.00 and 5,910.95. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were BPCL up by 2.66%, ONGC up by 1.99%, Ranbaxy up by 1.05%, Sun Pharmaceuticals up by 1.04% and Lupin up by 0.82%.On the flip side, IDFC down by 6.31%, IndusInd Bank down by 6.17%, ICICI Bank down by 5.46%, DLF down by 5.08% and PNB down by 4.86% were the major losers on the index.

Most of the Asian equity indices were trading on mixed; Shanghai Composite declined 13.99 points or 0.68% to 2,045.40, Straits Times slipped 10.32 points or 0.32% to 3,226.50, Seoul Composite decreased 8.62 points or 0.46% to 1,866.54 and Taiwan Weighted was down by 13.28 points or 0.16% to 8,241.40.

On the flip side, Hang Seng up 10.13 points or 0.05% to 21,313.44, Jakarta Composite rose 13.26 points or 0.29% to 4,648.99, KLSE Composite increased 0.41 points or 0.02% to 1,787.08 and Nikkei 225 was up by 65.80 points or 0.45% to 14,572.05.