Markets continue to trade weak amid Rupee depreciation

Indian equity markets continued their weak trade in the late morning session as the investors’ sentiments remained cautious after the Reserve Bank of India (RBI) turned unexpectedly dovish in the monetary policy review on account of rupee volatility. Further, fall in rupee value to over 61 per dollar due to month-end dollar demand from importers also dented the investors’ sentiments. The economic growth concerns also weighed on the sentiments as the RBI lowered GDP estimates to 5.5% from earlier projection of 5.7% for the current fiscal. On sectoral front, Realty, Power and FMCG were trading over 2.5% lower, while Teck, IT and Healthcare stocks were trading higher. Moreover, Bharti Airtel stock has surged 6.19% to 341 per share, after reporting a consolidated net profit at Rs 689 crore for the quarter ended June 30, 2013 (Q1).

On global front, Asian markets were trading weak amid looming fear over tapering of the stimulus ahead of today’s Federal Reserve monetary policy. Back home, the market breadth was favoring the negative trend; there were 1342 stocks on the losing side against 465 stocks on the gaining side.

The BSE Sensex is currently trading at 19,216.20 down by 132.14 points or 0.68% after trading in a range of 19,325.39 and 19,126.82. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.10% and Small cap index lost 1.72%.

The top gaining sectoral indices on the BSE were, Teck up by 1.75%, IT up by 1.23% and Healthcare up by 0.24%, while Realty down by 3.45%, Power down by 2.85%, FMCG down by 2.67% and Bankex down by 2.62% were the top losers on the BSE.

The top gainers on the Sensex were Bharti Airtel up by 6.19%, Dr. Reddy Lab up by 3.46%,  Wipro up by 2.20%, TCS up by 1.87% and Coal India up by 1.62%. On the flip side, NTPC was down by 6.49%, Gail India was down by 4.19%, ITC was down by 3.68%, ICICI Bank was down by 3.29% and Tata Steel was down by 2.53% were the top losers on the Sensex.

Meanwhile, the Confederation of Indian Industry (CII), although has empathized with RBI’s decision of holding key rates in First Quarter Monetary Policy Review,  but it sees the moderation of growth outlook by the RBI as a matter of great concern, enforcing their view of more actions being required on multiple fronts to revive the economy.

Kris Gopalakrishnan, President, CII stated, “We understand the decision of the RBI on the rates and draw heart from the statement of the RBI saying that had it not been for the volatility, the rates could have been reduced, since inflation has started to moderate'. He added, “Lowering of economy’s growth projection is the number one worry because all the problems like current account deficit, in some sense, are because of the reduction in growth rates, which will impact jobs”. The central bank, in its First Quarter Review of Monetary Policy, slashed the growth projection for 2013-14 to 5.5% from an earlier estimate of 5.7%, while keeping key rates unchanged and asking the government to take urgent steps to contain the current account deficit.

However, CII is hopeful that the forthcoming session of the Parliament will be fruitful, with some of the key legislations being enacted, which would shore-up investors’ sentiment back at home and abroad. These include the Bills on Insurance, Pensions, etc.

Further, while CII has shared with the government its concerns about the high CAD which calls for financing measures, it has also expressed a dire need to establish a very competitive manufacturing sector. “Our exports need to increase exponentially and with a strong manufacturing sector we should be able to obviate the need for many imports, which could be very well manufactured within the country,' Gopalakrishan said.The CNX Nifty is currently trading at 5,698.65 down by 56.40 points or 0.98% after trading in a range of 5,742.10 and 5,675.75. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Bharti Airtel up by 6.20%, Dr. Reddy up by 3.57%, Lupin up by 2.69%, Coal India up by 1.91%, and TCS up by 1.76%. On the flip side, DLF down by 6.93%, NTPC down by 6.90%, JP Associate down by 5.30%, Gail down by 4.10% and ITC down by 3.76% were the major losers on the index.

The Asian equity indices were trading in red; Hang Seng down by 0.12%, Jakarta Composite down by 0.82%, Nikkei 225 down by 1.45%, KLSE Composite slipped 1.01%. Straits Times down by 0.22% to 3,238.01, Taiwan Weighted was down by 0.68%, while, Shanghai Composite up by 0.34%.