Benchmarks drift lower on rupee woes

Fresh selling in funds amid a weak trend in the Asian region pulled the Indian benchmarks to hit fresh intraday low in the late morning trade as a steep slide in rupee which took it to record low against the dollar rattled investor sentiment. The rupee has plunged over 1.6 per cent so far in the month of August and is presently Asia's worst performing currency. The currency has depreciated nearly 12 per cent so far in the year 2013. Banking stocks are witnessing selloff, India’s Reserve Bank has tightened liquidity to defend the rupee, but the continued weakness in the currency may push the central bank to hike long term interest rates to attract foreign capital. That will hurt banks because the risk of defaults on current loans will rise.

On the global front, Asian markets too were trading lower at this point of time with Hang Seng shedding over one and a half percent on the back of disappointing first-half earnings from HSBC. Back home, traders were still buying from IT counter, while selling was seen in Realty, Bankex and Consumer Durables sectors on the BSE.  Textile related stocks like, Alok Industries, Grasim Industries, Vardhman Textile and Arvind edged lower as the India’s export of textiles and clothing remained almost the same year-on-year, in the first three months of the fiscal to $7.79 billion compared to $7.76 billion in last fiscal.

Meanwhile, the NSE Nifty and BSE Sensex were trading near the psychological 5,600 and 18,900 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in the ratio of 429:1117.The BSE Sensex is currently trading at 18993.54, down by 188.72 points or 0.98% after trading in a range of 19131.92 and 18969.65. There were 4 stocks advancing against 26 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 1.65% and Small cap index lost 0.94%.

The only gaining sectoral index on the BSE were, IT up by 0.14%, while Realty down by 3.08%, Bankex down by 2.60% , Consumer Durables down by 2.52%, Metal down by 2.34%, and Capital Goods down by 2.00% were the top losers on the BSE.

The top gainers on the Sensex were Wipro up by 1.88%, Hero MotoCorp up by 1.36%, TCS up by 0.46%, Tata Motors up by 0.26%. On the flip side, Sterlite Industries was down by 4.71%, HDFC Bank was down by 3.38%, Bajaj Auto was down by 3.20%, Tata Power was down by 2.93% and Tata Steel was down by 2.93% were the top losers on the Sensex.

Meanwhile, raising doubts over prospects of sustained global economic recovery from the financial crisis, the business activity across emerging economies contracted for the first time in over four years in July mainly due to the decline in manufacturing, while services activities remained stagnant. The composite HSBC Emerging Markets index for services and manufacturing fell to 49.4 in July from 50.6 in June. For the first time since April 2009, the index fell below the 50 mark that separates growth from contraction.

The HSBC survey, based on a review of about 7,500 firms in 16 emerging markets, highlighted that new business in emerging markets also recorded its first decline in over four years as India, China and Brazil all received less new work in July, while Russia registered its slowest growth in nearly three years. Further, it highlighted growing divergence between activity in the developed world and emerging economies and said that presently the main risk for emerging economies is that the cyclical downturn in manufacturing and softer service sector activity which will ultimately lead to a weaker job market. Employment across emerging markets was broadly unchanged and inflationary pressures remained weak in July.

Meanwhile, the HSBC index for business expectations showed some signs of recovery as emerging market future output index rose slightly from June's low but was still the second-lowest figure in the last 16 months. Among the four largest emerging economies, sentiment was weakest in China.The CNX Nifty is currently trading at 5,618.20 down by 67.20 points or 1.18% after trading in a range of 5,664.90 and 5,609.30. There were 7 stocks advancing against 42 declines while 1 stock remains unchanged on the index.

The top gainers of the Nifty were Ambuja Cements up by 2.51%, Hero MotoCorp up by 1.51%, HCL Technologie up by 1.06%, Power Grid up by 0.96% and TCS up by 0.65%. On the flip side, JP Associate down by 5.57%, Asian Paints down by 5.33%, DLF down by 5.30%, Sesa Goa down by 4.62%, and Indus Ind BK down by 3.81% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite slipped 3.37 points or 0.16% to 2,047.11, Hang Seng tumbled 344.81 points or 1.55% to 21,877.20, KLSE Composite dipped 4.78 points or 0.27% to 1,780.36, Nikkei 225 dropped 13.70 points or 0.10% to 14,244.34, Straits Times shed 25.16 points or 0.78% to 3,216.63, Seoul Composite decreased 12.62 points or 0.66% to 1,903.60 and Taiwan Weighted was down by 97.37 points or 1.20% to 8,041.26.