Key benchmarks drift lower as rupee weaken further

Volatility continued on the street though the benchmarks trimmed losses after hitting fresh intraday low in late morning trade tracking the weakness in the rupee .The rupee weakened in early trades on Wednesday due to persistent dollar demand by importers.  There is also dollar demand from foreign banks on behalf of Foreign Institutional Investors who were selling stocks. The partially convertible rupee was hovering at 61.37, weaker than its close of 60.77/78 in last session. The RBI and the Finance Ministry is set to review the situation arising out of the weakening rupee and the widening current account deficit at a meeting of the sub-committee of Financial Stability and Development Council today afternoon. The rupee is expected to weaken further near the all-time-low level today unless state-run banks step in by way of dollar sale.

On the global front, Asian markets were trading mostly lower with Japanese Nikkei tumbling near three percent to a one-week low as exporters were hammered after the dollar fell to a six-week low against the yen. Back home, traders were still buying from IT, PSU and Oil & Gas counter, while selling was seen in FMCG, Auto and Capital Goods sectors on the BSE.  Software and technology counters edged higher after the global IT major Cognizant, beating street expectations and surpassing its own guidance reported a profit of $300 million for the June quarter, up 5.7% sequentially and 19.2% compared to the year-ago quarter. The revenues stood at $2.16 billion, up 7% quarter-on-quarter and 20.4% compared to the same quarter a year ago.

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 743:830.The BSE Sensex is currently trading at 18614.29, down by 118.75 points or 0.63% after trading in a range of  18771.77and 18578.95. There were 8 stocks advancing against 22 declines on the index. The broader indices were trading in mix; the BSE Mid cap index was down by 0.14% and Small cap index gained 0.14%.

The few gaining sectoral indices on the BSE were, Realty up by 1.59%, PSU up by 0.85%, Oil & Gas up by 0.58%, Power up by 0.46% and Bankex up by 0.35%, while FMCG down by 2.13%, Auto down by 1.25%, Capital Goods down by 1.23%, Metal down by 0.82% and Health Care down by 0.65% were the top losers on the BSE.

The top gainers on the Sensex were Wipro up by 2.37%, SBI up by 1.68%, BHEL up by 1.64%, ONGC up by 1.38% and Hero MotoCorp up by 0.67%. On the flip side, Tata Motors was down by 3.50%, ITC was down by 2.63%, L&T was down by 2.30%,  Hindalco Industries was down by 1.93% and Sun Pharma  was down by 1.46% were the top losers on the Sensex.

Meanwhile, Chief Economic Advisor Raghuram G. Rajan said that there is no magic wand to pull the country instantly out of challenges being faced by the economy. Rajan said that the prevailing economic slowdown has posed many challenges to Indian economy and the government and the Reserve Bank of India (RBI) are working together to address these challenges.

After the announcement of his appointment as the new RBI governor, Rajan said that he was looking forward to work with the many dedicated employees of the RBI and expressed hope to deal with the existing economic slowdown. Raghuram Rajan will be the 23rd Governor of the Reserve Bank and will succeed Duvvuri Subbarao who will leave office on September 4.

Rajan will take new RBI governor position at a time when the domestic economy is struggling with slowdown. All the macro-economic indicators have deteriorated with current account deficit (CAD) widened to a record high of 4.8 per cent of GDP in the previous fiscal and also rupee value depreciated to a record low of over 60 against the US dollar. Further, Indian economic growth also slowed down to decade low of 5 percent in the previous fiscal.

The CNX Nifty is currently trading at 5,505.05 down by 37.20 points or 0.67% after trading in a range of 5,553.90 and 5,492.60. There were 21 stocks advancing against 29 declines on the index.

The top gainers of the Nifty were DLF up by 4.09%, BPCL up by 3.29%, IDFC up by 2.33%, PNB up by 2.22%, and Bank Baroda up by 2.10%. On the flip side, Asian Paints down by 3.77%, Tata Motors down by 3.69%, ITC down by 3.00%, Grasim down by 2.56%, and L&T down by 2.36% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng dipped 62.40 points or 0.28% to 21,861.30, KLSE Composite decreased 5.19 points or 0.29% to 1,779.45, Nikkei 225 tumbled 366.58 points or 2.54% to 14,034.97, Seoul Composite declined 19.19 points or 1.01% to 1,887.43 and Taiwan Weighted was down by 104.21 points or 1.32% to 7,932.82.