Benchmarks edge lower on Rupee's free-fall

Benchmarks edged lower in late-morning session on fear that the roll-back of US stimulus could spark selling pressure by the overseas investors in the equity space. Risk appetite further dampened after government imposed new restrictions on foreign exchange outflows and gold imports in new attempt to prop up the rupee, were also seen hampering an already slowing economy. The rupee has slipped to all time low in early trade despite a slew of measures announced by the central bank on late evening Wednesday aimed at boosting inflows and curbing outflows. The rupee touched 62 against the dollar, which is an all time intra-day low. RBI deregulated NRE deposit rate offered by banks, which was capped at domestic deposit rate earlier and hiked ceiling on FCNR (B) deposit rate. These steps will be effective till Nov 30. In addition, RBI curbed outflows, first time since 1991, by cutting the ceiling on remittances and also said India companies' can invest upto 100% of their networth in overseas geography, as compared to 400% earlier. Most of Asian markets were trading in red as US stock futures traded near five-week low after Wall Street shares had their biggest one-day drop since late June.

Back home, traders were selling Consumer Durables, Realty and Bankex on the BSE. Shares of jewellery makers edged lower after the Reserve Bank of India banned imports of gold coins and medallions. Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,700 and 19,200 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in the ratio of 500:1106.

The BSE Sensex is currently trading at 19367.59, down by 408.73 points or 2.11% after trading in a range of 19310.95 and 18852.40. There were 3 stocks advancing against 27 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 1.61% and Small cap index lost 1.26%.

There were sectoral indices gaining on the BSE, while Consumer Durables down by 7.90%, Realty down by 3.45%, Bankex down by 3.39%, Capital Goods down by 2.73% and Metal down by 2.67%were the top losers on the sectoral index.

The top gainers on the Sensex were Hero MotoCorp up by 1.12%, Wipro up by 0.74% and Dr Reddys Lab up by 0.02%. On the flip side, BHEL was down by 4.59% , Maruti Suzuki was down by 4.02%, Tata Power was down by 3.98%, HDFC was down by 3.80%, and Mahindra & Mahindra was down by 3.38% were the top losers on the Sensex.

Meanwhile, amid concerns over rising prices of vegetables and other essential commodities, Finance Minister P Chidambaram said that unless supply side constraints are addressed, consumer price inflation is not likely to fall. Indian annual inflation rate based on general Consumer Price Indices (CPI) combined stood at 9.64% in July on YoY basis. Among all the constituents that make the CPI, vegetables recorded the highest inflation of 16.40% in July.

By adding further, Chidambaram said that although the wholesale price-based inflation has come down to below five percent in five months till June, efforts would have to be made to address the supply side problems to bring down the retail inflation. However, India's wholesale Price Index (WPI) inflation shot higher to 5.79% for the month of July as against 4.86% for the previous month of June. The July inflation also came above the Reserve Bank of India’s (RBI) perceived comfort level of 5%.

At present, the central bank is concerned over the widening gap between the wholesale price index (WPI) inflation and consumer price index (CPI). Over the past few months, the CPI (rural and urban) inflation remained close to double digits, compared with WPI inflation, which fell below five per cent. The RBI had pointed out that the difference between wholesale and retail price levels can largely be attributed to trade and transport margins and taxes across states.

The CNX Nifty is currently trading at 5,601.45 down by 140.85 points or 2.45% after trading in a range of 5,716.60 and 5,571.60. There were 2 stocks advancing against 48 declines on the index.

The top gainers of the Nifty were HCL Technologie up by 1.77% and Hero MotoCorp up by 1.09%. On the flip side, Axis Bank down by 7.20%, JP Associate down by 6.75%, DLF down by 5.56%, Bank of Baroda down by 5.19% and Bhel down by 4.68% were the major losers on the index.

Most of the Asian equity indices were in red, Shanghai Composite surged 66.51 points or 3.19% to 2,148.39, Seoul Composite added 3.10 points or 0.16% to 1,927.01 and Taiwan Weighted was up by 60.29 points or 0.76% to 7,947.55.

On the flip side, Jakarta Composite declined 72.11 points or 1.54% to 4,613.02, KLSE Composite slipped 2.26 points or 0.13% to 1,789.95, Nikkei 225 dropped 18.59  points or 0.14% to 13,734.35  ,Straits Times was down by 19.28 points or 0.60% to3,201.64, and  Hang Seng down by 50.07 points or 0.22% to22,489.18.