Sensex crashes over 500 points; Nifty below psychological level of 5600

Indian equity markets continued to reel under pressure in the late morning session on Monday amid sustained selling pressure. The S&P BSE Sensex snapped four-day winning streak and has plunged over 500 points to trade below its crucial psychological support level of 19000. The 50-share Nifty index slipped below its crucial psychological level of 5600. Government’s new restrictions on foreign exchange outflows and gold imports on Wednesday in a new attempt to prop up the rupee were hampering the local markets raising concerns about slowing economy. Meanwhile, profit-booking by participants after four sessions of gains and a mixed trend on the Asian bourses in line with overnight losses on the US markets also pressurized the markets. In the currency market, following a positive start, Indian rupee again extended its fall against the greenback after touching an all-time low of 62 versus the US dollar. On the sectoral front, consumer durable Index was down 7%, followed by the banking Index which dropped over 4%. Realty and power stocks were trading weak too.

On the global front, most Asian markets were trading lower following the sell-off in US markets as upbeat U.S. jobs claims data and rising consumer prices suggested a winding back of Fed's $85 billion a month bond buying, which could start anytime soon as in the next month. Back home, the market breadth was favoring the positive trend; there were 543 shares on the gaining side against 1343 shares on the losing side, while 90 shares remained unchanged. 

The BSE Sensex is currently trading at 18,854.29 down by 513.30 points or 2.65% after trading in a range of 19,310.95 and 19,817.25. There were only 2 stocks advancing against 28 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was down by 2.12%, while Small cap index up by 1.59%.

The top losing sectoral indices on the BSE were, Consumer Durables down by 7.95%, Bankex down by 4.66 % Realty down by 4.48%, Metal down by 3.71% and Capital Goods down by 3.35. There were no gaining indices on the BSE.

The top gainers on the Sensex were Wipro up by 1.06% and Hero Moto Corp up by 0.42%. On the flip side, BHEL down by 6.49%, HDFC down by 5.36%, Maruti Suzuki down by 5.06%, Sterlite Inds down by 4.92% and HDFC Bank down by 4.32% were the top losers on the Sensex.

Meanwhile, Prime Minister Manmohan Singh said that prevailing slowdown in Indian economy would not last long as the government is working hard to remedy the situation. Manmohan Singh said that over the last nine years, the country had attained average economic growth rate of 7.9 percent and therefore economic growth will recover soon on the back of strong growth potential. The government expects that Indian economic growth to recover to 6 percent in the FY14 from the decade low level of 5 percent recorded in the previous fiscal.

Expecting positive impacts of the recent government’s move of allowing several sectors to foreign direct investment (FDI) in the coming months, Manmohan Singh said that the FDI limit on telecom sector was raised 100 percent from 74 percent, while restrictions in a dozen other sectors from insurance to tea plantations were eased or abolished. These steps will increase investment into the country and will generate new employment opportunities. In order to improve the infrastructure sector, Manmohan Singh said that the government will kick-start a number of new infrastructure projects including 8 new airports and two new sea-ports in the coming months. To remove hindrances in the way of stalled projects, the government has already set up the Cabinet Committee on Investment (CCI).

The government has also hoped to bring down current account deficit (CAD) to 3.7 percent of the gross domestic product (GDP) in the current financial year by cutting imports, especially of gold, silver, oil and non-essential items. India’s CAD widened to a record high to $88.2 billion or 4.8 of GDP in the previous fiscal on account of high gold imports and crude oil prices. The recent volatility in the currency markets was largely due to the growing concerns over the high CAD and growing inflation, reflecting pressure on the domestic currency. Rupee value depreciated to a record low of over 62 per dollar on August 16.

The CNX Nifty is currently trading at 5,577.25 down by 165.25 points or 2.88% after trading in a range of 5,716.60 and 5,558.60. There were 3 stocks advancing against 47 declines on the index.

The top gainers of the Nifty were Hero Moto Corp up by 0.42%, Power Grid up by 0.41%, HCL Tech up by 0.29%. On the flip side, Axis Bank down by 7.79%, JP Associate down by 7.35%, Bank of Baroda down by 7%, BHEL down by 6.92% and DLF down by 6.16% were the major losers on the index.

The most of Asian equity indices were trading in red; Straits Times down by 0.67%, Jakarta Composite down by 1.54%, Nikkei 225 was down by 0.75%, KLSE Composite down by 0.16% and Hang Seng down by 0.31%. While, Shanghai Composite up by 0.38% and Taiwan Weighted down by 0.48%