Benchmarks slump; Nifty slips 200 points in a day

Indian equity markets added losses to slump over three and half percent in a day's trade in the late afternoon session on account of major selling by FIIs in front line counters due to fear of roll-back of US stimulus and the perennially weakening rupee. The sentiments were dampened on the street after rupee traded near record low as exporters stepped in to sell the greenback. The Reserve Bank of India (RBI) on August 14, 2013 announced additional measures to support the Indian rupee by stemming foreign exchange outflows by Indian residents. Traders were seen selling in Consumer Durables (CD), Bankex and Oil & Gas sector stocks. In scrip specific development, Axis Bank was trading in red as MSCI has deleted the firm from its Standard and Large Cap indices. JK Tyre & Industries was trading firm after consolidated net profit of company jumped 236.1% to Rs 55.26 crore on 3.3% growth in net sales to Rs 1866.94 crore in Q1 June 2013 over Q1 June 2012. Escorts was trading in green touching two-year high after ace investor Rakesh Jhunjhunwala bought 621,789 equity shares of the company through an open market transaction on Wednesday.

On the global front, most of the Asian markets were trading in red barring Taiwan Weighted while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,550 and 18,700 levels respectively. The market breadth on BSE was negative in the ratio of 597:1530, while 118 scrips remain unchanged. 

The BSE Sensex is currently trading at 18,693.07, down by 674.52 points or 3.48% after trading in a range of 19,310.95 and 18,621.39. There was 1 stocks advancing against 29 declines on the index.

The broader indices were trading in red; the BSE Mid cap and Small cap indices were trading down by 2.40% and 1.96% respectively.

There were no sectoral indices gaining on the BSE, while Consumer Durables down by 7.58%, Bankex down by 5.01%, Oil & Gas down by 4.40%, Realty down by 4.30% and Metal down by 4.23% were the top losers on the sectoral index.

The only gainer on the Sensex was Hero MotoCorp up by 2.30%. On the flip side, BHEL was down by 7.16% , HDFC was down by 5.75%, HDFC Bank  was down by 5.73%, Sterlite Industries was down 5.54% and ONGC was down by 4.75% were the top losers on the Sensex.

Meanwhile, the World Gold Council (WCG) has revised its forecast for India's gold imports to 1000 tonnes from 865-965 tonnes projected earlier on the back of spurt in demand during the April-June quarter of 2013. Despite a series of hikes in import duty and other restrictions imposed by the government, the reported quarter witnessed record gold imports of 310 tonnes, highest in the last ten years.    

According to the WCG report, the demand was mainly due to falling prices in gold. Gold prices came off by around 13%, or by Rs 3,835 per 10 gram, in the reported quarter, which increased domestic jewellery demand around 51% and investment demand by 116% in the same period. India and China together accounted for almost 60% of the world’s gold demand during the quarter. Strong demand of gold has become a worrying factor for Indian policymakers as the country is facing a high current account deficit (CAD), which widened to a record high of 4.8% in the previous fiscal year.

Further, the report said that the increase in gold import duty in June and the change in payment for gold imports only had a limited impact on end-user demand however, the situation could improve, going forward. The WCG expects that the demand for jewellery is likely to remain high in the near term on account of wedding season and a good monsoon, while, the demand for investments will come down as most jewellers have strictly suspended the sale of gold coins and bars.

Meanwhile, to curb the gold import, the government has taken several steps, including raising import duty. Recently, the government has hiked imports duty on gold for a third time in eight months to 10% from the earlier 8%. Further, the Reserve Bank of India (RBI) too had put restrictions on banks on gold imports, which has led to forex outflow.

The CNX Nifty is currently trading at 5,532.45, down by 209.85 points or 3.65% after trading in a range of 5,716.60 and 5,509.25. There was 1 stock advancing against 49 declines on the index.

The only gainer of the Nifty was Hero MotoCorp up by 2.35% while Bank of Baroda down by 8.52%, JP Associate down by 7.80%, Axis Bank down by 7.62%, BHEL down by 7.34% and Reliance Infrastructure down by 7.08% were the major losers on the index.

Most of Asian equity indices were trading in red; Straits Times down by 0.89%, Jakarta Composite down by 2.24%, Nikkei 225 was down by 0.75%, KLSE Composite down by 0.14%, Shanghai Composite down by 0.64% and Hang Seng down by 0.10% while, Taiwan Weighted was the sole gainer up by 0.48%.

The European markets were trading in red; France’s CAC 40 was down 0.13%, Germany’s DAX lost 0.46% and the United Kingdom’s FTSE 100 edged lower 0.19%.