Carnage continues on D-street; Rupee hits record low

Extending last session’s bloodbath, key domestic markets clobbered out of shape with frontline gauges shaving off over one and a half percentage points on Monday. The sentiments were spooked largely by the sharp fall in the rupee, which is currently the worst performing currency in Asia. The rupee fell to a record low today and looked poised for further losses, with a series of measures unveiled last week failing to stall its decline. The currency fell as far as 62.82 to the dollar at the time of equity markets closing, breaching the previous low of 62.03 hit on Friday. Sentiments also remained down beat on report that foreign institutional investors (FIIs) sold shares worth a net Rs 563.23 crore on August 16, 2013. Selling was both brutal and wide based as, barring metal and software, none of sectoral indices on BSE were spared.

Earlier the markets got off to a gap down opening and failed to show any kind throughout the day. The key gauges slipped around the eleven month low levels below the psychological 5,400 and 18,300 levels for the first time since September 2012. But some short covering in metal counters and blue chip stocks in the dying hours ensured that the indices recovered from the lowest point in the session but snapped second straight session in the red terrain.

Global cues too remained sluggish as European counterparts traded choppy in the early deals from their recent 2-1/2-month highs, dragged down by miners, with persistent concern about a cut in US stimulus as early as next month hurting sentiment. Moreover, Asian markets too shut shop mostly in the red following the weakness on Wall Street, while investors remained concerned on expectation that the US Federal Reserve will soon begin rolling back its stimulus programme.

Back home, investors’ remained worried about the slow pace of economic reforms in India, which made it harder for the country to finance its hefty current account shortfall. Shares of rate sensitive and capital intensive companies were badly beaten on concerns that the Reserve Bank of India might look at the option of a rate hike in order to contain inflation. Sentiments also remained dampened after share of public sector oil marketing companies HPCL and IOC plunged as international crude oil prices edged higher amid the concern of supply disruption due to Egypt unrest, as the country controls the Suez Canal and the Suez-Mediterranean Pipeline.

The NSE’s 50-share broadly followed index Nifty declined by over ninety points to end below the psychological 5,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex crumbled around three hundred points to declined below the psychological 18,350 mark.

Broader markets too clobbered out of shape and snapped the session with cut of over a percentage point. The market breadth remained in favour of decliners, as there were 886 shares on the gaining side against 1,401 shares on the losing side, while 142 shares remained unchanged.

Finally, the BSE Sensex shaved off 290.66 points or 1.56% to settle at 18,307.52, while the CNX Nifty plunged by 93.10 points or 1.69% to end at 5,414.75.

The BSE Sensex touched a high and a low of 18,587.38 and 18,139.15, respectively. The BSE Mid cap index was down by 1.40% and Small cap index was down by 1.10%.

The top gainers on the Sensex were, Tata Steel up by 5.00%, Hindalco up by 2.89%, Jindal Steel up 2.86%, Tata Power up 2.46% and Infosys up 1.04%. On the flip side, Bharti Airtel down by 5.51%, ICICI Bank down by 5.07%, Bajaj Auto was down by 4.55%, Sun Pharma was down by 4.05% and Tata Motors was down by 3.77% were the top losers on the index. 

The top gainers on the BSE sectoral space were, Metal up 1.78% and IT up 0.31%, while Bankex down by 3.40%, Auto down by 3.13%, Health Care down by 2.49%, FMCG down 2.07% and PSU down by 2.05% were the top losers on the sectoral space.

Meanwhile, as per the Planning Commission member B K Chaturvedi, increased domestic production of coal would help reduce its imports and in a way help contain the country’s widening current account deficit (CAD). India has substantial coal reserves, however demand for the dry fuel is much higher than domestic production, resulting in increased coal imports. In the recent period, the coal imports into the country have increased by almost 40 percent and touched $18 billion, which is twice the value of the import a few years ago. Meanwhile, the CAD widened to a record high of 4.8 percent of GDP in the previous fiscal.

He further said that, the domestic production of coal has to be increased to meet the demand of various segments, especially power sector as acute coal shortages in the country is hurting electricity generation and many power producers, which are dependent on imported fuel to fire their plants. Indian coal demand touched 772.84 million tonnes (MT) during 2012-13 period whereas production was at 557.60 MT. Import of coal steadily increased to around 113 MT till Jan during 2012-13 from 20.93 MT during 2000-01.

The government policy is very clear on increasing domestic coal output to cater to power generation needs, but there are certain issues to be sorted out like environmental clearances and land acquisition etc. He also suggested that the efficiency of power plants need to be improved so that less coal could be consumed for generating electricity.

The CNX Nifty touched a high and low of 5,499.65 and 5,360.65 respectively. 

The top gainers on the Nifty were Tata Steel up 4.97%, JP Associates up by 4.38%, Jindal Steel up 2.74%, Reliance Infra up 2.43% and Hindalco up by 2.08%. On the flip side, the top losers of the index were, Axis Bank down by 6.32%, IndusInd Bank down by 5.86%, IDFC down by 5.48%, Ambuja Cement down by 5.42% and ICICI Bank down by 5.31%.

The European markets were trading in red, France’s CAC 40 down by 0.67%, Germany’s DAX down by 0.22% and the United Kingdom’s FTSE 100 down by 0.19%.

All the Asian markets barring Shanghai Composite and Nikkei 225, concluded Monday’s trade in red amid worries over Federal Reserve’s policy outlook, while Indonesian and Thai stocks tumbled on local economic concerns. Seoul shares closed slightly lower as large-caps struggled, but continued foreign inflows and a rally in shipbuilding sector on bets for stronger earnings ahead capped the decline. Mainland Chinese and Japanese shares ended higher after a choppy trading session on buying after a string of recent losses. Some Chinese developers weakened despite broad market gains and data showing a further improvement in home prices last month. The prices of new homes rose in 62 of 70 large and medium-sized Chinese cities in July from their levels in June. On-month growth in median home prices in 70 Chinese cities moderated in July for the fourth- straight month, but on-year prices in major cities continue to speed ahead, indicating that the government faces considerable pressure to keep prices in check. The Philippines suspended trading in the stock, foreign currency and debt markets today due to heavy rains and flooding in some parts of Manila.

In Japan, the steel makers and some automobile firms dropped even as the yen briefly weakened after data showing the country’s trade deficit widened sharply in July from the year-ago period. Japanese exports rose 12.2% on year in July as a weaker yen lifted the value of exports, while imports jumped 19.6% amid surging demand for fossil fuels. This has left Japan’s merchandise trade balance at a deficit of Y1.024 trillion, extending the monthly shortfall to a 13th month, the longest spell since 1980 when the second oil shock caused a spike in oil prices.

Indonesia’s President Susilo Bambang Yudhoyono set out the national budget and announced that the government has projected 6.4 percent economic growth for 2014. The government set growth at 6.8 percent economic growth in the 2013 State Budget, but revised expectations down to 6.3 percent in June’s revised budget. Next year’s inflation target has been marked at 4.5 percent, while the rupiah is projected to trade at an average Rp 9,750 against the US dollar. The three-month treasury bill (SPN) was expected to stand at 5.5 percent.