Benchmarks witness massacre in early deals as rupee hits new record low

Extending previous session’s bloodbath, key domestic markets have made a gap down start and are trading in the deep red with frontline gauges declining below their crucial levels of 18,400 (Sensex), 5,450 (Nifty). The sentiments have been spooked by the sharp fall in the rupee, which is the worst performing currency in Asia. The rupee fell as much as 62.40 to the dollar in early trade, breaching the previous low of 62.03 hit on Friday. The rupee has fallen over 12 per cent since May leading to fears of increased inflation and has led to worries about financing of India's record current account deficit. 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.

Global cues too remained sluggish as the US markets closed in red in last session on heightened voices for stimulus tapering after a mixed batch of economic data. Asian markets too were trading 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. However, Japanese Nikkei was trading in the green despite figures showing Japan’s trade deficit had almost doubled as the weaker yen led to a surge in the cost of energy imports.

Back home, sentiments also remained dampened after share prices of three public sector oil marketing companies BPCL, HPCL and IOC plunged as 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. Selling was both brutal and wide based as, barring consumer durables, none of sectoral indices on BSE were spared. Banking, auto and capital goods remained the BSE sectoral indices. The broader indices were struggling to get some traction, while the market breadth on the BSE was positive; there were 380 shares on the gaining side against 843 shares on the losing side while 37 shares remain unchanged.

The BSE Sensex opened at 18587.38; about 10 points lower compared to its previous closing of 18598.18, and has touched a high and a low of 18587.38 and 18322.45 respectively.

The index is currently trading at 18323.37, down by 274.81 points or 1.48%. There were 4 stocks advancing against 26 declines on the index.

The overall market breadth has made a weak start with 30.16% stocks advancing against 66.90% declines. The broader indices too were trading in red; the BSE Mid cap and Small cap indices were down by 1.24% and 0.94% respectively. 

The only gaining sectoral index on the BSE were, Consumer Durables up by 0.08%, while Bankex down by 3.17%, Auto down by 2.86%, Capital Goods down by 2.21%, Realty down by 1.83% and PSU down by 1.71% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 2.05%, Sterlite Industries up by 1.52%, Gail India up by 1.22% and Dr Reddys Lab up by 0.42%. On the flip side, Mahindra & Mahindra was down by 5.14%, ICICI Bank was down by 4.36%, Bharti Airtel was down by 3.81%, Bajaj Auto was down by 3.72% and L&T was down by 2.81% 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 opened at 5,497.55; about 10 points lower as compared to its previous closing of 5,507.85, and has touched a high and a low of 5,499.65 and 5,420.30 respectively.

The index is currently trading at 5,425.10, down by 82.75 points or 1.50 %. There were 8 stocks advancing against 41 declines, while one stock remains unchanged on the index.

The top gainers of the Nifty were Tata Power up by 1.97%, Cairn up by 1.94%, Gail up by 1.41%, Ranbaxy up by 1.30% and Sesa Goa up by 1.19%. On the flip side, Bank of Baroda down by 5.22%, Axis Bank down by 4.85%, M&M down by 4.73%, PNB down by 4.11% and ICICI Bank down by 3.98% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dipped 4.09 points or 0.20% to 2,064.36, Hang Seng slipped 38.37 points or 0.17% to 22,479.44, Jakarta Composite tumbled 175.38 points or 3.84% to 4,393.27, KLSE Composite decreased 2.52 points or 0.14% to 1,785.72, Straits Times shed 1.36 points or 0.04% to 3,196.17, Seoul Composite contracted 6.74 points or 0.35% to 1,913.37 and Taiwan Weighted was down by 18.12 points or 0.23% to 7,906.88.

On the flip side, Nikkei 225 was up by 43.59 points or 0.32% to 13,693.70.