Selling pressure continues on street; banks & auto drag

Benchmarks continue to reel under selling pressure on concerns that the Reserve Bank of India might look at the option of a rate hike in order to contain inflation. Any such move would be detrimental for the economy which is slowing down due to already high interest rates. Weakness in Asian stocks has also dampened the sentiments. The rupee fell to yet another record low today as the government's steps unveiled last week seemed inadequate to stall the currency's fall. The rupee fell as much as 62.40 to the dollar in early trade, breaching the previous low of 62.03 hit on Friday. It had closed at 61.65/66. Meanwhile, Foreign institutional investors (FIIs) extend selling in index futures for a fourth day on Friday, totalling sales of Rs 2063 crore, indicating they are bracing for lower levels in cash shares in the near term.

On the global front, 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, traders were buying Metal, Consumer Durables and Oil & Gas stocks, while selling was seen in Auto, Banking and Capital Goods on the BSE. 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.

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 595:995.

The BSE Sensex is currently trading at 18393.06, down by 205.12 points or 1.10% after trading in a range of 18587.38 and 18303.20. There were 12 stocks advancing against 18 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 1.10% and Small cap index lost 0.70%.

The only gaining sectoral index on the BSE were, Metal up by 0.97%, Consumer Durables up by 0.70% ,Oil & Gas up by 0.20% and IT up by 0.05%,while Auto down by 3.06%, Bankex down by 2.97%, Capital Goods down by 1.65%, PSU down by 1.39%  and  Realty down by 0.99% were the top losers on the sectoral index.

The top gainers on the Sensex were Sterlite Industries up by 3.10%, Tata Power up by 2.53%, Tata Steel up by 2.42%, Hindalco Inds up by 2.14% and Gail India up by 1.59%. On the flip side, Mahindra & Mahindra was down by 5.26%, Bajaj Auto was down by 4.47% , Bharti Airtel was down by 4.36%, ICICI Bank was down by 3.51%, and Hero MotoCorp was down by 3.25% were the top losers on the Sensex.

Meanwhile, Reassuring investors that there would be no reversing the path of globalisation of Indian economy, Prime Minister Manmohan Singh ruled out the possibility of India witnessing a repeat of the 1991 balance of payments crisis, which had forced India to pledge its gold reserves abroad to raise foreign exchange.

Manmohan Singh said that there is no question of going back to1991 balance of payment crisis as at that time foreign exchange in India was a fixed rate, but now it is linked to market, thereby we only have to correct the rupee volatility. By adding further, Prime Minister said that in 1991, the country had only foreign exchange reserves for 15 days and now we have reserves of six to seven months. Regarding the high current account deficit (CAD) of the country, he said that high import of gold was one of the major factors contributing to it.

India’s CAD widened to a record high of 4.8 percent of GDP in the previous year on account high gold imports. India imported 845 tonnes of yellow metal in FY13. Meanwhile, during the April-June quarter of 2013, the country witnessed record gold imports of 310 tonnes, highest in the last ten years. Further, widening CAD is also putting pressure on Rupee, which recently depreciated to a record low of over 62 per dollar. Meanwhile, in order 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%. RBI also imposed restrictions on import of gold coins, medallions and dorebars and notified that gold importers would now require licence from Directorate General of Foreign Trade (DGFT).   

The CNX Nifty is currently trading at 5,439.10 down by 68.75 points or 1.25 % after trading in a range of 5,499.65 and 5,409.95. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Tata Steel up by 2.68%, Sesa Goa up by 2.34%, Tata Power up by 1.97%, Hindalco up by 1.92% and Gail up by 1.73% On the flip side, M&M down by 5.51%, Bank of Baroda down by 4.84%, Bajaj-Auto down by 4.51%, Axis Bank down by 4.40% and Bharti Airtel down by 4.14% were the major losers on the index.

Most of the Asian equity indices were trading in red; 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 6.64 points or 0.21% to 3,190.70, Seoul Composite contracted 6.74 points or 0.35% to 1,913.37 and Taiwan Weighted was down by 14.01 points or 0.20% to 7,908.39.

On the flip side, Nikkei 225 was up by 38.35 points or 0.28% to 13,687.90 and Shanghai Composite was up by 4.09 points or 0.20% to 2,064.36.