Markets to continue their slide with soft start

The Indian markets were unable to get any respite in last session after the carnage and slumped further, as the rupee continued its slide, breaching 63/$ mark. Today the start is not likely to be any different and traders will be watching the movement of rupee as the domestic currency has weakened in futures markets overnight, indicating further slide in the currency. Meanwhile, World Bank chief economist Kaushik Basu has warned that tough times are ahead for India as well as the global economy. However, there is some solace, as the Moody's Investors Service has reiterated its stable outlook on India's Baa3 sovereign-credit rating, the lowest investment grade, saying the nation has adequate currency reserves for balance of payments needs in the near term. Markets may see some recovery or short covering in the latter part of the day. There will be some relief for the consumer electronics and appliances makers, as the Government banned duty-free import of high-end flat screen plasma TVs. There will be some buzz in the financial sector too, after the Reserve Bank of India hiked the limit for foreign investment in Asset Reconstruction Companies (ARCs) to 74 percent from the earlier cap of 49 percent.

The US markets giving up their early gains lost momentum in second half to extend their losing streak on Monday. Though, there was not much from the economy front but the traders remained concerned about the Fed tapering its stimulus after last week's flurry of data. The Asian markets have made mostly a soft start on pessimistic sign that economies in the region and across the globe are struggling to ignite growth.

Back home, 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. 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. 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.