Markets resume downtrend after paring most of early losses

After recovering most of the early losses, Indian benchmarks once again started moving southward after JPMorgan downgraded Indian markets to ‘neutral’ from ‘overweight’ on account of weak rupee, faltering economic growth and reversal of flows. Sentiments also remained dampened on report that foreign institutional investors (FIIs) sold shares worth a net Rs 680.08 crore on August 19, 2013. Meanwhile, sentiments remained dovish on concerns over depreciating rupee that hit a fresh life-time low today.

Weak opening in European counterparts too were dampening the sentiments with CAC, DAX and FTSE all trading with cut of around a percentage point in early deals. Asian markets too were trading lower as investors remained concerned that the Fed would start tapering its stimulus after last week’s flurry of data. Meanwhile, Indonesia’s stock market remained the top loser, shedding 5.50 percent as investors worried about the looming balance of payments crisis following Friday’s data showing a wider-than-anticipated current account deficit.

Back home, both the frontline gauges feeling strong resistance near their crucial 5,400 (Nifty) and 18,300 (Sensex) levels. On the sectoral front, metal witnessed the maximum gain in trade followed by fast moving consumer goods and banking, while consumer durables, auto and software remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction, while the overall market breadth on BSE is in favour of declines which have thumped advances in the ratio of 986: 933; while 122 shares remained unchanged.

The BSE Sensex is currently trading at 18208.08 down by 99.44 points or 0.54% after trading in a range of 18291.00 and 17970.98. There were only 8 stocks advancing against 22 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.66%, while Small cap index up by 0.01%.

The top gaining sectoral indices on the BSE were, Metal up by 1.07%, FMCG up by 0.61%, Realty up by 0.59% and Bankex up by 0.14%. While, Consumer Durables down by 2.41%, Auto down by 2.19%, IT down by 1.46%, Teck down by 1.38% and Healthcare down by 1.16% were the top losers indices on the BSE.

The top gainers on the Sensex were Tata Steel up by 1.68%, ITC up by 1.65%, Cipla up by 1.55%, Sterlite Inds up by 0.92% and ICICI Bank up by 0.85%. On the flip side, Tata Motors down by 3.95%, Sun Pharma down by 2.89%, Wipro down by 2.48%, Mahindra & Mahindra down by 2.45% and ONGC down by 2.12% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India in its another measure to prop up rupee and bring more Foreign Direct Investment (FDI) in the country, has hiked the limit for foreign investment in Asset Reconstruction Companies (ARCs) to 74 percent from the earlier cap of 49 percent. The decision of the central bank follows Cabinet decision earlier this month to liberalise FDI norms in various sectors.

As per the RBI notification 'The ceiling for FDI in ARCs has been increased from 49 percent to 74 percent subject to the condition that no sponsor may hold more than 50 percent of the shareholding in an ARC either by way of FDI or by routing through a foreign institutional investors (FII)'. The foreign investment limit of 74 percent in ARC would be a combined limit of FDI and FII.

Further, the apex bank has allowed the FIIs to invest in Security Receipts (SRs) up to 74 percent of each tranche of scheme of SRs issued by the ARC. The banks circular stated that the individual limit of 10 percent for investment of a single FII in each tranche of SRs issued by ARCs may be dispensed with. Such investment should be within the FII limit on corporate bonds prescribed from time to time, and sectoral caps under the extant FDI Regulations should be complied with.

The CNX Nifty is currently trading at 5,388.30 down by 26.45 points or 0.49% after trading in a range of 5,410.90 and 5,306.35. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were JP Associate up by 4.38%, Tata Steel up by 2.07%, DLF up by 1.74%, BPCL up by 1.73% and Jindal Steel up by 1.69%. On the flip side, Tata Motors down by 4.06%, HCL Tech down by 3.41%, Sun Pharma down by 2.84%, ACC down by 2.45% and M&M down by 2.44% were the major losers on the index.

The Asian equity indices were trading in red; Straits Times down by 1.55%, Jakarta Composite down by 5.50%, KLSE Composite down by 2.00%, Seoul Composite down by 1.55%, Taiwan Weighted down by 0.86%, Shanghai Composite down by 0.71% and Nikkei 225 was down by 2.63%.

European markets have got off to a choppy start; with CAC 40 down by 39.25 points, DAX slides by 98.38 points and FTSE 100 dipped 47.37 points.