Post Session: Quick Review

The Indian markets after seeing some light intraday, continued their capitulation for the fourth consecutive session. There was an initial spurt in the markets, thanks to the latest RBI measures to loosen some liquidity that led the banking stocks rejoice, moving considerably higher after a series of beating on worries that the apex bank may go for a rate hike as rupee depreciated to a record low. The apex bank took various measures of easing liquidity conditions in the market which has worsened with its recent money tightening steps, including raising short-term rates, to curb volatility in the exchange rate of rupee.

The global cues too were not very supportive, as the US markets despite a recovery ended mixed overnight, while the Asian markets too looked in a somber mood in beginning ahead of the release of the minutes of the last FOMC meeting and the traders remained reluctant to take any major positions, though the regional indices ended mostly in green. Nevertheless, the major mood dampener for the domestic markets was the soft start of some of the major European markets that provoked selling.

Back home, the markets despite a good gap-up start went through a very volatile trade with traders opting to book profit at every single opportunity, fearing major downtrend once FII outflow starts. All the early optimism fizzled out in the final hours of the trade and major benchmarks crashed, losing many of their crucial support levels.The markets looked firm in early deals after RBI on late Tuesday announced slew of measures to ease liquidity, including Rs 8,000 crore bond buyback, to ensure adequate credit flow to the productive sectors of the economy. The Reserve Bank will conduct open market purchase of government bonds of Rs 8,000 crore on August 23 to inject liquidity. Nifty and Sensex reclaimed their 5500 and 18500 respectively on the back of short covering and some value buying. However, markets lost ground in the second half of the trade with banking stocks that were flying high since morning,started cooling off. Rupee once again showed its weakness and resumed its declining path, hitting a record low of 64.51/$ intraday as rupee traders clicked on panic button after selling dollar in early morning on anticipation of strength in the local currency. There was across the board weakness in the emerging market currencies. Most strikingly, the IT sector that usually remains in jubilation mood on rupee depreciation, too suffered sharp cuts despite the weakness in rupee on profit booking. Finally the markets suffered another major jolt, losing over one and half a percent, the broader markets after showing some resilience, too fell in line to the benchmarks. Sectorally consumer durables witnessed some buying, while the banking too ended in green despite losing most of their gains, while all other indices ended with sharp cuts.

The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 926: 1339, while 135 scrips remained unchanged. (Provisional)

The BSE Sensex lost 281.81 points or 1.54% to settle at 17964.23.The index touched a high and a low of 18567.70 and 17807.19 respectively. Among the 30-share Sensex pack, 7 stocks gained, while 23 stocks declined. (Provisional) The BSE Mid cap and Small cap indices ended lower by 1.21% and 0.72% respectively. (Provisional)

On the BSE Sectoral front, Bankex up by 1.25% and Consumer Durables up by 0.86% were the only gainers, while Realty down by 4.04%, Metal down by 3.69%, Oil & Gas down by 3.47%, FMCG down by 2.79% and Health Care down by 2.19% were the top losers. (Provisional)

The top gainers on the Sensex were BHEL up by 3.15%,  HDFC up by 2.59%, HDFC Bank up by 2.35%, Gail India up by 0.20% and Tata Power up by 0.14%, while, Bharti Airtel down by 6.31%, Sun Pharma down by 4.92%, Sterlite Industries down by 4.81%, ITC down by 4.80% and RIL down by 4.72% were the top losers in the index. (Provisional)

Meanwhile, following the debacle at the NSEL and rising concerns over its inability for paying dues, the Forward Markets Commission (FMC), presently regulated by the consumer affairs ministry, has drawn much dissension. The government may consider plans to bring the FMC under the purview of the finance ministry, which already oversees the operations of several regulators, including SEBI, IRDA and PFRDA. Bringing FMC under the purview of finance ministry will ensure better co-ordination of regulators.

Earlier this month, NSEL had shut down its operation following the government direction in the wake of violation of certain rules and has given seven-month period to investors to settle their Rs 5,600 crore. However, the exchange could settle only Rs 92.12 crore out of the scheduled of Rs 174.72 crore payment it had committed to FMC.

Concerned over payment crisis at NSEL, the Forward Markets Commission on August 20 has ordered NSE to disclose the party-wise amount deposited in the escrow account maintained with Axis Bank on a daily basis. It also ordered NSE to reconcile the amount of pay-in and pay-out to be made to various members of the exchange. FMC also came down on NSEL for incorrect data and raised doubts on the seriousness of the exchange’s management to resolve the crisis. Meanwhile, the government is also planning to conduct an audit of NSEL’s physical stocks lying in warehouses by own agencies as it fears defaults in payment by buyers.

India VIX, a gauge for markets short term expectation of volatility gained 3.15 % at 28.09 from its previous close of 27.23 on Thursday. (Provisional)

The CNX Nifty lost 77.85 points or 1.44% to settle at 5,323.60. The index touched high and low of 5,504.10 and 5,268.45 respectively. 11 stocks advanced against 39 declining on the index. (Provisional)

The top gainers on the Nifty were IndusInd Bank up by 6.30%, BHEL up by 4.05%, HDFC up by 2.64%, HDFC Bank up by 1.92% and ICICI Bank up by 1.16%.

On the other hand, Ranbaxy down by 10.94%, Sesa Goa down by 9.00%, ACC down by 6.98%, JP Associate down by 5.86% and Bharti Airtel down by 5.48%.

The European markets were trading in red; France’s CAC 40 down by 0.03%, Germany’s DAX down by 0.23% and the United Kingdom’s FTSE 100 down by 0.74%.

Most of the Asian markets concluded Wednesday’s trade in red. South Korean and Hong Kong stocks dropped as investors awaited details of discussions at the Federal Reserve’s last policy meeting to gauge when the US central bank might pare its bond purchase. Chinese shares ended flat with positive bias dragged down by weakness in financials and property counters ahead of economic survey that could offer clues on how the Chinese economy is doing. Japan's Nikkei bounced back from a seven-week low on concern that capital outflows from Asia will accelerate as the Federal Reserve starts tapering its monetary stimulus. The Taiwan Stock Exchange Corporation was closed today due to Typhoon TRAMI.

Indonesian consumers have become less rosy in their view of the economy since the government raised the price of subsidized gasoline in June. The Central Bank’s consumer confidence index based on a survey of 4,600 households in 18 major cities fell by 8.7 points to 108 in July, the lowest level in 14 months. The index stood at 117 in June. A score above 100 means consumers are generally optimistic about the economy. Besides, Bank Indonesia’s recent increases in its key interest rate, which is expected to also drive up commercial lending rates, may drag down domestic direct investment. The central bank raised its benchmark interest rate by 75 basis points to 6.50% in June and July in an effort to combat soaring inflation. The bank kept the rate steady in August. The government would announce a policy package on Friday to combat growing inflation and job losses in Southeast Asia’s largest economy.

Taiwan’s export orders rose slightly in July, ending five successive monthly drops, on improving demand from major markets including the United States and the Chinese mainland. The July figure was $36.11 billion, up 0.5% year on year and up 2.9% from the previous month. Orders from the Association of Southeast Asian Nations economies rose 3.7% year on year, while those from the US and the mainland were also up 2.8% and 2%, respectively, from a year ago.