Benchmarks trims early gains as Rupee weakens

The market erased more than half of its early gains as the rupee weakened past 64 per dollar, while bond yields inched up, indicating that stability is yet to return to the financial markets. The rupee was trading under pressure, reversing most of its gains seen on Friday, when it rebounded sharply ending a five-day losing streak. The rupee was trading at 64.12 per dollar, down 1.2% from its Friday’s close of 63.35, The Indian currency had earlier opened the session at 63.69 per dollar. Bond yields rose, with the yield on India’s benchmark 10-year ?bond trading at 8.321% from Friday’s close of 8.25%. Bond yields and price move in opposite directions.

On Saturday, finance minister met foreign institutional investors (FIIs) and top bankers to discuss present market conditions and steps taken by the government to contain fiscal and current account deficits. The rupee had rebounded on Friday primarily due to the assurance of finance minister P. Chidambaram that the government was in control of the fiscal situation and had no intention to impose capital control

On the global front, All the Asian markets, barring Jakarta Composite, were trading in the green, with Chinese Shanghai Composite garnering a gain of around one and a half percent after state statistics bureau said that the country’s economy is showing clearer signs of stabilization and positive change, helped by some external improvement, and is on track for the 2013-growth target of 7.5%. The US markets extended their gains on Friday supported by a positive reaction to weak new home sales data. Back home, traders were buying, Capital Goods, Power and IT on the BSE. The rate sensitive realty and auto sector were also trading with some traction as Finance Minister P Chidambaram said that there is no need for excessive and unwarranted pessimism. Finance minister has also said that the recent liquidity control measures taken by the Reserve Bank to reduce volatility in forex market and quell speculation would be revisited with return of stability.

Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,500 and 18,600 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in the ratio of 1092: 465.The BSE Sensex is currently trading at 18642.89, up by 123.45 points or 0.67% after trading in a range of 18728.19 and 18602.56. There were 21 stocks advancing against 9 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.90% and Small cap index up by 0.96%.

The few gaining sectoral indices on the BSE were, Capital Goods up by 1.76%, Power up by 1.54%, IT up by 1.52%, Teck up by 1.40% and Health Care up by 1.03%, while there were the no losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 3.45%, Tata Power up by 3.14%, Sterlite Industries up by 3.08%, Wipro up by 3.00% and Hero MotoCorp up by 2.24%. On the flip side, ONGC was down by 1.84%, Tata Steel was down by 1.77%, ICICI Bank was down by 1.70% , Gail India was down by 1.66%  and Tata Motors was down by 1.56% were the top losers on the Sensex.

Meanwhile, in a big disappointment to Engineering Export Promotion Council (EEPC), Indian engineering exports remained in negative trend in July, despite a sharp depreciation in rupee value against dollar and other major currencies. However, the pace of decline has come down from a high of 9.52 percent reported in April to 1.38 percent in the month of July. On cumulative basis, during April to July period, engineering exports declined by 5.77 percent with total consignments of $18.03 billion for the four months against $19.14 billion in the corresponding period in the previous fiscal.

Engineering goods exports constitute around one-fourth of the country's total merchandise shipments. The prevailing slowdown in the US and European Union markets has been affecting India’s exports as the US and Europe together account for around 60 per cent of the country’s total engineering exports and now it has become imperative for India to search new markets for engineering exports. Meanwhile, contrary to engineering exports India’s overall merchandise exports increased by 11.64 percent in July after months of drop.

The CNX Nifty is currently trading at 5,506.55 up by 34.80 points or 0.64% after trading in a range of 5,528.70 and 5,496.20. There were 36 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were Sesa Goa up by 7.02%, BHEL up by 3.88%, Tata Power up by 3.65%, Asian Paints up by 2.89% and Hero Moto Co up by 2.78%. On the flip side, Tata Steel down by 1.91%, DLF down by 1.75%, Axis Bank down by 1.68%, ICICI Bank down by 1.52%, and REL Infra down by 1.32% were the major losers on the index.

Most of the Asian equity indices were trading in Green; Shanghai Composite surged 29.03 points or 1.41% to 2,086.49, Hang Seng strengthened 205.78 points or 0.94% to 22,069.29, KLSE Composite gained 10.85 points or 0.63% to 1,731.92, Straits Times increased 16.68 points or 0.54% to 3,105.53, Seoul Composite added 17.12 points or 0.92% to 1,887.28 and Taiwan Weighted was up by 32.40 points or 0.41% to 7,905.71.

On the flip side, Jakarta Composite was down by 1.20 points or 0.03% to 4,168.63, Nikkei 225 was down by 18.14 points or 0.13% to 13,642.41.