D-street witnesses bloodbath; Rupee hits record low

Tuesday turned out to be a big disappointing session of trade for the stock markets in India, as the benchmark equity indices clobbered out of shape and settled the session at their lowest level since January 2012 with a cut of over three percentage points. Both the frontline gauges tumbled below their crucial 5,300 (Nifty) and 18,000 (Sensex) levels as sentiments got spooked largely by the sharp fall in the rupee, which is 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 65.70 to the dollar at the time of equity markets closing, breaching the previous low of 65.56. Selling was both brutal and wide based as, barring software, none of sectoral indices on BSE ended in green.

The market sentiment was also affected adversely by data showing that foreign funds remained net sellers of Indian stocks on August 26, 2013. The foreign institutional investors (FIIs) sold shares worth a net Rs 607.43 crore on August 26, 2013. Sentiments got hammered on concerns related to current account deficit (CAD), as Lok Sabha passed the Food Security Bill after considering all the amendments. The bill proposes subsidized food-grain for up to 75 percent of the rural and up to 50 percent of the urban population.

Global cues too remained sluggish as sentiments remained jittery over the geo-political tensions coupled with uncertainty over the timeline for tapering of US Fed stimulus. European counterparts traded choppy in the early deals with CAC, DAX and FTSE all shedding around a percent amid political wrangling in Italy. Moreover, Asian markets too shut shop mostly in the red as sentiments remained dampened after the United States signaled possible military action against the Syrian government over a suspected chemical weapons attack.

Back home, banking shares remained under pressure on the bourses after the rupee once again weakened against the dollar due to month-end demand from importers. Investors’ also 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. Meanwhile, global ratings agency Fitch has warned India of a rating downgrade if the country is unable to meet its fiscal deficit target adding that India's fiscal numbers look weak and the space to contain expenditure is very limited in the second half of the financial year. Sentiments also remained dampened after share prices of three public sector oil marketing companies BPCL, HPCL and IOC plunged as tensions in Syria pushed crude prices higher.

The NSE’s 50-share broadly followed index Nifty declined by around one hundred and ninety points to end below the psychological 5,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex crumbled around six hundred points to declined below the psychological 18,000 mark.

Broader markets too clobbered out of shape and snapped the session with cut of around two percentage points. The market breadth remained in favour of decliners, as there were 720 shares on the gaining side against 1,537 shares on the losing side, while 138 shares remained unchanged.

Finally, the BSE Sensex shaved off 590.05 points or 3.18% to settle at 17,968.08, while the CNX Nifty plunged by 189.05 points or 3.45% to end at 5,287.45.

The BSE Sensex touched a high and a low of 18,460.72 and 17,921.82, respectively. The BSE Mid cap index was down by 2.09% and Small cap index was down by 1.70%.

The top gainers on the Sensex were, Infosys up by 0.91%, Dr Reddys Lab up by 0.53% and Sesa Goa up 0.18%. On the flip side, BHEL down by 9.49%, HDFC Bank down 8.04%, HDFC down 7.70%, NTPC down 5.86% and Jindal Steel was down by 5.68% were the top losers on the index. 

The only gainer on the BSE sectoral space was, IT up 0.16%, while Bankex down 5.34%, Capital Goods down 4.71%, Power down 4.51%, Realty down 3.95% and PSU was down 3.80% were the top losers on the sectoral space.

Meanwhile, in a move to boost the infrastructure development in the country and to enhance business sentiment in a slowing economy, the Cabinet Committee on Investment (CCI) headed by Prime Minister Manmohan Singh, has set a 60- day deadline for ministries to clear 36 mega infrastructure projects including 28 power plants that were stuck due to delay in sanctions.

The government had set up the CCI, to clear the bottlenecks holding back big infrastructure projects. Recently, the CCI cleared the proposal of setting up two hydro power projects in Arunachal Pradesh. The panel has so far cleared 171 projects worth Rs 1.69 lakh crore.

Further, in order to speed up the implementation of infrastructure projects, the government has also set up special cell, special project monitoring group, which is meant to supplement CCI's efforts and has been tasked with monitoring the progress of projects cleared earlier by CCI.

Further, a web-based information system has also been put in place wherein firms can provide details of their project as well as the issues that are restraining smooth implementation of projects. Meanwhile, for the 12th Five Year Plan (2012-17), the government has set the $1-trillion investment target for the infrastructure sector.

The CNX Nifty touched a high and low of 5,427.40 and 5,274.25 respectively. 

The top gainers on the Nifty were Infosys up 1.03%, Dr Reddy’s up by 0.98% and HCL Tech up by 0.05%. On the flip side, the top losers of the index were, IDFC down by 16.15%, BHEL down by 10.65%, IndusInd Bank down by 8.69%, JP Associates down by 8.68% and HDFC Bank down by 7.44%.

The European markets were trading in red, France’s CAC 40 down by 1.40%, Germany’s DAX down by 1.54% and the United Kingdom’s FTSE 100 down by 0.77%.

Most of the Asian markets, barring Shanghai Composite concluded Tuesday’s trade in red after US hardened its stance against Syria, with south-east Asian markets hit particularly hard, while mainland Chinese shares gained after data showing an increase in industrial profits. Japan’s Nikkei share average fell for a second straight day, taking cues from other weak Asian stock markets, with investors generally reluctant to trade actively ahead of potentially market-moving events in the coming weeks. Investors are keeping eyes on developments over Syria and waiting to get clarity on when the US Federal Reserve will scale back its stimulus measures.

China will be able to meet the economic growth target of 7.5% this year as the economy is stabilizing, helped by supportive policies at home and rising demand abroad, an official with the National Bureau of Statistics stated. Chinese industrial firms’ total profit from January to July was 11.1% higher than the same period a year earlier. The rate of annualized gains was unchanged from the January-June reading but marked a slowing from the January-May year-on-year rise of 12.3%. For July alone, industrial profit rose 11.6%, accelerating from a 6.3% increase in June. Separately, new home purchases ended above the 200,000-square-meter threshold in Shanghai for the second consecutive week, with mid- to low-end properties selling strongly. Sales of new homes, excluding government-subsidized affordable housing, totaled 202,000 square meters last week, a slight dip of 0.5% from the previous seven-day period.

In Indonesia, following criticism that its economic stimulus package lacked information, the national government revealed financial details on its plan to curb oil imports, saying it hopes it will help wipe $3 billion off the current account deficit. The policy aims reduce fuel imports, which stood at $5.8 billion in the first half of the year, according to the Central Statistics Agency (BPS). Hatta Rajasa, the coordinating minister for the economy, stated that the current account deficit which reached $9.8 billion in the second quarter would likely fall in coming months.