Benchmarks pare losses on recovery in rupee

Benchmarks trimmed losses on the back of recovery in rupee from its record low of 68.72 per dollar. Slide in rupee continues despite frantic attempts by the government and central bank to support it and repeated comments by the finance minister that the rupee is oversold. Investors have now set their sight at around 70 levels to be breached soon in the absence of strong steps by the government and the central bank. On Tuesday, Finance Minister P Chidambaram said there is need to ‘be patient and firm’ and the government is doing what is required to be done. Today's fall in the rupee comes after the currency posted its biggest percentage fall in 18 years. The rupee has lost 17 per cent against the dollar so far this year - making it the worst performer by far among Asian emerging market currencies.

On the global front, All the Asian Equity indices were trading in the red at this point of time on concern the US will take military action against Syria. Moreover, the sentiments across the region also got clobbered out of shape amid worries that the US may pullback on aggressive monetary stimulus that had benefited many of these emerging markets until just a few weeks ago. Sentiments also remained down-beat after Emerging market currencies have been hit hard, with Indonesian rupiah and Thai baht among others at multi-year lows.

Back home, traders were buying, IT and Teck while selling were seen in Banking, Oil & Gas and Realty on the BSE. Share prices of three public sector oil marketing companies BPCL, HPCL and IOC plunged as the international crude prices have surged on escalating geo-political tension, though, there is buzz that diesel prices may be increased by at least Rs 3 a litre after the monsoon session of Parliament ends next week.

Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,100 and 17,500 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in the ratio of 391: 1131.The BSE Sensex after declining over 500 points is currently trading at 17505.88, down by 462.20 points or 2.57% after trading in a range of 17851.44 and 17448.71. There were 4 stocks advancing against 26 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 2.81% and Small cap index down by 1.68%.

The top gaining sectoral indices on the BSE were, IT up by 2.28% and Teck up by 0.88%, while Bankex down by 5.20%,  Oil & Gas down by 4.83%, Realty down by 4.68% ,PSU down by 4.54%, and Capital Goods down by 3.43% were the top losers on the sectoral index.

The top gainers on the Sensex were TCS up by 3.73%, Wipro up by 2.31%, Infosys up by 1.83%, and Dr Reddys Lab up by 0.08%. On the flip side, ONGC was down by 8.58%, HDFC was down by 5.50%, BHEL was down by 5.13%, Mahindra & Mahindra was down by 5.03% and Gail India was down by 4.85% were the top losers on the Sensex.

Meanwhile, Concerned over the widening current account deficit (CAD) of the country, Commerce and Industry Minister Anand Sharma suggested with an off-beat idea that the government can use a fraction of its gold reserves in order to contain high CAD. Anand Sharma said that at present the country has over 31,000 tonnes of declared gold reserve and if 500 tonnes is monetized at current value, then it will help to contain a large part of country widening CAD. At current market rates, 500 tonnes of gold is valued at about $25 billion.

India’s CAD widened to a record high of 4.8 percent of GDP in the previous fiscal on account of high gold imports and crude oil prices. During April to July, the country’s gold imports rose 87 percent to 383 tonnes despite a large number of steps taken by the government and the Reserve Bank of India (RBI) to curb demand for the yellow metal. The government recently raised customs duty on gold to 10 percent from 8 percent earlier.

Meanwhile, the government has set target to contain the CAD at 3.7 per cent of GDP in the current fiscal, however achieving this target seems to be a difficult task with a hoard of obstacles such as high inflation, depreciating rupee, and slowing down economy

The CNX Nifty is currently trading at 5,134.50 down by 152.95 points or 2.89% after trading in a range of 5,236.05 and 5,118.85. There were 5 stocks advancing against 45 declines on the index.

The top gainers of the Nifty were Cairn up by 4.31%, TCS up by 3.97%, Infosys up by 1.92%, HCL Tech up by 1.11% and NMDC up by 0.53%. On the flip side, BPCL down by 11.12%, Axis Bank down by 9.21%,  ONGC down by 8.95%, Indusind BK down by 7.02% and JP Associates  down by 6.92% were the major losers on the index.

All the Asian equity indices were trading in red; Shanghai Composite dipped 5.05 points or 0.24% to 2,098.52, Hang Seng declined 380.49 points or 1.74% to 21,494.28, Jakarta Composite tumbled 102.26 points or 2.58% to 3,865.58, KLSE Composite shed 24.68 points or 1.45% to 1,676.56, Nikkei 225 crumbled 261.88  points or 1.93% to 13,280.38, Straits Times decreased 37.98 points or 1.25% to 2,996.04, Seoul Composite contracted 7.78 points or 0.41% to 1,878.21  and Taiwan Weighted was down by 4.95 points or 0.06% to 7,815.89.