Post Session: Quick Review

After witnessing three consecutive sessions good run, it turned out to be an absolute carnage on the Dalal Street on Tuesday, as traders grew increasingly pessimistic over the market outlook, which has been largely dented by sharp depreciation of Indian currency. The aggravating concerns over depreciating Indian rupee took center stage in the session, prompting investors to ruthlessly square off positions. It turned out to be a sort of freefall as the benchmark equity indices struggled to find a bottom through the day and finally settled with a cut of over three and half percent. Both, Sensex and Nifty, collapsing like a house of cards, finally settled near the 18,200 and 5,300 psychological levels. Meanwhile, broader indices, too capitulated to selling pressure, but ended with less nasty loss of around a percent. Freefall of local equity markets was a complete shocker as Indian bourses not only halted the three consecutive sessions’ gaining streak but also resumed their streak of underperformance against their global peers.

On the currency front, Indian currency depreciated past perilous 68/$’ on increased dollar demand and also as Goldman  Sachs, the investment giant slashed India’s GDP growth rate to 4% from 6% earlier for the current financial year, underscoring that it expects the rupee to depreciate past 72 in next six months. Goldman's report comes after JPMorgan, HSBC Global Research, Nomura and ICRA cut their growth forecast on India to below 5% for the current financial year.

Meanwhile, sentiment also took a hit after S&P underscored that it considers more chances of India getting a credit ratings downgrade than for Indonesia. Some losses also came on account of caution exercised by market-participants, which anxiously wait for some fresh measures with Raghuram Rajan taking over the reins of RBI as the new governor on September 5. Further, political row over missing coal files, also added to negatives for Indian equity markets, which made further headroom in red with negative European start.

On the global front, further signs of improvements in global manufacturing pushed Asian stocks higher Tuesday, with Japan index emerging as the leader after the yen weakened toward the 100 to the dollar mark.  However, European shares were trading lower in early trade despite shares in mobile device maker Nokia surging by 40% after Microsoft confirmed it will purchase the Finnish firm's mobile business for $7.2 billion.

Back home, across the board profit booking was witnessed with banking index getting whipped by over four percent being the top laggard followed by the Consumer Durable pivotal, which too settled with similar amount of losses. Though, no sectoral index managed to keep its head in green, individual stocks like Coal India and M&M went home with some gains. The markets got butchered on extremely large volumes of over 1.5 lakh crore. The market breadth remained weak as there were 1470 shares on the gaining side against 809 shares on the losing side while 137 shares remained unchanged. (Provisional)

The BSE Sensex lost 651.47 points or 3.45% to settle at 18234.66.The index touched a high and a low of 19007.31 and 18166.17 respectively. Among the 30-share Sensex pack, 2 stocks gained, while 28 stocks declined. (Provisional) The BSE Mid cap and Small cap indices ended lower by 1.86% and 0.95% respectively. (Provisional)

On the BSE Sectoral front, Bankex down by 5.06%, Consumer Durables down by 4.61%, Realty down by 4.39%, FMCG down by 3.89% and Oil & Gas down by 3.63%, were the top losers, while there were no gainers in the space. (Provisional)

The top gainers on the Sensex were Coal India up by 0.99% and Mahindra & Mahindra up by 0.33%, while, RIL down by 6.33%, Hero MotoCorp down by 6.31%, HDFC down by 5.40%, Bharti Airtel down by 5.26% and ICICI Bank down by 5.10% were the top losers in the index. (Provisional)

Meanwhile, global financial services major HSBC has slashed India's GDP growth forecast for the current financial year to 4% from 5.5% earlier, citing chances of economic uncertainty weighing on the growth forecast in the coming months. According to the global financial services major, tighter financial conditions and higher macroeconomic uncertainty, could lead to slow growth in the near future.

Going by the official figures, the country’s economic growth in the first quarter of the current fiscal slid to dismal 4.4%, the lowest in past several years, pulled down by drop in mining and manufacturing output. HSBC, however, believes the slowdown to prolong, with leading indicators suggesting that the country’s growth momentum could ease further during the July-September quarter in both manufacturing and services sector.

Further, HSBC in its reports, has highlighted that factors like RBI’s currency stabilization measures and heightened macroeconomic uncertainty is making consumers and businesses more cautious about spending.  It has anticipated pressure on growth momentum likely to pose a greater challenge for the policy makers, which are struggling to stabilize the falling Indian currency, which keeps scaling fresh historic low levels.

However, the financial services major expects growth to show 'faint' signs of recovery during the final quarter of the fiscal year as macroeconomic uncertainties recede somewhat and confidence reluctantly recovers. Nevertheless as per HSBC, 'the outlook for India is still tainted with downside risks given the lingering macroeconomic uncertainties and the possibility that politics could get in the way of meaningful progress on structural reform'.

Adding to the headache of policymakers and government, HSBC is not the only foreign agency, which has slashes growth forecast for Indian economy. CLSA, Nomura too have downgraded their gross domestic product (GDP) growth estimates for India after the economy grew lower-than-expected in the June quarter. 

India VIX, a gauge for markets short term expectation of volatility gained 17.93 % at 32.49 from its previous close of 27.55 on Monday. (Provisional)

The CNX Nifty lost 209.30 points or 3.77% to settle at 5,341.45. The index touched high and low of 5,580.95 and 5,323.75 respectively. 3 stocks advanced against 47 declining on the index. (Provisional)

The top gainers on the Nifty were Lupin up by 2.59%, Coal India up by 1.14% and Cairn up by 0.91%.

On the other hand, Axis Bank down by 10.65%, IndusInd Bank down by 8.67%, DLF down by 7.17%, Reliance Infrastructure down by 7.11% and PNB down by 7.05%.

The European markets were trading in red; France’s CAC 40 down by 0.26%, Germany’s DAX down by 0.61% and the United Kingdom’s FTSE 100 down by 0.26%.

Most of the Asian markets barring Straits Times concluded Tuesday’s trade in green on further signs of improvements in global manufacturing.  Seoul shares rose to a three-month closing high but gains were capped by profit-taking for big stocks. China shares posted their biggest daily rise in more than a week led by the banking and property sectors. Indonesia’s major banks are robust, despite the slipping value of the rupiah, because of their low un-hedged foreign-currency exposure, strong loss-absorption cushions and in some cases foreign ownership, Fitch Ratings stated. Fitch forecast GDP growth easing toward 5% to 5.5% will weigh on the rated banks’ operating environment, but is unlikely to damage their credit profiles to any great extent.

China lowered its figure for economic growth for last year to 7.7% from 7.8%, the National Bureau of Statistics stated, in an unexpected downgrade for the key number. The world’s second-largest economy has long been looked to as a potential driver of global recovery, but has put in a mixed performance in recent months. The new figure posted remains the lowest for gross domestic product growth since 1999, when it expanded 7.6%. China’s GDP stood at 51.9 trillion yuan ($8.5 trillion) for 2012. Besides, China’s official non-manufacturing Purchasing Managers’ Index was 53.9 in August compared with 54.1 in July, according to China Federation of Logistics and Purchasing, which issues the data along with the National Bureau of Statistics. Yesterday a report released showed that China’s official manufacturing Purchasing Managers Index rose to 51.0 in August compared with 50.3 in July. Separately, House prices in China continued to rally in August, extending momentum for the 15th straight month. The average price of new houses in 100 cities climbed 0.92% from July to 10,442 yuan ($1,703) per square meter, the China Index Academy stated. That compared to a growth of 0.87% in July and June’s 0.77% rise. The number of cities that registered monthly price increases rose from 61 to 71.

The Census & Statistics Department of Hong Kong reported that the total retail sales value in July, provisionally estimated at $40 billion, rose 9.5% on the same month last year. After netting out the effect of price changes over the same period, total retail sales volume grew 8.9%. The revised estimate of the total retail sales value in June increased by 14.7% year-on-year, while the volume of total retail sales increased by 13.3%. For the first seven months of 2013, total retail sales grew 14.2% in value and 13.6% in volume over the same period a year earlier. Separately, the number of sale and purchase agreements for all building units in August was 5,111, down 6.9% on July, and a decline of 50.7% year-on-year, the Land Registry stated.