Benchmarks witness bloodbath; Rupee breaches 68 per dollar mark

Indian markets were butchered on Tuesday with both the major indices losing massive around three and half a percent to close near their intraday lows, breaching major crucial support levels of 18,300 (Sensex) and 5,350 (Nifty), as investors opted to cash out most of their profits garnered in previous three sessions of rally. Though, Indian equity bourses opened slightly in the green but turned red very soon and never looked in recovery mood, continuing their slide till end. Selling was both brutal and wide-based as none of sectoral indices on BSE was spared. Counters, which featured in the list of worst performers, included banking, consumer durables and realty.

Sentiments remained dampened after rupee got depreciated sharply during the trade. The partially convertible rupee was trading near 68 per dollar mark as compared to the yesterday’s close of 66.02 against the dollar on the Interbank Foreign Exchange. Investors also remained on sidelines, awaiting any fresh measures with Raghuram Rajan taking over the reins of Reserve Bank of India (RBI) as the new governor on September 5. Selling got intensified in last leg of trade as geopolitical concerns weighed on sentiment after Russia reportedly announced that its missile early warning system had detected the launch of two missiles from the central part of the Mediterranean Sea, fired towards the sea's eastern coastline. However, US officials confirmed that no American ship or plane launched missiles.

Weakness in European markets too dampened the sentiments with CAC, DAX and FTSE all edging lower after a flat-to-positive opening. However, most of the Asian equity indices shut shop in the green with Japan’s Nikkei 225 ending higher with a gain of around three percent, a day after data showing strong corporate capital expenditures prompted economists to expect upward revisions to economic growth in the second quarter.

Back home, sentiments got clobbered out of shape after global financial services major HSBC 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. Meanwhile, Standard & Poor’s (S&P) considers chances of a credit ratings downgrade for India higher than that for Indonesia. It has also warned that India’s sovereign rating faces more than one in-three chance to be downgraded to the junk status within next two year.

The NSE’s 50-share broadly followed index Nifty declined by over two hundred points to end below the psychological 5,350 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex crumbled over six hundred and fifty points to declined below the psychological 18,300 mark.

Broader markets too clobbered out of shape and snapped the session with cut of around one percentage point. The market breadth remained in favour of decliners, as there were 805 shares on the gaining side against 1,478 shares on the losing side, while 133 shares remained unchanged.

Finally, the BSE Sensex shaved off 651.47 points or 3.45 % to settle at 18234.66, while the CNX Nifty plunged by 209.30 points or 3.77% to end at 5,341.45.

The BSE Sensex touched a high and a low of 19007.31 and 18166.17, respectively. The BSE Mid cap index was down by 1.86% and Small cap index was down by 0.95%.

The top gainers on the Sensex were, Coal India up by 1.32% and Mahindra & Mahindra up 0.35%. On the flip side, Hero MotoCorp down by 6.58%,  RIL down 6.07%, ITC down 5.37%, ICICI Bank down 5.21% and Bharti Airtel was down by 5.17% were the top losers on the index. 

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.

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.

The CNX Nifty touched a high and low of 5,580.95 and 5,323.75 respectively. 

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 0.07%, Germany’s DAX down by 0.14% and the United Kingdom’s FTSE 100 down by 0.01%.

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.