Markets take a turn for worse as bears tighten grip; Nifty dips below 5450 psychological mark

Markets have taken a turn for worse, with both Sensex and Nifty, slipping below the psychological 18,600 and 5450 levels respectively, nursing heavy loss of close to two percent. Accentuated selling pressure tailing Rupee’s sharp depreciation to ‘67/$’, is mainly pressurizing the sentiment of Indian equity markets, which are trading sideways since early deals as investors anxiously wait for any fresh measures with Raghuram Rajan taking over the reins of RBI as the new governor on September 5. Meanwhile, slew of foreign agencies, downgrading their GDP growth estimates on Indian economy, is also adding to the negatives of local equity markets. Additionally, negative start of European markets is adding to the already glum milieu. On the global front, shrugging side positive Asian counterparts, European shares have made a negative start as investors await U.S. manufacturing data. Meanwhile, further signs of improvements in global manufacturing pushed Asian stocks higher on Tuesday, with Japan leading the gains as the yen weakened toward the Yen 100 to the dollar mark. Closer home, broader indices reversing gears, too have surrendered to selling pressure. Amidst across the board selling, stocks from banking, Oil & Gas and Power counters are the top losers on BSE. The overall market breadth on BSE is in the favour of declines which have thumped advances in the ratio of 1073:851; while 135 shares remained unchanged.

The BSE Sensex is currently trading at 18560.23, down by 325.90 points or 1.73% after trading in a range of 19007.31 and 18537.94. There were only 5 stocks advancing against 25 declines on the index.

The broader indices too capitulated to selling pressure; the BSE Mid and Small cap indices were trading lower by 0.62% and 0.10% respectively. Amidst across the board selling pressure, Bankex down by 2.63%, Oil & Gas down by 1.80%, Power down by 1.40%, Consumer Durables down by 1.29% and Capital Goods down by 1.28%, were  the top selling counters on BSE.

The top gainers on the Sensex were, Tata Motors up by 1.57%, Coal India up by 1.49%, BHEL up by 1.32%, Sesa Goa up by 0.80% and ONGC up by 0.28%. On the flip side, Hero Moto Corp down by 4.41%, HDFC down by 4.31%, Hindalco Industries down by 3.35%, Reliance down by 3.11% and ICICI Bank down by 2.84% were the top losers on the Sensex. Meanwhile, amid rising doubts over the declining value of the rupee and widening CAD, the Chief Economic Advisor and RBI Governor designate Raghuram Rajan said that there is no magic wand to solve country’s economic challenges overnight and will endeavour to deal with them one at a time. Raghuram Rajan said that at present, there are various challenges for Reserve bank of India (RBI) like rupee depreciation, banking financial inclusion and prevailing economic downturn, but there are undoubtedly solutions to many of the problems and RBI will tackle with them step by step. 

Raghuram Rajan will be the 23rd Governor of the Reserve Bank and will succeed Duvvuri Subbarao who will leave office on September 4. Rajan will take new RBI governor position at a time when the domestic economy is struggling with slowdown. All the macro-economic indicators have deteriorated with current account deficit (CAD) widened to a record high of 4.8 percent of GDP in the FY14 and also domestic currency depreciated to a record low of over 68.50 against the US dollar. Further, Indian economic growth also slowed down to four year low at 4.4 percent in Q1 FY14. Besides combating with the key economic issues like rupee depreciation and high CAD, Rajan will also have to take a call on continuing with RBI's practice of mid-quarter policy review every 45 days, which was initiated by D Subbarao. 

The CNX Nifty is currently trading at 5,443.50, down by 107.25 points or 1.93% after trading in a range of 5,580.95 and 5,440.15. There were 7 stocks advancing against 42 declines on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were Lupin up by 2.09%, BHEL up by 1.61%, Tata Motors up by 1.52%, Coal India up by 1.40% and Sesa Goa up by 0.74%. On the flip side, Indusind bank down by 5.22%, HDFC down by 4.54%, Axis Bank down by 4.43%, Hero Moto Corp down by 4.25% and Asian paints down by 2.58% were the major losers on the index.

The most of the Asian equity indices were trading in green; KLSE Composite up by 0.51%, Seoul Composite up by 0.46%, Jakarta Composite up by 1.28%, Taiwan Weighted up by 0.62%,  Shanghai Composite up by 1.08%, Hang Seng up by 1.02%, Nikkei 225 was up by 2.99% while Straits Times down by 0.12%.

European markets got off to a negative start; with CAC declining by .015%, FTSE 100 sliding by 0.07% and DAX losing by 0.04%.