Benchmarks retract from day’s low; selling pressure intensifies in broader indices

Weakness at Dalal Street has gone a little subtle as the benchmark indices have retracted from day’s low. However, the discouraging milieu continues to envelop Dalal Street. Benchmark equity indices have plummeted for seven straight day in a row on Friday on the back of intensifying Europe's funding difficulties amidst Spanish borrowing costs hitting an unsustainable level and mounting premiums for dollar funds worrying investor’s.

However, Asian shares too are acting as a mood dampener as Asian pacific stocks slid further after a report showed new house prices in China slid last month. Adding to the pessimism, a Chinese government report showed new house prices in October fell in 33 of 70 cities measured from the month before, stoking fears about the country's once-buoyant housing market. Meanwhile, US stocks fell on Thursday, as fears over euro zone debt woes overtook more encouraging signs for the U.S. economy after data showed a drop in new claims for jobless benefits to a seven-month low last week and a rebound in permits for future home construction in October. The US future indices too were showing a downtick in the screen trade.

Back home, bears were active across the 13 sectoral indices. However, stocks from Capital Goods, Realty and Power counters on the BSE sectoral front, staggered the most under intense selling pressure. Subtle weakness was seen in the stocks belonging from the Healthcare, Information Technology and TECk counters. 30 share barometer indices-Sensex- on BSE contracting close to 250 points was trading sub 16300 level. Similarly, 50 share index- Nifty-on NSE declining over 50 points were gyrating below 4900 level. The broader indices showcasing immense weakness were down and out over 2%. The overall market breath on BSE was in the favour of declines which thumped advances in the ratio of 1765:410, while 50 shares remained unchanged.

The BSE Sensex is currently trading at 16,232.92, down by 228.79 points or 1.39%. The index has touched a high and low of 16,387.70 and 16,231.11 respectively. There were 5 stocks advancing against 24 declining one’s on the index, while 1 share remained unchanged.

The broader indices were reeling under intense selling pressure; the BSE Mid cap and Small cap indices plunged by 2.02% and 2.21% respectively.

Selling was witnessed across the counter. Realty down by 3.10%, CG down by 2.49%, Metal down by 2.39%, Power down by 2.33% and Bankex down by 2.05% were the top losers on the index.

The top gainers on the Sensex were Hero MotoCorp up by 2.19%, Sun Pharma up by 1.23%, Cipla up by 1.19%, HUL up by 0.49% and Bharti Airtel up by 0.11%.

On the flip side, Jaiprakash Associate down by 5.10%, BHEL down by 4.44%, Hindalco Industries down by 3.46%, Tata Motors down by 3.31% and Tata Steel down by 3.15% were the top losers on the index.

Meanwhile, the Reserve bank of India (RBI) has directed banks dealing in foreign exchange (forex) to exercise caution in respect of transaction by Indian resident where margin payments through a credit card or deposit are required in view of the risk of fraud. ‘Banks were advised to exercise due caution and be extra vigilant in respect of the margin payments being made by the public for online forex trading transactions through credit cards / deposits in various accounts maintained with banks in India,’ the RBI said in a notification.

By adding further RBI said, banks were also advised to exercise due care in respect of the accounts being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin money, investment money, etc. in connection with such transactions. The RBI has observed cases where abroad foreign exchange trading has been introduced on a number of internet and electronic trading portals, attracting Indian residents with offers of guaranteed high returns based on such forex trading.

'The advertisements by these internet/online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees. Some companies have reportedly engaged agents who personally contact people to undertake forex trading/investment schemes and entice them with promises of disproportionate/exorbitant returns,’ RBI said.

As per the RBI, majority of forex trading via such portals is done on margining basis with huge leverage or on an investment basis, where the returns are based on forex trading. The public is asked to make the margin payments for such online forex trading transactions via credit/deposits in various accounts maintained with banks in India. 

'It is also observed that accounts are being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin money, investment money, etc,' it said.  The RBI further, warned that any person who is residing in India and engaged in collecting or remitting such payments either directly or indirectly abroad would be liable to face action as per the rules of the Foreign Exchange Management Act (FEMA) and other laws.

The S&P CNX Nifty is currently trading at 4,862.10, down by 72.65 points or 1.47%. The index has touched a high and low of 4,902.25 and 4,857.00 respectively.  There were 7 stocks advancing against 43 declining one’s the index.

The top gainers of the Nifty were Hero MotoCorp up by 2.39%, Cipla up by 1.25%, Sun Pharma up by 0.79%, Hindustan Unilever up by 0.54% and Dr Reddy’s Laboratories up by  0.53%.

JP Associates down by 4.95%, BHEL Down by 4.93%, RPower down by 4.39%, Sesa Goa down by 3.95% and Reliance Power down by 3.87%, were the major losers on the index.

All the Asian equity indices were bleeding badly; Shanghai Composite lost 1.51%, Hang Seng plummeted 1.81%, Jakarta Composite slid 0.95%, KLSE Composite declined 0.20%, Nikkei 225 plummeted 1.26%, Straits Times fell 1.20%, Seoul Composite dropped 2.28% and Taiwan Weighted dived 1.96%.