JOIN US Key benchmark indices on Tuesday nosedived after a sharp slide in rupee against the dollar and profit-booking begun, after the four-day rally ended, on fears of a downgrade after the global rating agency Standard and Poor’s reiterated that India’s credit rating may be reduced to junk.
That apart, intensifying tensions in Syria also impacted investor sentiment in D-Street.
Also, the rupee slid a little closer to a record low struck against the dollar last week, as investors remained doubtful whether the government would act decisively to restore confidence in the economy. So much so, the premium indices of both BSE and NSE settled at almost one-week low. In the process, investors lost over Rs 1.5 lakh crore wealth in a single day as total market capitalisation of actively traded stocks on BSE has declined by Rs 1.63 lakh crore to Rs 5,949,295 crore. Out of BSE-500 companies, the market price of 54 stocks declined by over 5 per cent each.
The market breadth, indicating the overall health of the market, was weak with all the 13 sectoral indices on BSE logged decline. In the day’s trade, bank stocks tumbled, while pharma stocks edged lower. Index heavyweights, Reliance Industries and ITC, both, slumped. Capital goods pivotals too declined. Realty stocks dropped also, while metal stocks edged lower in volatile trade. Airline stocks were mostly higher.
A bout of volatility was witnessed during the day as key benchmark indices slipped into the red after opening higher. It weakened and hit fresh intraday low in morning trade. It hovered in negative terrain in mid-morning trade. It slumped and hit fresh intraday low in early afternoon trade.
“The economy’s fundamentals in the near-term remain on shaky ground. Increase in oil prices due to the Syria situation is expected to add to the current account burden, keeping the rupee under pressure. As a result, hopes of quick reversal of interest rate hikes by the RBI are waning, and the GDP and earnings growth outlook for FY14 continues to have downside. Hence, we believe in the near-term cyclical and rate-sensitive sectors are likely to underperform while defensives, IT and Pharma sectors would continue to outperform,” Angel Broking’s Vaibhav Agrawal said.
S&P analyst Kim Eng Tan was quoted as saying that there is a more than one in three chances for India ratings cut within two years and that the possibility of a downgrade is higher than for Indonesia.
The popular Sensex at BSE was down 651.47 points or 3.45 per cent to 18,234.66, its lowest closing since August 28, 2013. The index tumbled 719.96 points at the day’s low in late trade and rose 121.18 points at the day’s high in opening trade.
The 50-unit CNX Nifty at NSE was down 209.30 points or 3.77 per cent to 5,341.45, its lowest closing from August 28, 2013. The index hit a low of 5,323.75 and a high of 5,580.95 in intraday trade.
From broader segments, the BSE Mid-Cap index fell 1.86 per cent and the BSE Small-Cap index declined 0.95 per cent. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak with 1,470 shares on BSE fell and 809 scrips rose while a total of 137 stocks were unchanged. The total turnover on BSE amounted to Rs 2173 crore, which is higher than Rs 1721.63 crore on Monday, 2 September 2013.
Meanwhile, globally during the day, European stock markets edged lower ahead of monetary policy decisions in Japan, the euro zone and the UK on Thursday and the US employment report on Friday. Key benchmark indices in the UK, France and Germany were down 0.03 to 0.21 per cent.
Asian stocks climbed on evidence of a pickup in global manufacturing. Key benchmark indices in China, Hong Kong, South Korea, Japan, Indonesia and Taiwan rose by 0.46 to 2.99 per cent, while Singapore’s Straits Times fell 0.03 per cent. Trading in US index futures indicated that the Dow could gain 104 points at the opening bell on Tuesday.