Market Review: Sensex snaps two-week winning spree, tumbles 646 points

Mumbai, Aug 2: The benchmark S&P BSE Sensex snapped its last two-week gaining spree, tumbling 646 points to end below 26,000 level at almost three-week low of 25,480.94 on cautious approach adopted by operators and retail investors ahead of the RBI’s monetary policy next week. Offloading long positions from operators in view of expiry of July-contract on Thursday, weak global cues, continuing geo-political tensions also affected the sentiment.

Weakness in the rupee against the dollar, as the domestic unit touched 61-mark after three months, was also the factor behind fall in share values. Shares of capital goods, refinery, metal, power, realty, PSU, consumer durables, IT, auto and banking declined sharply on heavy selling pressure. Small-cap shares also moved down on fresh selling from retail investors.

“The overall sentiment also remained downbeat after India’s fiscal deficit crossed half the budget estimate in the first three months of the fiscal,” said Jayant Manglik, President-retail distribution, Religare Securities. The Sensex resumed higher at 26,173.47 and moved up to 26,181.83 but declined afterwards to 25,459.13 before ending at 25,480.84, showing a loss of 645.91 points or 2.47 pct.
It had gained by 1,102.40 points or 4.41 per cent in the previous two weeks.

The NSE 50-share Nifty also fell by 187.85 points or 2.41 per cent to 7,602.60. Globally, the US Fed’s decision to continuing with
gradual tapering and reducing asset purchases by another USD 10 billion/month triggered concerns that flows into emerging market would slow. Besides, risk-aversion was seen due to reports that Argentina has failed to strike a deal to avert its second default in more than 12 years, affecting sentiment.

Construction and engineering giant Larsen and Toubro (L&T) tumbled by 11.13 per cent on weak Q1 earnings. However, Bharti Airtel, the top gainer from the Sensex rose 7.02 per cent on excellent Q1 results. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 2,746.24 crore during the week as per SEBI’s record including the provisional figure of August 1.

Twenty-four scrips out of the 30-share Sensex pack ended lower while remaining six finished higher. Other major losers were Tata Power (5.85 pct), NTPC (5.51 pct), Tata Motors (4.85 pct), Coal India (4.45 pct), RIL Ind (4.24 pct), Hindalco Ind (3.81 pct), ONGC (3.65 pct), TCS (3.40 pct), SSLT (3.25 pct), M&M (2.88 pct), Wipro (2.63 pct), SBI (2.47 pct), Axis Bank (2.43 pct), HDFC Bank (2.42 pct), HDFC (2.34 pct), Bajaj Auto (2.16 pct), ITC (2.06 pct) Tata Steel (1.43 pct).

However, other gainers from the Sensex pack were HUL 4.81 pct and Maruti Suzuki 3.21 pct. Among the S&P BSE sectoral indices, Capital Goods fell by 7.89 pct followed by Oil&Gas 3.01 pct, Metal 2.91 pct, Power 2.75 pct, Realty 2.67 pct, PSU 2.54 pct, CD 2.25 pct, IT 1.99 pct, Auto 1.79 pct and Bankex 1.22 pct.

Dollex-30, Dollex 100 and Dollex 200 indices also fell sharply by 4.13 pct, 3.66 pct and 3.50 pct respectively. The total tunrover at BSE and NSE fell to Rs 11,998.28 crs and Rs 73,179.24 crs respectively from the last weekend’s level of 15,645.76 crs and Rs 80,500.22 crs.

After taking a respite for a week, the Indian rupee continued its downslide and tumbled by 108 paise to end the truncated week at more-than four-month low of 61.18 against the Greenback on distinctly weak local equities amid fresh dollar demand from importers.

The Forex market was closed on July 29 on account of “Ramzan Id“. Importers and some banks bought dollars and short-sellers covered their positions on hopes of further hike in the dollar value after the US Fed recently trimmed its monthly economic stimulus by USD 10 billion. The dollar too gained against most peers as the American economy grows stronger, impacting negatively on the rupee value.

Fresh selling by Foreign Institutional Investors (FIIs) also put pressure on the rupee. FIIs pulled out USD 277.78 mln on first three trading sessions of the week, as per Sebi data. At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced slightly weak at 60.12 a dollar from last last weekend’s close of 60.10 and it touched a two-week high of 60.05 on Wednesday.

However, later it met with strong resistance and fell sharply to breach 61-mark to over four-month low of 61.19 before settling the week at 61.18, a net fall of 108 paise –its worst drop since 112-paise plunge in the week ending January 24 — or 1.80 pct.
On the drop in markets, RBI Governor Raghuram Rajan in Delhi said: “We are not immune to what is happening world markets.”  Pramit Brahmbhatt, Veracity Group CEO said, “In the first half of the week, the rupee traded range-bound and tried to hold its pose, but in the second half it depreciated taking cues from strong dollar in global market.”

“The dollar demand from oil importers and state-run banks for corporate and defence-related payments wounded the rupee. The rupee posted the third weekly fall in four weeks. The trading range for the rupee is expected to be within 60.50 to 61.50,” he added.
The benchmark six-month forward dollar premium payable in January was quoted at 249.5-251.5 paise and far-forward contracts maturing in July 2015 at 490-492 paise. The RBI fixed the reference rate for the USD at 60.8510 and the euro at 81.4615 from 60.1448 80.0173 last weekend.

The rupee reacted downwards against the pound Sterling to end the week at 102.97 from 102.05 preceding weekend and also fell back to 59.43 per 100 Japanese yen from 58.98. It too slumped against the euro to 81.93 from last weekend’s close 80.80.

Cottonseed oil prices rose by Rs 50 per quintal in an otherwise steady wholesale oils and oilseeds market today on scattered buying by retailers. However, other edible and non-edible oils moved in a narrow range in limited deals and settled around previous levels.
Traders said some buying by retailers helped cottonseed oil prices to trade higher. In the national capital, cottonseed mill delivery (Haryana) oil moved up by Rs 50 to Rs 6,450 per quintal.

Following are today’s quotations (in Rs per quintal):
Oilseeds: Mustard seed 2,950-3,050 and Groundnut Seed 2,150-2,900.
Vanaspati Ghee (15-litre tin) 1,140-1,250.
Edible oils: Groundnut Mill Delivery (Gujarat) 7,650, Groundnut Solvent Refined (per tin) 1,300-1,375, Mustard expeller (Dadri) 7,150, Mustard Pakki Ghani (per tin) 1,225-1,275, Mustard Kachi Ghani (per tin) 1,275-1,375, sesame mill delivery 8,900, Soyabean Refined Mill Delivery (Indore) 6,900, Soyabean Degum (Kandla) 6,600, Crude Palm Oil (Ex-Kandla) 5,300, Cottonseed Mill Delivery (Haryana) 6,450, Palmolein (RBD) Rs 6,200, Palmolein (Kandla) 6,000 and Coconut (per tin) 2,650-2,700.
Non-edible oils: Linseed 7,750, Castor 9,650-9,750, Neem 5,350-5,450.