IANS
A benchmark index of Indian equities markets closed yesterday’s trade around 1% or 240 points down, as stocks like metal and capital goods plunged.
Investor sentiment was down after Friday’s industrial activity data, measured in terms of the Index of Industrial Production (IIP), was below expectations. It only grew 0.5% in the month of July over the same month of the previous year.
India’s retail inflation too slowed down marginally at 7.8% in August from 7.96% in the previous month.
There was also anxiety regarding global cues such as US Fed rate hike and the upcoming China factory output.
However, India’s annual rate of inflation, based on official wholesale price index, gave some relief to the market as it fell to a near-five-year low of 3.74% for August.
The annual inflation rate stood at 5.19% for the previous month and 6.99% for August of 2013. Notably, the annual inflation rate for food articles in August fell to 5.15% from 19.17% in the like month of the previous year.
Reacting to all the above, the 30-scrip Sensitive Index (Sensex) of the S&P Mumbai Stock Exchange (BSE), which opened at 26,998.07 points, closed trade at 26,816.56 points, down 244.48 points or 0.90% from the previous day’s close at 27,061.04 points.
The Sensex touched a high of 26,998.07 points and a low of 26,794.10 points in the intra-day trade.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was range-bound at the 8,000-mark. However, it closed the day’s trade in negative territory. It was down 63.50 points or 0.78% at 8,042 points.
Metal, capital goods, information technology (IT), oil and gas and bank stocks sustained heavy selling pressure, while healthcare and realty stocks rose.
The S&P BSE metal index was down 225.96 points, capital goods slipped by 154.38 points, oil and gas index was lower by 123.34 points, bank index plunged 118.33 points and oil and gas index lost 93.94 points.
However, healthcare index was up 42.09 points and realty index increased by 0.40%.
The major Sensex losers were: Hindalco, down 3.08% at Rs163.40; Tata Steel, down 2.06% at Rs506.40; Sesa Sterlite, down 1.86% at Rs285.10; ONGC, down 1.83 points at Rs421.30; and Coal India, down 1.66% at Rs.352.
Rupee hits 1-month low
The Indian rupee hit a one-month low and saw its biggest single-day decline in nearly one-and-a-half months yesterday, tracking weakness in other Asian currencies, while dollar demand from custodian banks due to the fall in the share market also hurt.
India’s wholesale price inflation eased to its lowest level in nearly five years in August, but the central bank is likely to keep interest rates on hold later this month to prevent a revival in price pressures once the economy gains momentum.
Asian currencies took a hammering yesterday and the dollar further strengthened after data out on Saturday showed China’s factory output grew at the weakest pace in nearly six years in August, and growth in other key sectors also cooled.
Caution on emerging market currencies is expected to continue as the US Federal Reserve is set to hold its policy meeting amidst concerns that it may raise interest rates earlier than previously anticipated, while Scotland is also due to hold its independence vote.
“We are seeing some kind of convergence between the rupee and other falling Asian currencies considering that the rupee has been an outlier in this space so far,” said Anindya Banerjee, a currency analyst at Kotak Securities, a brokerage in Mumbai.
“The rupee still has a lot of catching up to do here, which means that it would continue to remain under pressure until the Fed meeting provides some clarity.”
Analysts were disappointed after data last week showed that India’s industrial output growth hit a four-month low in July while inflation remained high.
The sharp fall in the core retail inflation print however was a relief for markets.
The partially convertible rupee ended at 61.13/14 per dollar, after hitting 61.18, a level last seen on August 13. It had closed at 60.65/66 on Friday.
The local currency recovered some of the losses after RBI Governor Raghuram Rajan said India’s macroeconomic indicators are improving and inflation has been coming down in line with central bank’s estimates.
However, most traders expect the local unit to continue to struggle against the dollar, with some pointing out that the rupee may slide to 61.70-62 levels if the key 61.35 level is breached.
In the offshore non-deliverable forwards, the one-month contract was at 61.51 while the three-month contract was at 62.12.