Market Week due to Rupee weekness and global Selloff

After snapping a five-day losing streak in the previous trading session, the Indian markets on Wednesday resumed their fall. The drop was quite sharp amid no sign of resolution to the Greek political crisis, which has triggering a global sell off. Asian stock indices finished sharply lower, as the undertone continued to be shaky amid concerns that political instability in Greece could lead to fresh economic turmoil in the debt-stricken eurozone nation. Fears are also mounting that Greece may eventually have to leave the currency bloc, further denting the prospects for global economic growth. European stock indices too extended losses today on mounting worries about a possible exit from the euro currency bloc. The FTSE index in the UK was down 1%, while the DAX index in Germany slipped 0.7%. The CAC index in France managed to rebound and was trading slightly higher. The Dow industrials ended near a four-month-low on Tuesday as investors continue to shun risky assets and are instead taking a refuge in the US dollar and treasuries. The BSE Sensex ended at 16,030, losing by 1.8% or 298 points. It had earlier touched a day’s high of 16,132 and a day’s low of 15,974. It opened at 16,132. The NSE Nifty settled at 4858, down by 84 points or 1.7%. It touched a day’s low of 4,837 and day’s high of 4,882. Top losers on the Sensex and the Nifty were Tata Motors, Tata Steel, SAIL, R Infra, JP Associates, Wipro, Jindal Steel, BHEL, Hindalco Inds, PNB, HDFC, DLF, ICICI Bank, Sun Pharma, Infosys, Maruti Suzuki, Coal India, Bharti Airtel, NTPC and SBI. Notable gainers were few on both the indices. They were BPCL, Power Grid Corp, Cairn India, Bajaj Auto, Kotak Mahindra Bank and Sterlite Inds. The market breadth was negative on BSE, with 1733 stocks declining and 983 stocks rising. The sectoral indices were a sea of red today with the Metals index declining the most, down 2.7%. Auto, Consumer Durables, Capital Goods, Bankex, Power, PSU, Teck and IT were the other notable laggards among the sectors. The broader markets also tumbled with the BSE Mid-Cap index falling 0.8% and the BSE Small-Cap index ending down 1.1%. The INDIA VIX on the NSE slipped by 6.4% to close at 23.71. It hit days high of 24.54. It hit a low of 22.28. On the domestic front, the Indian Rupee slumped to a new record low of 54.46 before recovering marginally. A suspected intervention by the Reserve Bank of India (RBI) earlier in the session didn't seem to have any impact on the Rupee. The rupee is down 9% since March, the biggest fall among major Asian currencies. But, traders are still building short positions, betting that the rupee will fall to a record low of 56 per dollar this year. "The ‘risk-off’ trade continues unabated amid growing concerns about the political impasse in Greece. The peripheral European nation’s future in the euro currency bloc is in doubt as all efforts to form a new government have failed. Fresh Greek election is imminent, raising fears of a disorderly exit from the eurozone and a broader meltdown. India is facing its own set of macro-economic problems, dragging down the rupee and exacerbating the selling by FIIs. Though valuations may be compelling, market players are unlikely to fall for it just yet. Searching for a bottom is futile. Stick to a defensive portfolio and avoid any adventures," says Amar Ambani, Head of Research, IIFL. Cairn India, Bank of Baroda and Godrej Consumer advanced after they were added in the MSCI India index while Suzlon fell as it was removed from the widely tracked index. Corporation Bank, Page Industries, IL&FS Transportation, Indiabulls Power, MOIL, Polaris Financial and Suzlon have been added in MSCI India Small-cap index while 31 stocks, including Videocon Industries, Shree Cement and SKS Microfinance, have been deleted.


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