Sensex closes weak for 6th day; banks dive, telecom soars

Moneycontrol Bureau

The market recouped losses in last hour of trade Wednesday and closed the session with marginal loss. The weakness continued for the sixth consecutive session on rupee depreciation, asset quality concerns of banks, slower sales growth of FMCG companies and cut in FY14 GDP forecast by the RBI.

The BSE Sensex was down 2.64 points to close at 19345.70 after seeing a day’s low of 19126.82 today, but crashed nearly 1000 points in the last six sessions. The NSE Nifty slipped 13.05 points to finish at 5742 after hitting an intraday low of 5675.75.

It has strong support in the 5750 area, says Sudarshan Sukhani of s2analytics.com. “With all the ups and downs that support more or less is likely to hold at least in the short-term so markets will become choppy as markets test this support and decide what to do next,” he adds.

Indian rupee approached a record low against the US dollar despite several measures the Reserve Bank of India had taken since July 15. The domestic currency touched an intraday low of 61.10, but recovered quite sharply in last hour of trade, gaining 8 paise to close at 60.40 per dollar.

Federal Reserve's two-day meeting outcome today will be the key for equity market and currency tomorrow.

Also Read - Further rupee fall unavoidable; funding CAD challenge: Bank of S'pore

Nick Verdi, Barclays Capital believes if Ben Bernanke fails to give a timeline for tapering off quantitative easing in the FOMC meet today, then dollar will rally which will be a negative for emerging markets (EMs).

"Monetary conditions are actually tightening in India which is being seen as a negative for market and the situation in which the RBI could be in a position to cut rates will be one in which inflation is falling and growth could improve on the back of lower rates. But according to the market, that will not happen anytime soon and as a result the rupee is seeing a selloff," he reasoned.

Banks remained under pressure with the Bankex falling nearly 2 percent after the Reserve Bank of India’s credit policy.

The major worrisome part for the banks is asset quality, which has been worsened more in case of public sector lenders compared to private sector banks.

ICICI Bank shares declined 1.86 percent after results announcement. Country’s largest private sector lender’s first quarter standalone net profit rose to a forecast-beating 25 percent year-on-year to Rs 2,274 crore, aided by both  net interest and non-interest income, but provisions and contingencies increased 28 percent on yearly basis to Rs 593 crore for the quarter ended June 2013.

Meanwhile, Andhra Bank and Karnataka Bank were down 6 percent post weak earnings in June quarter.

FMCG and realty stocks were also down while telecom, metals, oil & gas and technology stocks outperformed.

ITC and Hindustan Unilever continued to reel under selling pressure, falling more than 2 percent.

Telecom stocks rallied quite sharply after Bharti Airtel’s first quarter numbers. Bharti gained more than 7 percent as India’s largest telecom operator reported improvement in India wireless revenue per minute (RPM), margin, date revenue growth and margin in DTH business, though there was weak volume growth in Indian wireless business and Africa performance.

Idea Cellular rallied 8 percent and Reliance Communications surged 10 percent ahead of April-June quarter earnings on Thursday.

Technology stocks remained on buyers’ radar due to rupee depreciation with the BSE IT Index rising 1.3 percent. HCL Technologies soared 3.5 percent post better-than-expected earnings in fourth quarter.

Metals and oil & gas stocks rebounded quite sharply today on short covering.

The broader markets also cut losses in late trade following recovery in equity benchmarks. The BSE Midcap and Smallcap indices were down 0.9 percent each.

JSW Steel and Motherson Sumi gained 6 percent and 3 percent, respectively after earnings announcement.

Declining shares outnumbered advancing ones by 1378 to 834 on the Bombay Stock Exchange.