Sensex falls 340 to shut at 11-month low; rupee at 64.11/$

Moneycontrol Bureau

It was a complete mayhem on the Dalal Street with the equity benchmarks closing at their 11-month low, continuing vertical fall for the fourth consecutive session on rupee woes Wednesday.

It was looking like a strong trade in morning today after the Sensex gained 300 points due to RBI measures, but that was short lived as bears remained in power with the 30-share BSE benchmark shedding 439 points intraday to touch an intraday low of 17807.19 in afternoon trade.

The Sensex fell 340.13 points or 1.86 percent to finish below 18000 level at 17905.91 for the first time since September 11, 2012.

The Nifty was down 98.90 points or 1.83 percent to 5302.55 after hitting an intraday low of 5268.45 and high of 5504.10, weighed down by major sectors like oil & gas, FMCG and metals.

The BSE benchmark shed 1461 points and NSE benchmark lost 440 points in last four sessions.

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Dilip Bhat, Prabhudas Lilladher feels that the some more correction looks very much possible on the Indian markets.

Lack of foreign money inflow is the cause of concern now, but the major worrisome factor according to him is the bond rates which have gone up means that the PE also has to get derated. "All this is the part of that process of correction. The PEs cannot remain so high when your bond yields are touching close to around 10 percent. So all these factors are really adding to the gloom," he adds.

Rupee's fresh record low of 64.49 against the US dollar added fuel to the fire today, but 7.16 percent 2023, 10-year bond yields fell quite sharply after the Reserve Bank of India Tuesday eased cash and bond holding rules for banks.

The RBI relaxed rules on mandatory bond holdings for banks, which would help protect lenders from large mark-to-market losses and said it would buy long-dated government bonds worth Rs 8,000 crore.

The domestic currency closed at all-time low for the fifth session, down 86 paise to 64.11 as against previous close of 63.25, triggered by consistent dollar demand from banks and importers on strengthening US currency overseas, coupled with a sharp fall in equities.

Deutsche Bank, in its report, says that the rupee could touch 70 against the US dollar in a month or so, although some revival is expected in the currency by the end of the year.

India Volatility Index rose 3.16 percent to close at its highest level since March 5, 2012 of 28.09.

Gainers & Losers

BSE Metal and Oil & Gas indices dropped over 3.5 percent followed by FMCG, Healthcare and Capital Goods with 2-3 percent loss while Bankex trimmed gains from 6 percent to 0.5 percent on profit booking.

Banks were in focus today after RBI measures and saw huge volatility. Country's largest lenders State Bank of India and ICICI Bank fell marginally after rising 6 percent in early trade while their rival HDFC Bank gained 1.6 percent.

Bharti Airtel was the biggest loser in the Sensex with a 6.3 percent fall as the country’s largest telecom operator added 4.76 lakh subscribers in July as against 12.6 lakh in previous month.

Index heavyweights ITC and Reliance Industries crashed nearly 5 percent (slipped over 9 percent in four sessions); Sun Pharma and Sterlite Industries too lost close to 5 percent.

Ranbaxy Labs shares dropped 13 percent today and 16 percent in last four sessions. ACC and Axis Bank were down 15 percent each in four sessions.

However, state-run capital goods major BHEL and housing finance company HDFC outperformed largecaps with 3 percent gains each.

Foreign institutional investors have net sold Rs 792.11 crore worth of equity shares today, as per provisional data available on NSE website.

Declining shares outnumbered advancing ones by 1340 to 911 on the Bombay Stock Exchange. (With inputs from Reuters)