Nifty down 400 pts in 8 days, below 5700 on rupee woes

Moneycontrol Bureau

The 50-share NSE Nifty closed Friday's trade below the 5700 level, continuing its losing streak for the eighth session on rupee volatility that forced the RBI, as well as brokerages, to cut GDP target for FY14 and weakness in earnings of PSU banks.

The Nifty shed 400 points in eight sessions and also posted a biggest weekly loss since week ended March 22. For the week, the index tanked 3.5 percent or 208 points while the Sensex plunged nearly 3 percent.

Probably the Nifty will move towards the base point of around 5500-5550 levels, where traders would eye the index over the next couple of weeks," says Rahul Mohindar of viratechindia.com.

Today the BSE Sensex lost 153.17 points to close at 19164.02 after hitting an intraday low of 19078.72 while the NSE Nifty was down 49.95 points to 5677.90 after seeing a day’s low of 5649.

Dipan Mehta, member BSE and NSE cautions that the situation could get worsen from hereon, so it is best to sidestep and adopt a wait and watch approach.

Given the high volatility in the forex market, investors should not hurry to take any investment calls as of now, says Dipan Mehta, member BSE and NSE. He believes the measures taken by the Reserve Bank of India so far, have not been able to prevent the rupee’s vulnerability.

“There are no exciting investment themes that investors can chase. The mood remains quite subdued and all eyes are on the forex market as to when the rupee stabilizes,” he says in an interview to CNBC-TV18.

The domestic currency fell 67 basis points to close at a record low of 61.10 against the dollar. It had touched its all-time low of 61.21/dollar on July 8.

Meanwhile the broader markets hammered quite badly this week compared to benchmarks. The CNX Midcap and BSE Smallcap indices were down 6 percent each. Today, both indices lost more than one percent.

Sandeep Shenoy, ED-Institutional Equities, Anand Rathi Financial Services says that midcap segment is under pressure as it has been witnessing exits. The sell off is seen in midcaps because it not offering significant returns and has seen a 50 percent fall over the past one month, he added.

Realty, Power and Metal indices were down around 4 percent while BSE Capital Goods, FMCG and Bankex fell 1.4-1.5 percent, but the IT Index gained 1 percent on rupee depreciation.

Coal India shares lost 6 percent ahead of first quarter earnings on Saturday while Jindal Steel plunged more than 7 percent.

FMCG majors remained in bear grip with the ITC and Hindustan Unilever falling 1.6 percent and 3 percent, respectively.

Country’s largest private sector lender ICICI Bank dropped nearly 3 percent while its rivals State Bank of India and HDFC Bank were marginally down.

Reliance Industries, Tata Motors and Bharti Airtel shares outperformed with 0.3-0.8 percent gains.

Buzzers

Siemens crashed nearly 6 percent after it reported net loss of Rs 48.8 crore in April-June quarter as against profit of Rs 36.2 crore in a year ago period. Siemens says made provision of Rs 135.4 crore on significant development in few projects.

Sun TV Network gained more than 4 percent. South-based media conglomerate's net profit was unchanged at Rs 164 crore in first quarter year-on-year, but net sales rose stronger-than-expected 41 percent to Rs 602 crore from Rs 425.8 crore on yearly basis.

Power Grid Corporation dropped 11 percent after the board approved a follow-on public offer of 69.44 crore equity shares.

Financial Technologies (FTIL) continued its downward journey for the second consecutive session today after its promoted National Spot Exchange suspended trade in all one-day forward contracts except E-series products, falling 21 percent today. It was down 45 percent intraday to touch more than 8-year low of Rs 105.50 in morning trade, but recovered later on. The stock plunged more than 72 percent in two days. MCX (promoted by FTIL) lost 20 percent for second day.

Titan Industries surged 8.5 percent after margins adjusted for the inventory writedown stand at 10 percent, beating street estimates. MD Bhaskar Bhat says that the reversal of gold on lease model is a positive development for the company. He does not see margin fall as a big concern. Deutsche Bank has upgraded the stock to a buy, citing market conditions favour acceleration in market share gains.

Bank of Baroda lost another 5.5 percent on top of yesterday’s 8 percent fall. Bank of America Merrill Lynch has downgraded the stock to neutral and cut its target to Rs 550. The brokerage firm cut its EPS estimate for FY14 by 20 percent on weak earnings and the recent RBI action.

Hindustan Construction Company (HCC) turned profitable with first quarter net profit at Rs 19.2 crore as against a loss of Rs 31 crore in a year ago period, sending shares 20 percent higher. Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped three-fold to Rs 210 crore from Rs 70 crore year-on-year and operating profit margin jumped 1110 basis points Y-o-Y to 18.3 percent in the first quarter. Also Read - Operational efficiency boosted topline in Q1: HCC