BSE Sensex, Nifty weak; Bank Nifty falls 3.5% on RBI steps

Moneycontrol Bureau
Live Market Commentary

9:55 am Exclusive: Pratip Chaudhuri, Chairman, SBI feels that the RBI is determined to do everything to defend currency. In an exclusive interview to CNBC-TV18, he said that liquid mutual funds will be impacted more by RBI moves. 9:50 am Bond market update: Indian bond yields and swap rates surged after the central bank moved to tighten rupee liquidity further in an attempt to shore up the weak local unit, which only edged up modestly despite the measures.
The benchmark 10-year bond yield rose as much as 33 basis points to 8.50 percent, its highest since late May 2012.
The 1-year swap rate jumped 41 bps to 9.30 percent, while the benchmark five-year rate rose 27 basis points to 8.45 percent, according to Thomson Reuters data. 9:45 am Buying interest: Techlonolgy stocks are seeing some buying interest. TCS, Wipro, Infosys are lead gainers in the index. Among the midcaps, Hexaware is up around 2 percent on the BSE. 9:40 am Buzzing: SpiceJet is down around 2.5 percent on the BSE as its CEO Neil Mills has resignsed. His resignation comes at a time when the Chennai-based carrier has been scouting for a foreign investor after the government hiked the FDI cap in aviation and when Air Asia is launching its services from SpiceJet's home turf Chennai by the end of this year.
Neil Mills joined SpiceJet in 2010 and he has called it quits before the end of his 5-year contract. Now spicejet does not have either a CEO or COO.  SpiceJet is yet to confirm his exit. 9:35 am Anemic: Wockhardt has fallen further by 13 percent as there are slew of downgrades on the back of US FDA warning. Earlier this week, the pharma major said it received a warning letter from US health regulator over its facility at Waluj in Maharashtra not meeting manufacturing norms. The US FDA warning letter has asked the compnay to put remediation plan in place. Wockhardt manufactures injectables and solid dosage in Waluj.
Macquarie downgraded to neutral from outperform and reduced target price to Rs 750 from Rs 1440. Citi says that the warning letter issues are serious and near-term overhang will remain. 9:30 am Expert opinion: Tirthankar Patnaik of Religare Capital Markets expects more measures from the Reserve Bank of India as it tries to bolster rupee.But the flip side of this strategy is that growth will be hurt, he cautioned.
In an interview to CNBC-TV18, Patnaik says institutional investors have already turned bearish following the recent RBI moves. He expects the Nifty to move in a range between 5500-6100 near term.
Patnaik's firm has a neutral view on the banking sector as a whole. He sees wholesale-funded banks like Yes Bank, IndusInd to be hurt because of tight liquidity. Also, state-owned banks would suffer marked-to-market losses on their bond portfolio because of rise in yields. When interest rates rise, bond prices fall, reducing the value of the portfolio.
Religare is bullish on IT stocks, and despite the recent rally in these shares, he feels valuations are not a cause for worry. Patnaik is bullish on Tech Mahindra and TCS in this space.
He has a 'hold' rating on the FMCG sector as he feels they are expensive. Within the sector, he prefers Britannia, Dabur and Bata.
Patnaik rates L&T as his top pick in the engineering space. The stock has been underperforming for a while now, but he sees limited downside from these levels. Don't miss: RBI's steps to curb rupee fall: How will it impact banks? 9:20 am Top losers: Major banking stocks are bleeding on RBI's rupee saving moves. ICICI Bank, SBI, HDFC Bank and HDFC are down between 1-3 percent in the Sensex. BSE Bankex is down 3.5 percent from its previous close. Read what Udayan Mukherjee says about the market
The market has opened in the negative terrain dragged majorly by banking stocks. The Sensex opens 133.29 points down at 20168.84 while the Nifty is at 6031, down 46.80 points. About 90 shares have advanced, 203 shares declined, and 29 shares are unchanged.
Bank Nifty falls 3.5 percent as the banking stocks are under heavy selling pressure not unable to digest Reserve Bank of India’s measures to curb rupee volatility.
The RBI has moved to further rein in forex market volatility as the rupee ends lower once again at 59.76 to the dollar. It says bank borrowing from RBI will be limited to 0.5 percent of the bank's total deposits. The central bank adds banks must maintain 99 percent of their daily cash reserve ratio (CRR) requirement with the RBI, against the current 70 percent.
Meanwhile, the rupee opened higher by 37 paise at 59.39 per dollar versus 59.76 yesterday. Rajeev Malik, CLSA said, "India will likely suffer more downgrades to GDP growth forecast if the RBI goes ahead with a sustained and aggressive liquidity squeeze, but it will still eventually have to live with a weaker rupee. A CRR hike on July 30 cannot be ruled out. Tactically, the RBI is more likely to prefer sucking out liquidity via bond issuance to ensure that interbank rates remain well above the repo rate."
In key earnings today-Ambuja Cements' topline may come under pressure owing to lower realisations and volumes. Profits may see a 32 percent dip and EBITDA margins are expected to take a big hit. In autos, Hero Motocorp’s volumes may slump due to slowdown in sector but margins may remain stable year on year.
Other results that are expected today are Cairn India, Yes Bank, Dabur, Central Bank of India, I Bull Realty, Novartis India, Mahindra Lifespace, Mahindra Composite, Atul, United Phosphorus, , SKF India, RSWM, Orient Refractories, Kirloskar Bros and  Astra Micro.
The US markets finished narrowly mixed in lacklustre trading, but the Dow posted a fresh closing high, as investors weighed a handful of upbeat earnings against a weak regional factory report.  The CBOE volatility index dipped near 12.
Asian markets were trading lower. China's Shanghai Composite shed 0.52 percent or 10.63 points at 2,033.25. Hong Kong's Hang Seng was flat at 21,906.38. Japan's Nikkei slipped 0.77 percent or 113.66 points at 14,664.85. Singapore's Straits Times was flat at 3,253.14.
In the currency space, the euro dollar holds above the 1.32 mark. The dollar index is trading around 82.  In commodities, Brent Crude prices continue to hold above the USD 108 levels per barrel. Nymex sees modest gains around USD 107 per barrel.
From precious metals space, gold eases marginally after four days of gains as dollar firms. However it's still well above the 1340 mark.