Free-Falling Rupee Drags Markets

The Indian markets had a volatile day today, as the markets remained positive in the first half but ended the day in the deep red. The Sensex saw around a 300 point movement, with half on either side. It tested the 16000 level a couple of times and finally held it for the day, closing just above the psychological mark. Nifty closed down almost 1% to the 4860 levels. This was majorly on account of the rupee depreciation, which is seeming to be unstoppable. The RBI has also not been able to take an appropriate step. The currency has once again depreciated against the dollar, making a record low. It is currently trading at 55.34, up 0.56% against the USD.

The peer Asian markets closed contrary to our markets. The three major indices, viz. Hang seng, Nikkei and Shanghai closed higher in the range of 0.6%-1.1% on investor speculation that China will take some steps to revive its economy. This news helped the European markets also to trade higher, as the Chinese economy is considered as the second largest economy of the world. The major European indices like FTSE, CAC and DAX are trading higher in the range of 0.6%-0.8%.

Dow Jones Futures is currently trading 21 points or 0.17% down at 12469, indicating a negative sentiment in the US markets.

Among the sectoral indices, Metals, Bankex, Power, Realty etc. plunged and exerted downward pressure on the broader markets. IT, Teck and Consumer Durables were the only three indices that closed the day marginally in the green zone, as these indices tend to benefit from the depreciating rupee.

Back home, Tata Power was the leading index loser. The scrip was down 5.29% to Rs 90.45 as investors speculated that the company may post dismal Mar 2012 quarter numbers. Metals stocks show a lacklustre performance, with Hindalco and Sterlite Industries trading lower by 3% and 4% respectively. SBI also witnessed heavy profit booking, and was down 3.43% to Rs 1938.50 after a handsome rally over two days. FMCG stocks also witness downward pressure, and those like ITC and HUL closed 1.13% and 0.91% respectively. Others like Infosys, Wipro, Cipla, Bharti Airtel, etc. closed the day marginally in the red zone.

On the other hand, there was a very short list of index gainers, with only four stocks rising today. Tata Motors and TCS closed the day up, both higher by 1.17%.  The two other stocks that closed in gains were BHEL and HDFC, higher by 1.04% and 0.24% respectively.

The market breadth, which indicates the overall health of the market, was negative today. Out of the 3105 stocks traded on the BSE, 1814 declined, 1159 advanced and 132 remained unchanged.

Investors should watch out for stocks like BHEL, REC, Indraprastha Medical, Jyothy Labs, MRPL, Tata Global Beverages and Tech Mahindra, which are going to post their Mar quarter results tomorrow. These stocks may witness volatility in their share price.

In conclusion, we expect the markets to remain volatile for tomorrow as investors are jittery in this uncertain environment. We advise our readers to play cautiously.