Markets Extend Morning Losses, Rupee Slides Further

After opening on a flat negative note today, the Indian markets extended their losses in the afternoon trade on the back of the negative opening in Europe markets and the falling value of the rupee against the dollar. The rupee has further depreciated to the 56.85 levels. Further, the lower GDP growth numbers for the Mar 2012 quarter and weak global markets added to the woes. The Nifty is trading down by 0.96% while Sensex is down by 1.03%.

The Asian markets continue to trade on a negative note over concerns from the global markets. The lower-than-expected industrial production numbers in China also raised concerns over the slowdown in the Chinese economy, and that kept the investors’ mood weak.

The European markets opened on a mixed flat note today on lingering fears over the economies of Greece and Spain, and this caused the major markets to suffer. We believe that the gains could be limited by worries over Spain's ability to rescue its ailing banking sector. The FTSE is up marginally by 0.04%, while CAC and DAX are down by 0.24% and 0.74% respectively.

Back home, all the BSE sectoral indices are trading in the negative zone. IT, Oil & Gas and Teck are leading with losses of 1.78%, 1.56% and 1.50% respectively. There has been selling pressure in these spaces following weak economic data in the US and the falling rupee making oil imports costlier. The US jobless claims increased by 10000 to 383000 for the week ended May 31. IT companies, which generate 60% of their revenue from the US, will be hit by any downfall in the economy.

In individual stocks, Educomp Solutions has fallen by 3% to Rs 139 as the company posted weak Mar quarter numbers. The net sales of the company increased by 5.10% to Rs 513 crore and the net profit declined by 57.75% to Rs 61.54 crore.

Among the Sensex shares, the IT stocks Infosys, TCS and Wipro are down by 2.04%, 1.67% and 1.84% respectively. Others like DLF, GAIL, HDFC, HDFC Bank and L&T are down by nearly 1% each.

The market breadth, which indicates the overall health of the market, is very weak. On BSE, 1481 shares have fallen and 923 shares have risen. 111 shares have remained unchanged.

We believe that the markets will remain in the negative territory today, and one can also expect a further downfall. Therefore, we advise investors to remain cautious.