Andrew L D'Cunha
Mumbai, Oct 4: The BSE Sensex and Nifty both broke psychological levels of 16000 and 4800 respectively on Tuesday as investors confidence has been shaken on deteriorating global economic situation. Financial market confidence has been knocked severely during the past weeks. Sensex closed at 15863 down 289 points or 1.79 per cent. The 30-share index touched intraday low of 15745 and high of 16202. Nifty ended at 4772 down 77 points or 1.59 per cent. The Nifty touched a high of 4870 and low of 4728 in trade today. Sensex fell more than 800 points in three days.
Bankex crashed after State Bank of India's (SBI) financial strength rating (BFSR) has been downgraded by Moody's Investors Service on the banking entity's capital situation and deteriorating asset quality. SBI's BFSR has been downgraded from D+ from C-. The downgrade comes a day after Fitch Ratings cut its estimate for India’s economic growth from 7.7% to 7.5% for 2011-2012. For 2012-13, it has estimated India's gross domestic product (GDP) growth at 8%, down from previous estimate of 8.2%. This is attributed to weak growth forecasts for all major advanced economies (MAEs).
Coal India (-5.47%), Tata Motors (-4.38%), ICICI Bank (-4.26%), M&M (-3.98%) and SBI (-3.77%) were amongst the major Nifty losers. In the auto space, Tata Motors slipped 4.5% and Mahindra & Mahindra dropped by 3.4%.
Asian shares fell Tuesday, extending steep losses from the previous session, as Europe’s debt woes weighed on sentiment. Japan’s Nikkei Stock ended with a 1.1% loss, while South Korea’s Kospi fell 3.6% and Hong Kong’s Hang Seng slipped 3.4%. European stocks dropped sharply Tuesday as a delayed aid payment to Greece and fears of more write-downs hit banks.
Following a meeting Monday, Jean-Claude Juncker, president of the Eurogroup of finance ministers, said a decision on whether to award another tranche of aid to Greece will be delayed to give auditors more time to complete their work. He also warned that the terms of a July 21 agreement on a second bailout may need to be revised; implying bondholders may have to take bigger losses than the 21% haircut previously proposed.
Gold Extend Gains; Oil Down
Gold hit its highest level in more than a week, rising more than 1% on Tuesday afternoon in a fifth session of gains, following a similar trend in the global market and with a weaker rupee against the dollar. The most-active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.78% higher at Rs 26,941 per 10 grams, after hitting a high of Rs 27,044, a level last seen on September 24.
Brent crude slipped below $101 on Tuesday on growing global economic concerns. US crude fell 62 cents to $76.99 a barrel after reaching an intraday low of $75.92.
Andrew L D'Cunha, Managing Director, WinWin Fin Advisory Pvt. Ltd. Mangalore. Email: finadvisoryltd@yahoo.com.