Andrew L D'Cunha
Mumbai, Nov 16: Indian markets continued their southbound journey on the fifth consecutive day on sustained worries of the Euro-zone debt crises. The BSE Sensex opened weak, following cues from the Asian markets. The market witnessed huge volatility in the last 2 hours’ trade as it tried twice to attempt full recovery but could not make it. News that the Union Cabinet has approved FDIof up to 26% in the pension sector; and was also likely to give assent for 100% FDI in Single Brand Retail lifted sentiment. However, the markets continued to see volatile trade, and Sensex continued its southbound journey. The Sensex after touching a low of 16,642, closed at 16,776. Nifty is down 38 points at 5030 .
The weak rupee also added to the concerns. Indian rupee depreciated to 50.93 a dollar during the day. A weaker rupee is a matter of concern for India as it depends on imports for over 70 per cent of its oil and gas requirements and the depreciation in the local currency have made imports expensive. Finance Minister Pranab Mukherjee today said the Reserve Bank is monitoring the situation and will intervene in the forex market "as and when necessary" Market is likely to witness immense amount of volatility from the current levels on the back of debt crisis in Europe.
Capital goods index slipped 3.8% due to disappointing corporate earnings. The slowdown in order inflow dragged down the capital goods stocks such as Bharat Heavy Electrical (BHEL), Larsen and Toubro (L&T), Punj Lloyd, Suzlon Energy, Thermax and Crompton Greaves, which plunged more than 5% each. Reliance Industries, which lost 2.5% in intra-day trade, ended down 1.6%. HDFC, HDFC Bank, Coal India, Hindalco, Maruti and Tata Power were down 1-1.7%. Infosys and TCS fell 0.6% each.
State-owned oil marketing companies (OMCs), including Bharat Petroleum, Hindustan Petroleum and Indian Oil were trading at their 52-week lows after reducing the price of petrol for the first time in 33 months by Rs 1.85 a litre to pass on to the consumer the benefit of a dip in the global crude oil price in the first fortnight of November. BPCL shed 4%, HPCL slipped 5% while IOC dropped 2.5%.
Asian stock markets slipped today over Euro zone worries. Nikkei Stock down 0.9%, and the Hang Seng fell 2%. The Shanghai Composite lost 2.5%, Pressure eased on Europe's government debt market on Wednesday, with Italian borrowing costs back below the 7% level viewed as unsustainable after the European Central Bank was seen buying up bonds.
Oil and Gold down:
Brent crude slipped below $112 on Wednesday, reversing some of the previous session's gains on worries that new governments in Greece and Italy may fail to muster political clout to impose unpopular reforms and contain the region's debt crisis. Gold today slipped from record high by losing 0.39% to Rs 29,058 per 10 grams in the futures market as speculators indulged in booking profits amid a weakening trend overseas.
Andrew L D'Cunha, Managing Director, WinWin Fin Advisory Pvt. Ltd. Mangalore. Email: finadvisoryltd@yahoo.com.