Indian stocks today dropped for the first time in five days with S&P BSE Sensex plunging over 651 points,its biggest fall in over a fortnight,on massive selling as the Indian rupee breached 68-mark to the US dollar on fresh signs of trouble in Syria,which was started by Russia’s announcement that ‘objects’ were fired at its ally.
Brokers said the across-the-board selling was also triggered by reports that Standard & Poor’s sees chances of a credit rating downgrade for India higher than for Indonesia.
The bloodbath in stock markets saw investors becoming poorer by a whopping Rs 1.63 lakh crore as nearly 1,500 stocks on the Bombay Stock Exchange platform ended the trade as losers.
In Sensex,Reliance Industries (RIL) lost 6.07 per cent to Rs 830.10,ITC Ltd by 5.37 per cent to Rs 302.25,Infosys by 1.41 per cent to Rs 3,033.85 and Tata Consultancy Services (TCS) by 2.31 per cent to Rs 2,000.85.
After gaining 918 points in last four sessions,BSE Sensex plunged by 651.47 points,or 3.45 per cent to 18,234.66,after hitting day’s low of 18,166.17. Today’s fall was the biggest after August 16,when it lost 769 points.
On similar lines,the NSE Nifty tumbled by 209.30 points,to 3.77 per cent to 5,341.45,after touching a low of 5,323.75. The MCX-SX’s SX-40 was down 3 per cent at 10842.41.
Reports quoting Russian news agencies said the country’s missile early warning system had detected the launch of two missiles from the central part of the Mediterranean Sea fired towards the Sea’s eastern coastline,amid growing fears of Western military action in Syria.
Domestic markets were also weighed down after Goldman Sachs lowered India’s growth forecast for the current fiscal to 4 per cent from 6 per cent earlier and is expecting the rupee to touch 72 against the US dollar in next six months.
With the markets in doldrums,gold once again surfaced as a safe haven for investors. The precious metal surged Rs 1,610 to Rs 34,370 in Kolkata,Rs 970 in Mumbai,Rs 440 in Delhi and Rs 350 in Chennai.
The mayhem in stocks and rupee was also triggered by a spate of poor economic data,including fall in growth of eight infrastructure industries in July and contraction in an indicator of manufacturing sector activity in August.
“S&P warned there is 1-in-3 chance for India’s rating to be cut over next 2 years. Secondly…fears of Syria attack,” said brokerage GEPL Capital.
Sectorally,The banking sector index fell the most losing 5.06 per cent,followed by consumer durable index (4.61 pc),Realty index (4.39 pc) and FMCG index (3.89 pc).
European markets like the UK’s FTSE,France’s CAC and Germany’s DAX were down while Asian indices like Nikkei,Hang Seng,KOSPI and Shanghai Composite were up. Strait Times,however,closed down.
Anindya Banerjee,Currency Analyst,Kotak Securities: Rupee dropped nearly 3% against the USD as it touched a low of 68.15/16. A combination of sell-off in leading emerging market currencies and fresh jitters in the Middle East has been driven rupee lower. Selling in Indian markets has been broad-based with banking,FMCG,Media,Reality and Infra sectors being hardest hit. Over the near-term,fears of Fed tapering and tensions in Middle East could put rupee under pressure,with risk emerging for a sell-off beyond 69.00 levels on spot.
Indian shares fall nearly 4 pct,S&P comments,Syria fears weigh
(Reuters) Indian shares fell nearly 4 percent on Tuesday,retreating from a 2-1/2 week closing high in the previous session,as blue chip shares slumped as fears of military tensions in the Middle East roiled global markets.
Russian radar detected two ballistic “objects” that were fired towards the eastern Mediterranean from the central part of the sea on Tuesday,state-run news agency RIA quoted the Defence Ministry as saying. The Defence Ministry declined immediate comment to Reuters.
Israel later said it had carried out a joint missile test with the United States in the area,as President Barack Obama pushed lawmakers to back his plan to attack Syria.
The Standard & Poor’s reiteration of a more than one-in-three chance of a ratings downgrade for the country alongside Indian rupee’s fall past 68 to the dollar to near a record low struck last week also weighed on stocks.
The outlook remains weak as traders focus on waning hopes of a one-time diesel price hike and dwindling volumes on days of gains.
“As fiscal deficit concerns weigh,the market may remain rangebound for remaining part of 2013. Valuations are still high in the context of economic slowdown and rupee movements,” said Dinesh Thakkar,chairman and managing director at Angel Broking.
The benchmark BSE index fell 3.45 percent,or 651.47 points,to end at 18,234.66,losing almost the entire gains made over the last four sessions.
The broader NSE index slumped 3.77 percent,or 209.30 points,to end at 5,341.45,after earlier falling as much as 4.1 percent.
Among blue-chip shares,Reliance Industries Ltd slumped 6.3 percent,while ITC Ltd lost 6.2 percent.
Among private-sector banks,Axis Bank Ltd tumbled 9.4 percent while Yes Bank Ltd slumped 9.4 percent.
The NSE bank index slumped 5.2 percent,marking its lowest close since January 2012.
Hero MotoCorp Ltd lost 6.3 percent adding to Monday’s 1.1 percent fall after the company’s sales for August,at 459,996 units,came in lower than analysts’ estimates.
TVS Motor Co Ltd fell 4.7 percent after Morgan Stanley downgraded the stock to “underweight” from “equalweight” saying the motorcycle maker could suffer from slowing volumes,rising capacity and low pricing power.
However,among stocks that gained,Tech Mahindra Ltd rose 1.8 percent to hit a 52-week high after India’s central bank increased the foreign shareholding limit in the software services provider.
MphasiS Ltd rose 2.2 percent as BNP Paribas upgraded the stock to “buy” from “hold” saying third-quarter earnings at the IT services provider were stronger than expected and on “cheap” valuations.