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Sluggish start to 2014 as Sensex slumps to 2-week low

The benchmark S&P BSE Sensex snapped its two-week gains, tumbling 342 points in the just concluded trading week on fresh selling in capital goods, power, PSU, auto, refinery, metal and banking sectors.

business Updated: Jan 04, 2014 17:30 IST

After an eventful 2013, the new year started on a tepid note for the domestic stock market, which is expected to remain cautious over political developments leading up to the general elections.

The benchmark S&P BSE Sensex snapped its two-week gains, tumbling 342 points in the just concluded trading week on fresh selling in capital goods, power, PSU, auto, refinery, metal and banking sectors.

RBI governor Raghuram Rajan, in his foreword to the 8th edition of the RBI's Financial Stability Report 2013, said any political instability will lead to a further erosion of investor confidence in the economy and that a stable new government would be desirable at the Centre.

However, the RBI said India is ready for the US Federal Reserve's tapering and pegged current account deficit at less than 3% of GDP in the current financial year.

The Sensex resumed higher at 21,260.15 and hovered in a wide range of 21,331.32 to 20,731.33 before concluding at more than two-week low of 20,851.33, disclosing a loss of 342.25 points, or 1.61%, over the last weekend.

The 30-share index had gained 478 points, or 2.31%, in the previous two weeks.

The NSE 50-share Nifty also dropped by 102.65 points, or 1.63%, to 6,211.15. It had gained by 145.40 points, or 2.36%, in the previous two weeks.

The markets appeared unimpressed even after Prime Minister Manmohan Singh said his government would continue to push economic reforms, create a favourable environment for foreign direct investment and work harder to generate more employment opportunities in the manufacturing sector.

However, foreign institutional investors continued their buying spree by investing net Rs 1,119.44 crore as per Sebi data including the provisional figure of January 3.

Jignesh Chaudhary, Head of Research, Veracity Broking Services said, "There was nothing to cheer about from the Indian equity markets this week as markets traded weak throughout the week due to thin holiday trading and some profit booking in blue-chip funds."

FII's abstained from rigorous participation in the market due to the holiday season as their global offices were closed for the New year, he said.

"Moreover positive data coming out the US markets have hinted at a better-than-expected recovery, which will throw new challenges to Indian equity markets; although it is good for export-oriented sectors, which will see better performance with renewed exports.

"But it will also prompt Fed to speed up its tapering process which will eventually put adverse pressure in Indian equity markets in an uncertain political environment with high inflation and low growth," he added.

Twenty-four scrips out of the Sensex pack ended in red while only six finished in green.

Major losers were M&M (7.03 %), Tata Power (6.54%), Larsen (6.40%), ONGC (5.95%), BHEL (4.30%), ICICI Bank (3.56%), Cipla (3.39%), SBI (3.17%), NTPC (3.94%), Hindalco (2.82%), Tata Steel (2.54%), Axis Bank (2.37%), ITC (2.21%), Tata Motors (2.11%), Bajaj Auto (1.95%), Coal India (1.93 %), RIL (1.54%) and SSLT (1.44%) while TCS rose by 2.70% and Maruti Suzuki (1.48%).

Among the S&P BSE sectoral indices, CG fell by 4.65% followed by Power 3.32%, PSU 2.79%, Oil & Gas 2.68%, Bankex 2.28%, Auto 2.26% and Metal 2.01%.

However, IT moved up by 0.93% and Teck by 0.86%.

The total turnover at BSE and NSE rose to Rs 10,486.82 crore and Rs 46,164.73 crore, respectively, during the week as against the last weekend's level of Rs 7,868.99 crore and Rs 41,974.45 crore.

Forex: In tandem with steep decline in local equities, the rupee also dropped for the first week of the new year by 31 paise to close at 62.16 against the greenback, breaking two weeks of gaining string.

Fresh dollar demand from importers and lack of any major trigger from overseas markets following new year holidays also weighed on the rupee.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 62.00 a dollar from last weekend's close of 61.85 and moved in a range of 61.74 and 62.56 before settling the week at 62.16, showing a fall of 31 paise or 0.50%. In last two week, it had risen by 27 paise or 0.43%.

The benchmark S&P BSE Sensex finished the week sharply down by 342.25 points or 1.61% on profit booking and caution after the Reserve Bank of India (RBI) Monday said any political instability after next year's general election would hurt the economy further.

However, Foreign Institutional Investors (FIIs) infused $183.73 million on first four days of the week as per Sebi data.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt Ltd said, "During the last week, the rupee depreciated by 0.5% taking cues from local equities which closed down by 1.6% on a weekly basis as lower-than-expected Services PMI data dented the confidence of investors. This year alarming domestic and global economic concerns depreciated the rupee."

The rupee depreciated over 11% for the year 2013. Immediate resistance for spot $/rupee pair is at 63.00. The trading range for the $/rupee for coming week is expected to be within 62.00 to 64.00, he said.

First Published: Jan 04, 2014 15:41 IST