Business
Rupee sinks Sensex by 630 points; bank stocks plunge
Mumbai, May 12
Heavy selling by foreign
investors on the back of the minimum alternate tax (MAT) dispute, free
falling rupee value and disappointing fourth quarter results led to a
benchmark index of the Indian equities market closing Tuesday's trade
down 630 points or more than two percent.
The wider 50-scrip
Nifty of the National Stock Exchange (NSE) also closed the day's trade
deep in the red. It closed 198.30 points or 2.38 percent down at
8,126.95 points.
The 30-scrip Sensitive Index (Sensex) of the
S&P Bombay Stock Exchange (BSE), which opened at 27,502.91 points,
closed the day's trade at 26,877.48 points, down 629.82 points or 2.29
percent from the previous day's close at 27,507.30 points.
The Sensex touched a high of 27,502.91 points and a low of 26,837.39 points in the intra-day trade.
Out
of 2,803 companies whose shares are traded on the BSE, stocks of 1,962
firms declined while only stocks of 746 companies advanced in the day's
trade. The scrip of 95 companies remained unchanged.
"The markets
have fallen due to a combination of factors such as the falling rupee
value, FIIs turning into net sellers, uncertainty over the US interest
rate hike, higher commodity prices like crude oil, and increase in US
10-year bond yields," Devendra Nevgi, chief executive of ZyFin Advisors,
told IANS.
The MAT on capital gains is expected to impact the
margins of foreign funds. This has hit their investment appetite for the
Indian equities' market.
According to data with the National
Securities Depository Limited (NSDL), the Foreign Portfolio Investors
(FPIs) had turned into net sellers in the Indian equities markets. They
off-loaded shares worth Rs.354.75 crore or $55.39 million.
For the previous trading week ended May 8, FPIs sold stocks worth Rs.6,553.44 crore or $1.02 billion in the equities market.
The
day's fall was also attributed to the decline in the Indian rupee's
vale which further weakened against the dollar. by around 17 paise
against the US dollar to Rs.64.17 per dollar around 4.30 p.m.
"Domestic
factors such the outcome of the parliament session and the
disappointing quarterly results have also dampened sentiments," Nevgi
said.
Vinod Nair, head of fundamental research with Geojit BNP
Paribas Financial Services said that: "Factors like increase in Europe
bond yield, outperformance by other EMs and currency depreciation is
impacting global inflow. Besides these, when the domestic earnings are
downgrading and outcome from parliament session is shaky market is not
taking it well."
"After posting strong gains in prior two trading
days, key benchmark indices dropped today as caution prevailed ahead of
release of macro-economic data," said brokerage Motilal Oswal.
"Delay
in the passage of land acquisition and foods and services tax bill and
intra-day depreciation in the rupee by nearly 41 paise to 64.26 against
US Dollar also weighed on the sentiments," added another leading
brokerage Sharekhan.
Another major trigger for the fall was the
investor anxiety over the US Federal Reserve's reaction to the
better-than-expected growth in the non-farm jobs in the US.
Growth
in jobs has the ability to push the Federal Reserve to increase
interest rates, thereby attracting funds back into the US equities'
market.
Other jittery factor for investor is the release of
crucial industrial production and inflation data. The data's will give
cues on the Reserve Bank's ability to cut lending rates in its next
monetary policy review scheduled on June 2.
In Tuesday's trade
all 12 sector-based indices ended the trade in the red. The S&P BSE
banking, capital goods, automobile, metal, oil and gas, information
technology (IT), consumer durables, healthcare, technology,
entertainment and media (TECK) and fast moving consumer goods (FMCG)
indices came under heavy selling pressure.
The S&P BSE Bank
index plunged by 644.42 points, followed by capital goods index which
drowned by 508.65 points, automobile index receded by 344.41 points,
metal index plummet by 302.77 points and oil and gas index decreased by
239.64 points.
The S&P BSE IT index declined by 191.23
points, consumer durables index edged lower by 152.51 points, healthcare
index lost 115.77 points, TECK index fell by 110.08 points and FMCG
index was down 89.61 points.
The major Sensex gainers on Tuesday
were: Dr.Reddy's Lab, up 3.31 percent at Rs.3,473.50 and Hero MotoCorp,
up 3.18 percent at Rs.2,459.90.
The losers were: Tata Steel, down
6.29 percent at Rs.353.15; BHEL, down 5.07 percent at Rs.222.65;
Vedanta, down 4.98 percent at Rs.218.40; ICICI Bank, down 4.59 percent
at Rs.308.55 and Tata Power, down 3.64 percent at Rs.71.50.
Among
the Asian markets, Japan's Nikkei was higher by 0.02 percent, while
China's Shanghai Composite Index gained by 1.58 percent and Hong Kong's
Hang Seng moved down by 1.12 percent.
In Europe, London's FTSE
100 was down by 1.71 percent. However, France's CAC 40 was lower by 1.68
percent and Germany's DAX Index lost 2.04 percent at the closing in the
Indian markets.