NEW DELHI: After opening with a mild gap-down, benchmark indices plunged over 3 per cent each in the afternoon trade, led by heavy selling in rate-sensitives, metals and FMCG
Tracking the weak momentum, the Nifty
slipped over 3 per cent in trade to mark its worst fall since August 16. The index closed below its crucial psychological level of 5300.
Following weak trend in the markets as much as 192 stocks
on the Bombay Stock Exchange
hit their 52-week in trade. Rate sensitive stocks including banks were the worst hit in today's market fall. Axis BankBSE -6.15 %
, Bank of India
and Canara BankBSE -4.17 %
hit their respective 52-week lows.
According to analysts, the market is likely to remain range-bound and take cues from rupee
and crude oil prices for direction in the near term as they affect the current account deficit.
The rupee posted its biggest single-day decline in nearly 24 months, falling as much as 66.07 intraday against the dollar led by strong month-end dollar demand from importers and a weak opening in the domestic equity market.
The 50-share index finally ended at 5,287.45, down 189.05 points or 3.45 per cent. It touched a high of 5,427.40 and a low of 5,274.25 in trade today.
The S&P BSE Sensex
was at 17,968.08, down 590.05 points or 3.18 per cent. It touched a high of 18,460.72 and a low of 17,921.82 in trade today.
Analysts are of the view, high inflation
and all-time low rupee levels will make it difficult for the central bank to announce any rate cut at its next meet. Most brokerage firms have predicted the rupee to hit 67-70 levels in near-term, a move which can damage the economy
along with markets and create a vicious cycle.
"We are getting into a vicious cycle on the rupee front and that is something which hopefully the government and the central bank can address by taking redeeming measures," said Gautam Chhaocharia, Head of India Small/Mid-cap Research at UBS.
"Timing is very important in the markets because the real economy is adjusting to the higher levels of rupee in terms of slowing trade deficit takes time," he added.
While the currency market
and the stock markets
are more real time and do react to a lot more short-term sentiment as well as noise. Chhaocharia is of the view
that stabilising the sentiment for the next couple of months, especially from the government's side, will hold key whether the market cracks below 5250 or not.
Passage of Food Security Bill
is another big overhang on markets and rupee, as most analysts feel that it will have negative impact on fiscal deficit
number. Finance Minister
had earlier allayed fears saying that the Food Security Bill will not have a negative impact on the fiscal deficit. "The government can afford a vast new food programme for the poor despite concern about its impact on the strained public finances," Finance Minister P Chidambaram
"The government has budgeted an additional 230 billion rupees annually for the programme on top of the existing 900-billion-rupee food subsidy bill," he added.
"Well there has always been a debate in the market about the effectiveness of this Food Security Bill but having said that when the ordinance was passed it was quite clear that in the monsoon session of the Parliament itself this bill will get passed given the priority that the government," said Samiran Chakraborty, Regional Head Research, India, Standard Chartered Bank
in an interview with ET Now.
"The implication of the bill
is likely to be felt not this year but the next fiscal year so in some sense it is too much of worry on the fiscal deficit front from the food security at this point of time," he added.
Chakraborty is of the view that the real risk to fiscal deficit is from fuel subsidy front. So if diesel prices are not hiked anytime soon in a substantial quantum, it will pose a real risk of fiscal slippage in FY14 itself.
Courtesy : http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/bloodbath-on-dalal-street-144-stocks-hit-fresh-52-week-low-on-bse/articleshow/22093642.cms