An evening walk down Dalal Street | Sensex, Nifty start week on a negative note amid weak rupee, global tensions

September 10
17:07 2018

It’s not a result that the bulls would have anticipated, considering the pullback it had on September 7, 2018. A weak rupee, which fell to record lows of 72.67 per US dollar weighed heavily on indices. The Indian currency saw weak moves following macro concerns on the domestic front along with having spillover effects of a selloff in emerging market currencies too.

Back home, investors are likely to have indulged in selling based on these cues, especially on the economic front. India’s trade deficit widened to USD 18 billion for July, while the current account deficit (CAD), too, widened to 2.4 percent of GDP.

The day was largely dominated by the bears, with the benchmarks seeing selling right from the first minute. Along with it, rupee’s weakness ahead added to its woes. The Nifty gave up 11,450-mark.

Traders rushed to dump stocks in segments such as automobiles, banks, FMCG, pharmaceuticals, and metals, among others. In the broader markets, selling in midcaps also added to the woes, with the Nifty Midcap index shedding 2 percent. Pharmaceuticals were dragged by a fall in Sun Pharmaceuticals following reports of a fresh inspection at its Mohali unit.

The Indian rupee was in focus after it breached past 72.50 per US dollar, falling to an all-time low of 72.67 per US dollar. It failed to build on some recovery which was visible on Friday. The fall in Indian rupee has also pushed its value lower by 5 percent so far in this month itself, while for 2018, the total fall stood at 13 percent.

An immediate impact was also visible on the bond yields, which rose to their highest levels in four years, according to a CNBC-TV18 input.

A sharp increase in dollar demand, global trade war risks along with a strengthening US dollar are reasons that could be attributed to the rupee’s fall, multiple analysts told Moneycontrol.

“Markets started the week on feeble note and lost over a percent. Weak global cues combined with widening trade deficit, due to continuous fall in rupee against the dollar, dampened the sentiment. Selling pressure was witnessed across the board and almost all the sectoral indices ended lower. The fall was evident, citing deteriorating local cues and continuous threat of trade war escalation,” Jayant Manglik, President, Religare Broking said in a statement.

Stocks in News

Demand for technology stocks, so far, have been huge for the current year as the IT maintained its leading position among all indices at Dalal Street on Monday, thanks to the rupee that hit new low of 72.67 against the US dollar. The Nifty IT index rose 0.02 percent led by gains in Hexaware (up 3.1%), NIIT Tech (up 2.2%), and HCL TEch (up 1.4).

Shares of Indian Hume Pipe Company gained 1.8 percent as company signed MoU with Kalpataru Gardens for development of land at Vadgaon, Pune. The company has signed a memorandum of understanding (MOU) with Kalpataru Gardens in respect of development of company’s land at Vadgaon, Pune.

Shares of Tata Motors fell 0.7 percent as investors reacted to a fall in its Jaguar Land Rover (JLR) sales for August. JLR reported a fall of 4.9 percent (year-on-year) in its August sales at 36,629 units.

Shares of Bank of India slipped 2.2 percent post Reserve Bank of India (RBI) has imposed penalty of Rs 1 crore on the bank. The bank has advised to pay a penalty of Rs 10 million on account of violation of RBI guidelines on frauds- classification and reporting in the accounts of Winsome Diamond and Jewellery and Forever Precious Diamond and Jewellery.

Share price of Thyrocare Technologies surged 3.3 percent as company approved the buyback of its equity shares worth Rs 63 crore. The company approved buyback of 8.63 lakh shares at Rs 730 per share aggregating to Rs 63 crore.

Global Update

Equities in Asia ended mixed as investors continued to keep a track of trade war fears continued to dominate the cues. Nikkei 225 and South Korea’s Kospi extended their earlier gains to close higher.

Meanwhile, shares in Europe were higher even as global trade war fears too continued to exit. Stoxx 600 was up by 0.32 percent with banking stocks leading the gains.

Experts further believe that the correction on September 10, 2018 were a normal one and that there could be further decline too.

“We feel it’s a normal correction, considering the rise that we had in Nifty in recent past. Indications are in the favour of further decline ahead and we expect Nifty to find support around 11,300. Trades have no option but to align their position accordingly and avoid naked longs,” Manglik further added in his statement.

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