Sensex hits 15-month low this week

The Bombay Stock Exchange benchmark Sensex posted its longest four-week losing streak since October 2008 as it plunged by 698 points to end at a 15-month low of 16,141.67 during the week in line with the mayhem in global markets on economic worries.

BSE and NSE were closed on Monday, August 15, on account of the ‘Independence Day’.

Increased selling by foreign institutional investors (FIIs) was also one of the major reasons for the turmoil. FIIs pulled out over Rs 2,000 crore this week, taking the total to over Rs 7,600 crore in August so far.

Enduring European debt problems and murky US economic data released on Thursday indicated that the world is going into another recession, distressing the market sentiment globally.

On the domestic front, higher inflation and rising interest rates, which might restrict the corporate profit growth, continued to weigh on the market.

The downslide commenced from July 26 when RBI raised the key lending rates by 50 basis points, higher than the market expectations. The situation was further exacerbated by external factors.

Sensex-based key stocks like RIL, Infosys, ICICI Bank, SBI, Tata Motors, Tata Steel, Jindal Steel, Sterlite, Wipro, Hindalco and Tata Power logged their new 52-week lows.

The Bombay Stock Exchange 30-share bellwether index resumed higher at 17,015.99 but later dipped below 16,000 to a low of 15,987.77, before ending at 16,141.67, lowest closing after May 25, 2010, a net loss of 697.96 points or 4.14 per cent from its last week-end close.

The broad-based NSE 50-share Nifty also slumped 227.30 points or 4.48 per cent to end the week at nearly a 15-month low of 4,845.65. It touched a low of 4,796.10 before recovering some ground.

In straight four-week of losses, the Sensex collapsed 2,580.63 points or 13.78 per cent and the Nifty nosedived 788.30 points or 13.99 per cent.

The Sensex registered its longest weekly losing string since October 2008 when crashed by 5,341.25 points or 38.40 per cent in straight five weeks.

Selling was seen across-the-board as all 13 sectoral indices ended with losses between 7.51 per cent and 0.25 per cent, while nine out of them logged their 52-week lows during the trading. Most of the other indices, too, recorded their 52-week lows.

Two and three-tier stocks got a huge drubbing on heavy selling by cautious retail investors and underperformed the Sensex. The BSE-Smallcap index was the top loser from all indices, falling a hefty 8.09 per cent. The BSE-Midcap tanked by 5.93 per cent.

Interest rate-sensitive stocks from banking, realty and auto segments suffered the most.

IT stocks, too, bore the brunt of heavy sell-off on hopes of another recession in the US and Europe, the two biggest markets for the infotech companies.

Realty shares continued their downslide on expectation of another hike in key interest rates by the apex bank although the overall inflation eased to 9.22 per cent for the month of July from 9.44 per cent in June, and food inflation dropped to 9.03 per cent for the week ended August 6 from 9.9 per cent last week-end, but they were still high.

According to analysts, the market is still in bearish mode and largely dependent on external factors, which do not look very encouraging as of now.

Primarily spooked by global investment banking major Morgan Stanley’s report, which warned that the US and Europe were dangerously close to recession, the Wall Street had tumbled on Thursday. Disappointing jobless claims data had also added to the uncertainties.

Overall, 27 of the 30 Sensex scrips closed with sharp to moderate losses. Sidelining the overall negative trend, Hero Motocorp, Coal India and ITC finished with gains.

From the banking segment, ICICI Bank tumbled 11.34 per cent and was the top loser from the Sensex pack followed by SBI (7 per cent) and HDFC Bank (1.49 per cent). Realty major DLF finished lower by 6.96 per cent.

Among IT sector, India’s largest software exporter TCS dropped 2.24 per cent, Infosys Tech 6.27 per cent and Wipro lost 6.55 per cent.

Top heavyweight and petrochem giant Reliance Industries dipped 3.89 per cent. Other losers were Tata Motors (10.94 per cent), Maruti Suzuki (6.77 per cent), M&M (2.86 per cent), Bajaj Auto (1.79 per cent), Hindalco (7.65 per cent), Jindal Steel (7.55 per cent), Sterlite Industries (6.28 per cent), Tata Steel (3.6 per cent), HDFC (4.65 per cent), L&T (5.97 per cent), BHEL (2.58 per cent), Jaipra Associates (3.95 per cent), Tata Power (3.27 per cent) and Cipla (2.89 per cent).

Among the sectoral indices, Bankex dipped 7.51 per cent, BSE-Realty 7.36 per cent, BSE-IT 5.33 per cent and BSE-CG 5.18 per cent.

Total turnover on the BSE and NSE dropped to Rs 9,507.67 crore and Rs 43,178.43 crore, respectively from its previous week-end level of Rs 14,283.61 crore and Rs 62,643.64 crore.

FOREX: In sync with bearish local equities, the rupee also dropped by another 40 paise to close at a 6-1/2-month low of 45.74/75 against the Greenback during the week under review, completing straight three-week of losses.

The forex market was closed on August 15 for observing “Independence Day” and on August 19 for “Pateti’’.

Sustained dollar demand from importers, mainly oil refiners, and increased capital outflows too weighed on the rupee heavily, a forex dealer said.

At the Interbank Foreign Exchange (Forex) market, the local currency opened the week better at 45.17/18 a dollar from last week-end close of 45.34/35 and immediately touched a high of 45.15.

Later, negative factors put pressure on the rupee and it dipped to settle the week at 45.74/75, a level not seen since February 1, 2011, when it was closed at 45.75/76, showing a fall of 0.88 per cent.

In straight three-weeks of losing streak, the rupee has crashed 301 paise or 6.81 per cent.

Mr Pramit Brahmbhatt, CEO, Alpari Financial Services (India), said: “Rupee continued to depreciate for third week.

FII were net sellers in Indian equity market in current month which helped Greenback to gain against Rupee.”

“India is estimated to owe around $4 billion to Iran for its oil imports and local oil firms have been aggressively buying dollars to make these payments, this affected the rupee further,” he added.

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