Indian stock markets tumble to 21-month low on heavy selling

Foreign portfolio investors (FPIs) sold shares net Rs.2,788.57 crores during the week as per the SEBI's record including the provisional figure of February 12 Source: PTI
The RBI fixed the reference rate for the US dollar at 68.4365 and the euro at 77.3606 from last weekend’s level of 67.6365 and 75.7326, respectively. The RBI fixed the reference rate for the US dollar at 68.4365 and the euro at 77.3606 from last weekend’s level of 67.6365 and 75.7326, respectively.
  Markets continued to fall for the second conscutive week due to persistent selling from operators and investors on concerns over global economy and weak results from banks. “Relentless selling in the stock market is coming from redemption pressures, margin calls, crude slumping to multi- year lows, depreciating rupee against dollar and disappointing earnings,” said Gaurav Jain, Director of Hem Securities. Weak earnings from public and private sectors banks on account of higher provisioning for bad loans mainly affected the market sentiment, a broker said. Putting the blame for the fall on global factors, the government sought to put a brave face saying the fall in market benchmarks this year has been just about 10% as against much higher declines in other markets. SBI reported a plunge of over 61.67% in its third-quarter net profits while a number of other banks have also reported weak results on worsening bad loan scenario. Asian markets also traded weak following US Federal Reserve Janet Yellen’s testimony which suggested that the bank is likely to continue on the gradual rate hike path. The sensex resumed slightly higher at 24,637.41 and moved up 24,698.85 on initial buying. But, tumbled afterwards to 22,600.39 before concluding at 21-month low of 22,986.12, showing a sharp fall of 1,630.85 points or 6.62%. The sensex had last quoted at 22,344.04 on May 9,2014. The sensex has dropped by 1,884.57 points or 7.57% in two weeks. The NSE 50-share Nifty also tumbled by 508.15 points or 6.79% to close at 21-month low at 6,980.95. The Nifty had last quoted at 6,858.80 on May 9, 2014. The Nifty has also lost 582.60 or 7.70% in two weeks. Foreign portfolio investors (FPIs) sold shares net Rs 2,788.57 crores during the week as per the SEBI's record including the provisional figure of February 12. Back home, the broad market depicted weakness, the BSE Mid-cap and Small cap indices dropped by 6.96% and 8.39%, respectively. The losses for both these indices were higher in percentage terms than those for the Sensex. Forex: The rupee failed to maintain its last week’s gains against the American currency, tumbling sharply by 59 paise to end the week at 68.23 on fresh dollar demand from banks and importers in view of sharp fall in equities amid sustained foreign capital outflows. The market benchmark Sensex crashed by 1,630.85 points or 6.62% this week on concerns over global economy and mounting bad loans amid weak quarterly earnings of state-run banks. The domestic unit resumed lower at 67.85 per dollar as against the last weekend's level of 67.64 at the Interbank Foreign Exchange (Forex) market and fell further to fresh 29- month low of 68.4750 before finishing at 68.23 per dollar, disclosing a loss of 59 paise or 0.87%. The rupee had gained by 14 paise or 0.21% last weekend. The domestic currency hovered in a range of 67.7775 and 68.4750 per dollar during the week. The rupee had slumped to its all-time closing low of 68.80 a dollar on August 28, 2013 after touching the record intra-day low of 68.85 the same day. In New York, the US dollar firmed against the euro and yen on Friday after better-than-expected retail sales suggested consumer spending the biggest driver of the economy was stronger than expected in January. The ICE Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.4% at 95.97, but was down 1% over the week. Meanwhile, Foreign portfolio investors (FPIs) pumped out net $351.39 million in first four days of week as per the SEBI’s record. In the forward market, premium for dollars declined on receipts from exporters. The benchmark six-month forward dollar premium payable in July fell to 196-198 paise from preceding weekend’s level of 202-204 paise and far-forward contracts maturing in January-2017 eased to 410-412 paise from 411-413 paise. The RBI fixed the reference rate for the US dollar at 68.4365 and the euro at 77.3606 from last weekend’s level of 67.6365 and 75.7326, respectively. In cross-currency trade, rupee extended its fall against the pound sterling to 99.22 from last weekend's level of 98.27 and also dropped further to 76.97 from 75.74 per euro previously. It also moved down against the Japanese Yen to 60.67 per 100 yen from 57.91 previously. Bullion: A ferocious wave of speculative buying activity swept through the domestic bullion hub here with both the precious metals - gold and silver - surging ahead to multi-year highs as global financial markets' turmoil continued to dominate sentiments. Spectacular collapse in oil prices in the midst of uncertainty about the global growth outlook and macroeconomic environment amid highly volatile currency made a perfect blended cocktail for the splendid performance, scripting the biggest weekly gain in more than four years. Riding high on the back of an unprecedented buying frenzy, gold stormed to reclaim the psychologically important Rs 29,000 milestone on Friday - its highest level in 20-month. Although, it succumbed to a modest profit-taking during the mid-week before rebounding. Robust demand from jewellery traders and retailers ahead of peak festival and wedding season was obviously the main catalyst whereas speculators created huge positions, tracking bullish global trend. Domestic sentiment turned highly buoyant after gold jumped to fresh eight-month high in overseas markets to break the key resistance at $1,200 an ounce mark following hectic buying from ETFs and investors against the backdrop of renewed panic selling in global equities. Marking the longest winning streak in the recent past, the six-week magnificent rally has seen the yellow-metal skyroketing a whopping 16.37% or Rs.4,095 per 10 grams. The ongoing rally in gold at the local market since the beginning of the year has been predominantly propelled by intensified speculations against the backdrop of jubilant sentiment overseas, a bullion trader said. Elsewhere, moving in line with the trend, silver also shot-up to reclaim the key Rs.38,000-mark due to frantic speculative as well as industrial demand.  

February 13, 2016 | 6:17pm IST.

The Dollar Business Bureau - Feb 13, 2016 12:43 IST