Rupee panic sinks Sensex; metals, banks, realty hammered

Concerns about the sliding rupee spilled over to equities Tuesday, with the Sensex diving 298 points to close at a near-two month low of 19143.00.

The rupee today touched a fresh low of 58.98 to the dollar intra-day, dimming prospects of a rate cut by the RBI at its policy review meet Monday. This sparked a sell-off in interest rate sensitive sectors like banking and realty.
 
Soothing remarks by the Chief Economic Advisor and some support from the RBI lifted the currency from its record low, but failed to assure equity bulls.

The Nifty closed at 5789, down 89 points over the previous close.

Investors got into defensive mode and sought the safety of pharma and health care sectors. IT shares did well relative to other sectors, but investors did not appear to be betting on a dramatic improvement in earnings because of currency depreciation.

Among the key concerns of a weak currency are higher raw material costs, increased borrowing costs on foreign loans, and forex losses, all of which will impact the bottomlines of companies.

This apart, sustained weakness in the rupee could prompt many foreign institutional investors to start withdrawing money from equities. Already, there has been a massive pull-out of foreign money from government securities. In the last three weeks, FIIs have net sold over Rs 15,000 crore of Indian debt. Fund flows into equities too have dried up in the last couple of weeks.

Jindal Steel & Power was the top loser in the Nifty, shedding over 15 percent, after the CBI's First Information Report on the coal blocks scam named promoter Naveen Jindal and his company Jindal and his company of misrepresentation of networth and concealing previous allotment.

Hindalco, Tata Power, ONGC, ICICI Bank, Mahindra and Mahindra, and Tata Steel were the other big losers, falling 3-6 percent. The handful of gainers among frontline shares included Wipro, Cipla and Bajaj Auto, up between 1-2 percent.

According to Pradeep Khanna, managing director and head- FX Trading, HSBC India, there could be another USD 1.5-2.0 billion of outflows from the bond market.

"We must also remember, we are trading in the backdrop of weak Asian currencies and that continues to also add a bit of weakness in terms of sentiment," he said in an interview to CNBC-TV18 earlier in the day.

Analysts expect trade deficit for May to widen to USD 17-21 billion due to higher gold imports. The deficit is expected to narrow in June, but there could be near term pressure on the rupee even as the government is trying hard to stem the slide.

"Gold imports have fallen considerably and we expect significantly lower gold imports due to steps taken by the government," Chief Economic Advisor Raghuram Rajan said at a press conference today.

3:40 pm Gainers: Cipla (up 1.90 percent), Bajaj Auto (up 0.83 percent),  Wipro , GAIL and  HUL are key gainers in the Sensex.

3:30 pm: The Sensex closes down 297.34 points at 19143.73, and the Nifty ends the days at 5786.65 down 91.35 points (provisional).  About 661 shares have advanced, 1679 shares declined, and 134 shares are unchanged.

3:25 pm Gold take: Indian gold futures pulled back from their highest level in two months in line with overseas markets, though the rupee, which traded near its record low, limited the downside.

3:20 pm Buzzing: Mahindra is up around 4 percent as AP High Court has approved merger of Satyam with Tech Mahindra .

Rupee at record low: How to position your debt portfolio?

The market continues to be under extreme pressure in the last trading session. The Nifty slips below 5800 levels once again and is currently at 5790.85, down 87.15 points while the Sensex sinks 286.67 points at 19154.40. About 613 shares have advanced, 1609 shares declined, and 139 shares are unchanged.

Jindal Steel (down 15.68 percent), Hindalco (down 6.17 percent), Tata Power (down 6.1 percent), ONGC Rs (down 3.64 percent) and ICICI Bank (down 3.59 percent) are key losers on the Sensex.

Don't miss: How to position your debt portfolio, when rupee is at record low?

Indian equity benchmarks are trading one percent lower, after showing some recovery from day's low. Chief Economic Advisor Raghuram Rajan says the large part of rupee decline is because of dollar strength.

"Potential debt outflows and larger trade deficit in May have resulted in rupee depreciation," he adds.

BSE Sensex is down 197.98 points to 19243.09, and the Nifty is down 58.70 points to 5819.30.

Market breadth improved a bit. Declining shares outnumbered advancing one by 1609 to 611.

02:25pm Jindal Steel cut its losses to 13 percent from 24 percent, especially after the company says it is committed to fully co-operate with CBI at this stage .

Also Read - Coal scam: CBI names Naveen Jindal, former MoS Coal Dasari

European markets remain under pressure; France's CAC, Germany's DAX and Britain's FTSE slipped 0.6 percent each.

02:15pm NSE Nifty clawed back back above the 5800 level, helped by a recovery in rupee from its all-time low of 58.98 per dollar to 58.50.

BSE Sensex is down 184.75 points or 0.95 percent at 19256.32, and the Nifty is down 52.30 points or 0.89 percent at 5825.70.

Titan Industries says RBI clarified on gold imports. "Gold imports for consumption are with 100 percent cash margins and credit for gold imports is not allowed. This will affect import of gold via non-consignment routes."

02:05pm BSE Sensex recouped some losses following a recovery in rupee. Infosys shares bounced back, rising 0.5 percent followed by Cipla with 1.3 percent gains.

State Bank of India , Reliance Industries and ITC trimmed losses to 0.4-0.8 percent from 1-1.5 percent.

The Sensex is down 210.76 points or 1.08 percent at 19230.31, and the Nifty is down 64.35 points or 1.09 percent at 5813.65.

Indian rupee depreciated by 38 paise to 58.53 per dollar, after showing a recovery of 45 paise from a record low of 58.98 per dollar.

Shares of Tata Power , Hindalco

01:59pm Nearly 10 lakh shares of EID Parry changed hands at Rs 137 a piece on exchanges via two block deals that were worth Rs 13.33 crore. The stock is down 0.5 percent.

Procter and Gamble shares declined 2 percent amid large volumes; 1.5 lakh equity shares of the company changed hands at Rs 3007.75 a piece on Bombay Stock Exchange.

01:50pm Jindal Steel shares plunged 20 percent after sources indicated that the CBI lodged FIR against 4 companies including JSPL in the Coalgate scam. JSPL issued a statement saying "JSPL, as a law abiding company, is governed by a strong ethical code of conduct....committed to fully cooperate with CBI."

Axis Bank and ICICI Bank are trading under pressure today. RBI levied penalties on three top private sector lenders ranging from Rs 5 crore to Rs 1 crore for KYC violations after the cobrapost expose.

01:40pm Shares of SpiceJet, Monnet Ispat , Bajaj Corp , BGR Energy and Ashok Leyland are top midcap losers, falling 6-7 percent.

Elder Pharma jumped 5 percent , after media reports said the debt-ridden firm was up for sale.

01:30pm Shares of oil marketing companies are under pressure despite the news that these companies will receive Rs 7,000 crore from the government for subsidy, reports, CNBC-TV18 quoting Reuters.

Reuters reports that three OMCs will get subsidy payments of Rs 45,000 crore in 6 tranches.

BPCL tanked 3.7 percent and IOC declined 1.8 percent while HPCL plunged 5.5 percent.

01:20pm Equity benchmarks continued to trade sharply lower since early trade on account of steep fall in rupee. European markets too are under pressure; France's CAC, Germany's DAX and Britain's FTSE slipped 0.6 percent each.

BSE Sensex is down 278.24 points or 1.43 percent at 19162.83, and the Nifty is down 85.85 points or 1.46 percent at 5792.15.

Bank Nifty fell more than two percent, as top private sector lender ICICI Bank crashed 3.7 percent. State Bank of India is down 1.3 percent and HDFC Bank declined 0.8 percent.

Indian rupee depreciated by 64 paise or 1.10 percent to 58.79 per dollar.

12:55 pm: Car sales in India fell for a record seventh consecutive month in May with a decline of 12.26 per cent, prompting industry body Society of Indian Automobile Manufacturers (SIAM) to caution that the prolonged slump in the market could result in job losses in the automobile sector.

According to the latest data released by SIAM, domestic passenger car sales in May stood at 1,43,216 units as against 1,63,222 units in the same month of 2012.

12:40 pm: Three government owned oil marketing companies (OMCs) will receive Rs 7,000 crore from governemnt for subsidy, reports Reuters. The three OMCs to get subsidy payments of Rs 45,000 crore in six tranches.
12:31 pm European markets: The European markets opened in the red territory.

12:30 pm Buzzing: JSW Energy is down around 11 percent as Amba River and JSW Steel will buy a little less than 3 million shares in JSW Energy at market price of around Rs 55 a share.

12:25 pm Rupee: The Indian currency has recovered slightly to 58.75 per dollar. Dealers say rupee recovery not on account of RBI intervention.

Expert talks: FII exodus unlikely; no major downside seen, says Bhamre

The Nifty has slipped below 5800 dragged lower by commodities and rate sensitives. The cuts are deeper for the midcap index. The Sensex is down 286.04 points or 1.47% at 19155.03, and the Nifty down 84.00 points or 1.43% at 5794.00.

In a CNBC-TV18 special interview Pankaj Vaish of Citi says global equities could correct 5-7 percent. For India, rupee depreciation is a major concern, policymakers need to address the weakening currency on priority.

The rupee fell a further 0.8 percent to touch a new low of 58.70 as more FIIs were seen selling their debt holdings after US yields spiked further yesterday after the S&P upgrade. Importantly no exporters were seen offering dollars in India. Other Asian currencies like the Indonesian rupiah, the Thai baht, Pilipino peso and Malaysian ringitt have also fallen around half a percent today.

Nikkei is down for the third day in a row. It is down nearly 20 percent from its peak on May 23 entering bear market on intraday basis as dollar briefly fell beneath the 96 level overnight. Rest of Asia is trading lower down 1 percent.

11:59am More than six shares declined for every one share advanced on National Stock Exchange. IVRCL shares crashed 14 percent.

JSPL says the company is committed to fully co-operate with CBI at this stage, "This is an ongoing CBI probe into coal block allocation," the company adds. ( JSPL tanks 18% on FIR against company in coal scam )

11:55am Lanco Infratech shares plunged 8 percent. Lanco group is likely to refinance Rs 25,000 crore worth of debt, reports CNBC-TV18 quoting sources.

Indian rupee is at new all-time low of 58.94 per dollar, down 79 paise or 1.35 percent from previous day's closing value.

11:50am NSE Nifty dropped below the 5800 level for the first time since April 23, 2013 on sharp fall across sectors. Shares of Bharti Airtel , ONGC and ICICI Bank lost 3 percent each.

BSE Sensex is down 304.85 points or 1.57 percent at 19136.22, and the Nifty is down 87.90 points or 1.50 percent at 5790.10.

11:40am India Infoline shares slipped 2.5 percent amid large volumes. 14.5 lakh equity shares each changed hands at Rs 61 a piece on Bombay Stock Exchange and National Stock Exchange in early trade.

Portfolio manager PN Vijay says investors are genuinely worried about the precipitous fall in the rupee .

"Next three-four days are going to be very critical. If the RBI does some open market operations (OMO) in the forex market and brings the rupee back to at least about 56.50-57, then we will be able to see the effect in the call money and get more calmness," he told CNBC-TV18 in an interview.

He says the RBI may go for a CRR cut to ensure more effective transmission to the corporate sector and bring bulk deposit interest rates down, but repo rate cut in the June policy.

11:30am The BSE Sensex is down 215.78 points or 1.11 percent to 19225.29, and the Nifty is down 61.65 points or 1.05 percent to 5816.35.

Declining shares outnumbered advancing ones on the Bombay Stock Exchange 1427 to 409.

Cinemax India rallied 10 percent for the second consecutive session, after the board of directors of PVR approved merger of Cinemax India and Cine Hospitality with self (a wholly-owned subsidiary) in last weekend.

KSK Energy Ventures surged nearly 6 percent amid large volumes, after a block deal worth Rs 5.88 crore. More than 11.64 lakh equity shares changed hands at Rs 50.50 a piece on Bombay Stock Exchange in early trade.

11:20am Index heavyweights ITC and HDFC declined one percent each. Metals hit quite badly with the BSE Metal Index falling 4.6 percent.

Shares of Hindalco Industries , Sterlite and Sterlite Industries lost 2.5-4 percent.

BSE Midcap and Smallcap indices slipped further to 1.6 percent each. SpiceJet, Max India , Monnet Ispat and BGR Energy declined nearly 6 percent.

Among smallcaps, Tecpro Systems tanked 13 percent while Everonn Education , UB Holdings , JSW Holdings and Kolte-Patil tumbled 8-10 percent.

11:10am About five shares declined for every one share advancing on the National Stock Exchange.

Country's largest private sector lender ICICI Bank dropped 3 percent and its rival HDFC Bank slipped 0.55 percent. Meanwhile, top lender State Bank of India gained 0.14 percent.

Infosys shares remained on buyers' radar on consistent depreciation in rupee that is moving towards 59 level. The stock is up 0.44 percent.

According to Portfolio manager PN Vijay, if one had to run somewhere in this bad market, IT could be the best refugee for an investor.

Also Read - RBI must cut rate despite weak rupee: Merrill Lynch

11:00am Indian equities extended fall in morning trade on sharp depreciation in rupee for the second consecutive session today. The BSE Sensex is down 209.94 points or 1.08 percent at 19231.13, and the Nifty is down 59.05 points or 1 percent at 5818.95.

Indian rupee touched a new record low of 58.85 per dollar on strengthening dollar, down by 70 paise from its previous day's closing value.

Broader markets too are down quite badly; the BSE Midcap and Smallcap indices slipped 1.3 percent each.

Jindal Steel & Power crashed 19 percent, after CBI sources say four companies (including JSPL) allegedly misrepresented facts for coal block allocation.

10.59 am Market update: The Sensex is down 180.61 points at 19260.46, and the Nifty is down 53.75 points to be at 5824.25.

1050 am Alert: Jindal Steel and Power has plunged 22 percent on the BSE as FIR has been lodged against four companies including JSPL in coal scam. Other companies named in the FIR are Jindal Realty and Gagan Sponge. CBI sources that it has registered fresh case in coal scam against four  companies and two individuals which includes Naveen Jindal and former Ministry of State Coal Dasari Rao. CBI conducting raids at 15  locations in Delhi and Hyderabad.

10:40 am Losers: Jindal Steel (down 5.12 percent), Bharti Airtel (down 3.17 percent) and ICICI Bank (down 3.16 percent) are key losers in the Sensex.

10:37 am: The Sensex is down 128.85 points at 19312.22, and the Nifty down 34.40 points at 5843.60. About 462 shares have advanced, 1114 shares declined, and 135 shares are unchanged.

10:35 am Buzzing: Standard Chartered downgrades Reliance Communications rating to "underperform" from "in-line", saying current valuations "fully reflect the upside from the optic fiber and tower deals." Reliance Communications was at Rs 106.25, down Rs 4.75, or 4.28 percent on the BSE.

The Ambani brothers signed a long-expected pact on Friday for their rival telecoms firms to share mobile masts in a contract valued at more than USD 2 billion over several years -- the biggest deal between them since reconciliation.

10:31 am macro outlook: Brokerage house Nomura expects India's current account deficit to widen to a record high of USD 21 billion in May, compared to USD 17.8 billion in April. Nomura analysts say a repo rate cut by the RBI at its monetary policy review meet next week looks unlikely.

10:30 am: Jet Airways rebounds after 11 percent slide yesterday. The crucial meeting of FIPB which was to discuss the Jet-Etihad deal as well as the FDI proposal of Norway's telecom firm Telenor has now been postponed to Friday.

10:25 am Alert: Private sector banks are under pressure today as Reserve Bank of India has penalised Axis Bank (down 2.2 percent), HDFC Bank (down 0.3 percent) and ICICI Bank (down 3.2 percent) for KYC rule breach.

10:20 am Buzzing: Videocon is up 1 percent on prospects of Mozambique deal coming through. Although ONGC withdrew the statement issued earlier that OVL and Oil India have inked a definitive agreement with Videocon to buy 10 percent stake in the block, they did mention that the deal is at an advanced stage but not signed yet.

Expert take: See buying opportunity beyond 5900 in short-term, says Sukhani

The market is growing as trading session progresses. The Sensex is down 107.34 points at 19333.73, and the Nifty down 33.90 points at 5844.10. About 380 shares have advanced, 863 shares declined, and 79 shares are unchanged.

Banking, metals and realty stocks are dragging the indices.

Rupee has hit another new low today trading at 58.69 to the dollar mark as Asian currencies fell further against the dollar and foreign banks purchased greenback aggressively for custodian clients. HSBC told CNBC TV18 that a lot of redemption is seen from foreign institutional investors' in the debt market. Further USD 1.5-2 bn can further be redeemed from the FII with FIIs already having pulled out USD 4 bn and it will be difficult for RBI to cut rates in June 17 policy.

9:55 am: The Sensex is down 98.54 points at 19342.53, and the Nifty is down 32.25 points at 5845.75.  About 371 shares have advanced, 815 shares declined, and 78 shares are unchanged.

9:50 am Management speaks: PK Goyal, Director Finance, IOC says in an interview to CNBC-TV18 that diesel under-recovery is now at Rs 5.67 per litre and full under-recovery project is now over Rs 1 lakh crore. He adds that the oil marketing company (OMC) will continue with once-a-month diesel hike.

9:40 am Losers: Jindal Steel (down 2.94 percent), ICICI Bank (down 2.17 percent), M&M (down 1.43% percent), Tata Steel (down  1.36 percent) and Bharti Airtel (down 1.36 percent) are major losers in the Sensex.

9:35 am Buzzing: Elder Pharma is up 5 percent on the BSE. The drug company has mandated Ernst & Young and Nomura Securities to find a buyer for the company through a negotiated transaction, media reports say.

9:30 am Market update: The Sensex is down 39.37 points at 19401.70, and the Nifty is down 17.00 points at 5861.00. About 333 shares have advanced, 550 shares declined, and 57 shares are unchanged.

What is Udayan view on the market today?

The market has opened on a soft note as rupee has hit all-time high. The rupee has touched a record low of 58.30 per dollar in opening trade Tuesday due to heavy dollar buying, as against previous day's closing of 58.15 per dollar.

The Sensex opens down 54.16 points at 19386.91 while the Nifty is down 29.25 points or at 5848.75. About 88 shares have advanced, 165 shares declined, and 26 shares are unchanged.

Technology stocks are getting strong as rupee depreciates. Infosys, TCS and Wipro are the lead gainers on the Sensex. Meanwhile, ICICI Bank, M&M, Sun Pharma , Jindal Steel and HDFC are the major losers.

Globally, US markets closed narrowly in mixed choppy trading as investors seemed to take a breather following last week's sharp rally and amid worries over the Federal scaling back it stimulus program. The Dow closed flat despite ratings agency, S&P raising its sovereign credit outlook to "stable" from "negative".

The agency added that the likelihood of a near-term downgrade is "less than one in three." It also said that US' credit strengths include its resilient economy, its monetary credibility, and the dollar's status as the world's key reserve currency.