Bloodbath witnessed; selling in IDFC, HDFC overdone... - Ajcon Global Services Ltd.

Domestically key benchmark indices were under tremendous pressure. Sensex closed the day's trade nearly three percent down, as concerns grew over the steep rupee fall and the effect the Food Security Bill entailing expenditure of nearly US $20 billion will have on the current account deficit. Except the information technology (IT) sector, all other scrips were trading in the red. Heavy selling pressure was observed in banking index (bankex), capital goods, metal, automobile and public sector undertakings (PSUs).

The S&P BSE bankex plunged 569.94 points, capital goods index tanked 345.17 points, metal index dropped by 278.16 points, automobile index slipped 265.19 points and PSU index dipped 198.38 points. However, the IT index went up by 11.83 points. Sensex which opened at 18,460.72 points, closed at 17,968.08 points (provisionally), down 590.05 points or 3.18 percent from the previous day's close at 18,558.13 points. The Sensex touched a high of 18,460.72 points and a low of 17,921.82 points during trade so far. This was the second time the Sensex traded below the 18,000-mark The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed the day's trade (provisional) down 189.05 points or 3.45 percent down at 5,287.45 points.

About 712 shares have advanced, 1523 shares declined, and 147 shares are unchanged. Banks, capital goods and realty stocks were badly hurt today while midcap and smallcap were bleeding too. BHEL, HDFC Bank, HDFC, NTPC and Jindal Steel were lead losers in the Sensex while on the gainers side were Infosys, Dr Reddy's Labs and Sesa Goa.

The Indian rupee slipped above the psychological level of 66 against the dollar Tuesday and the capital markets saw heavy selling by foreign funds as the government admitted there were domestic factors behind the currency crisis. The partially convertible rupee slumped to a new record low of 66.07 against the dollar at the inter-bank foreign exchange market in Mumbai, surpassing the previous record low of 65.56 recorded Aug 22, 2013. The rupee later recovered at 65.92 against the dollar in afternoon. The free fall in rupee led to heavy selling pressure in the equities markets.

Earlier, Finance Minister P. Chidambaram told the Rajya Sabha that the rupee had overshot its true value but expressed confidence that it will find its appropriate level. According to the Finance Minister, there are not just external factors, there are also domestic factors. One of the domestic factors is that the Government allowed the fiscal deficit to be breached and also allowed current account deficit to swell because of certain decisions that it took during the period 2009 to 2011. The free fall in rupee value and market capital also came even as the Cabinet Committee on Investment (CCI) Monday cleared three dozen projects worth Rs.1.83 lakh crore. Chidambaram said: "The message that we are sending, we are very keen to get investment cycle restarted."

Source : Equity Bulls

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